||The Duke University Health System Demand Response Prospectus is a client-based Masters
Project that explores the profitability and environmental impacts of enrolling Duke
University Health System and Duke University into Duke Energy’s PowerShare demand
Demand response programs are mechanisms used by utilities to decrease energy demand
during high-usage periods (e.g. hot days when air conditioning use is highest) by
incentivizing their customers to reduce grid consumption for a limited time. This
temporary demand reduction results in cost savings to utilities because it allows
them to avoid using their most inefficient and expensive power plants.
In our project, we analyze the economic, environmental, and regulatory feasibility
of using Duke University and Duke Medicine emergency generators in a Duke Energy demand
response program called PowerShare, more specifically the Generator Curtailment Option.
Duke Carbon Offset Initiative credits, a Duke University funding mechanism to reduce
carbon dioxide emissions, were also considered as a potential revenue source. In order
to conduct the analysis, an MS Excel and Visual Basic model was created to calculate
the impacts of enrollment. The model provided to the client was designed to offer
an easy user interface to quickly conduct the analyses. It was also specially designed
to offer the flexibility to incorporate future changes in the energy market and user
The model results indicated that, while feasible, demand response enrollment is not
currently attractive from environmental and financial perspectives. The financials
are poor for two mains reasons. First, expected net revenues are strictly negative
because PowerShare enrollment requires Duke University to re-enroll into paying a
demand side management rider (DSM) to which they are currently exempt. The DSM fee,
although minimal individually, amounts to an astronomical fee for large consumers
like Duke University and Duke Medicine since it is charged per unit of energy purchased.
Second, PowerShare curtailment compensation is lower than current cost of diesel fuel.
From an environmental perspective, PowerShare is also not a favorable option. Instead
of offering a carbon emissions reduction opportunity, PowerShare participation is
actually expected to increase the amount of global carbon emissions because Duke University
generators emit more carbon than Duke Energy’s natural gas peak usage plants.