The Merits of Thermal Storage in An Unregulated Power Marketplace

Abstract

For many years, it was in the best interests of the electric power
industry to financially support the installation of thermal storage sys-
tems for off-peak air-conditioning. By shifting electrical usage to
night hours generating reserve was maintained at a far lower cost than
the construction of new generating equipment would have required.
This additional support from the utility industry influenced designers
of commercial buildings to fully exploit the available rate structures
by maximizing cool storage capacities.
However, deregulation is seen by some as a threat to the continu-
ation of incentive programs. Additionally, questions regarding the
future structure of time-of-use rates, as well as the introduction of
other rate variants such as real-time pricing (RTP), has introduced
considerable uncertainty into the economic forecasting necessary to
justify large thermal storage systems with enough capacity to meet the
entire cooling load of typical applications.
By minimizing or eliminating a first cost penalty, one can focus
on the features of thermal storage that not only protect customers from
uncertainties in utility rate structures, but also provide them with the
flexibility to take advantage of the optimum available rate. By con-
suming a significant fraction of their power needs at night, customers
become more attractive to generators anxious to fully utilize their
power producing capacity in a competitive marketplace. With very
few exceptions, it is unquestionably more economical to produce elec-
trical power at night.
A properly selected, implemented and controlled thermal storage
system creates a preferred customer who is prepared to respond to the
inevitable market forces that will shape electrical power rate struc-
tures in an uncertain and unregulated power marketplace.