Make the Call! Peak Prediction Frustrations
By EnPowered - May 15, 2020
For businesses taking part in Ontario’s Industrial Conservation Initiative (ICI), the need for accurate electricity demand predictions is a daily concern.
EnPowered simplifies energy management. This article is a part of our 'Predicting Peaks' series. We discuss the current environment about Peaks and present some easy-to-use-tools and tips on how to forecast and respond to them.
Ever wonder how weather networks can get away with the kind of broad, all encompassing weather forecasts that they sometimes announce? You get bombarded with sweeping potentialities and percentages for precipitation; just at what point does sunny with clouds turn into cloudy with sunny breaks? Many times these forecasts do more harm than good, leaving your weekend plans hanging in the balance, with you unable to commit one way or the other.
These situations are annoying, but the worst case scenario is usually just a soggy picnic or barbecue, and it makes you appreciate those times when you can get a clear, no-nonsense prediction about the weather.
That being said, there are times when pinpoint accuracy is what is demanded, especially when hundreds of thousands of dollars are on the line. For businesses taking part in Ontario’s Industrial Conservation Initiative (ICI) - an energy conservation program that encourages companies to reduce their Peak hour energy use - this need for accurate predictions is a daily concern. When your business’ bottom line is at stake, statements like ‘60% chance of rain’ just don’t measure up.
Playing with colours is not good enough
The complicated nature of predicting Peaks and the intricacies of the ICI program mean that many businesses struggle to catch Ontario’s Five Coincident Peaks (basically the five highest Peaks of the year that determine your annual Global Adjustment bill). Many firms opt to avail themselves of the services of an energy consultant like EnPowered. However, unlike EnPowered, many consultants have taken a page from their local weatherman and adopted broad predictions that try to cover as many bases as possible without actually committing to a firm position.
Thanks to our experience in the energy market, combined with discussions with our customers, we have noticed that many consultants don’t offer fixed Peak calls, opting instead to provide colour coordinated warnings - think of the green-yellow-red Parks Canada signs indicating the risk of forest fires.
"Energy consultants that use a colour based reporting system do their clients a disservice [...] it shifts the burden of responsibility away from the consultant and onto the customer."
While this appears to be a simple and intuitive way to convey information to clients, the reality is that this system causes a lot of uncertainty, which leads to unnecessary Peak calls. For instance, the consultant might send clients a yellow warning as a sign to keep an eye on the situation, but the thresholds for these colour categories can be very broad. The likelihood of a Peak occurring could be just slightly higher than the threshold for a green classification, just below the threshold for a red classification, or anywhere in between.
Curtailing energy use or implementing other demand response measures might be prudent in the second scenario, but overly cautious and ultimately financially detrimental in the first case - there is no way to tell for sure with such a system. To further problematize the situation, companies are so afraid of missing a Peak and therefore incurring substantial costs that they prefer to be overly cautious, opting to curtail more times than necessary in order to be on the safe side. The issue with such a strategy is that responding more than necessary (up to 20 times more than needed during the summer season alone) erodes any savings companies get from capturing the relevant Peaks in the first place.
The consultant who cried Peak
EnPowered makes sure that we only notify customers with clear, actionable messages when our predictions indicate that a Peak will fall within the 5 largest for the year. We make a concerted effort to minimize the number of Peak calls while ensuring that our customers still capture all 5 Coincident Peaks.
Energy consultants that use a colour based reporting system do their clients a disservice because such imprecise reporting not only negates the value of consulting services, but it shifts the burden of responsibility away from the consultant and onto the customer. Yellow warnings that can be read either way in turn absolve consultants of responsibility when customers decide not to act, only for a Peak to occur that they would have responded to had the warning been more firm.
EnPowered makes sure that there are only ever two decisions you have to make: either no action is required, or you need to curtail as much as possible. The old adage of ‘no news is good news’ sums this tenet perfectly; we won’t bombard you with ‘maybes’ or ‘shoulds’. This minimizes the number of disruptions that your company has to face, and makes sure that our warnings are not diluted.
If your customers start second guessing your predictions or shrug them off as unreliable, then you are doing something wrong. Uncertainty remains one of the largest obstacles to business confidence: paying for a service that only adds more doesn’t make sense.
Think of it this way: would you trust, let alone pay, a stockbroker who only told you that ‘you could sell today, maybe’ only to turn around after the stock plummets and claim that they did their job. Stockbrokers and energy consultants are hired to alleviate this uncertainty and indecision, not bill you for playing around with colour swatches.