About 15% of the total generation capacity in Ontario is required because of peak demand for 50 out of the 8,760 hours a year. In other words: Billions of dollars of capital cost are spent in developing the capacity to prepare for and supply demand which occurs only 0.57% of the time. It also means that those plants that are on stand-by for the peak are idle most of the year.
In the 1970s the utilization rate of electric generation assets for North American utilities was 73%, but it has steadily declined to 53% today. What caused the precipitous fall? It's simple: air conditioning began to get widely adopted in the 1970s.
Ever since, air conditioning has been driving the cost of North America's electric grid. Utilities have to build to peak demand for hot summer days when there is heavy air conditioning demand.
Supplying electricity when demand is high costs more because a utility must fire up standby plants or buy power from other utilities on the spot market, which can costs hundreds of times more per kilowatt hour. Each incremental kilowatt at peak cost significantly more than the last.
A new technology promises to change this: the Ice Bear. The Toronto Dominion Bank just installed two Ice Bears in a London, Ont., branch and Mountain Equipment Coop (MEC) was the first Canadian company to install four units in Burlington, Ont., earlier in 2009.
The Ice Bear uses base-load electricity at night when there's a glut of cheap power to make ice. During the day electricity demand typically peaks between noon and 6 p.m. That's when the Ice Bear kicks in turning off the air conditioning and using the ice to cool the building air.
The Ice Bear takes advantage of the unique properties of water. Heating one pound of water one degree Fahrenheit takes one British thermal unit (BTU). But to melt one pound of ice at 32°F and turn it into water at the same temperature requires 144 BTUs! So ice is a powerful thermal energy storage (TES) medium for electricity.
The Ice Bear attaches to a normal existing air conditioning system. The unit holds 1,700 litres (450 U.S. gallons) and has the cooling capacity of a five-tonne air conditioning unit operating for six hours. MEC's Burlington store installed four units, made by California-based Ice Energy.
Air conditioning and thermal loads account for 50% of peak power and a third of all electricity on the grid during a summer day. Today, there are 80 million air conditioning units in North America used by commercial and industrial businesses and annual shipments total just under four million units.
Thermal Energy Storage and the Ice Bear offer the promise of levelling the grid's demand and in the process saving taxpayers billions upon billions of dollars in avoided capital costs for new generation facilities.
Heavy hitters in the financial and electric utility communities recognize the game-changing nature of this technology: Goldman Sachs led Ice Energy's 2007 private financing and Bob Foster, former chief executive officer of Southern California Edison, notes that the Ice Bear "normalizes the impact of weather on the grid."
Which strikes you as a better option: Building new spare generation capacity that sits idle for 99.43% of the time, or having assets that work every single day that there is air conditioning demand? One approach will decrease utilities asset utilization rate while the other increases the efficiency of the whole system. With more than three million hours in operation, the Ice Bear and thermal storage is a very exciting technology.