My Clean Break column today takes a look at Vancouver-based Sempa Power Systems, which helps large energy customers reduce their bill and lower greenhouse-gas emissions by dynamically switching their heating requirements between fossil fuels (mostly natural gas) and electricity. Now, you might be saying to yourself: this makes no sense because electricity is too inefficient for space and water heating. True, but in certain jurisdictions off-peak electricity tends to be zero- or low-emission (i.e. nuclear, wind, hydroelectric) and wholesale prices can drop dramatically as power generators look for ways to offload what is often baseload power that can’t be easily turned down. What Sempa will do is install an electric boiler at, say, a hotel or university residence, and use its proprietary software to switch to electric mode when the wholesale price of power drops below the price of the fossil fuel being used, whether that be natural gas, oil or propane.
A few caveats: it’s most ideal for jurisdictions with low-emission baseload capacity and in large industrial or commercial buildings that need heating 24-hours a day, particularly buildings like hotels or prisons where people sleep. The payback is also faster if the building in question is older and less energy efficient, though one could argue money might be better spent improving efficiency.
This is essentially real-time fuel switching based on wholesale price signals, with the spinoff benefit often being that a building’s carbon footprint is reduced (again, this is specific to certain jurisdictions). Sempa claims most installations have a three year return on investment. You can find out more details on estimated energy savings and greenhouse-gas reductions in the column.
NOTE: I’d like to throw out for discussion the issue of electricity as a fungible commodity, and how the kind of hybrid heating system that Sempa offers, while it may lower energy costs for large in-jurisdiction customers, doesn’t necessarily reduce greenhouse gases. The reason is that the clean, baseload surpluses generated during off-peak times will get used somewhere, even if it’s exported for practically nothing. And this exported power would presumably displace dirtier marginal capacity in the jurisdiction where it’s being imported. The only exception may be wind farms that are forced to dial down or shut down generation in the evening. Anybody have thoughts on this?