The Solution - Issue 24

The Solution The Quarterly Publication of Edison Energy's Demand Solutions Team

Issue 24 • January 2019

A quarterly publication highlighting relevant industry and Demand team news - keeping subscribers ahead on trends, upcoming events, industry leaders, and more.

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The Solution | Quarterly | January 2019

this issue 4

Edison Eye On: Data Center Energy Savings

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Featured Project

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Spotlight On

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Year in Review

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Insights from Supply

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What's Next

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Eye On Energy Savings Opportunities for Data Centers Through Pragmatic Testing and Engineering

In today’s world, we are bombarded with all sorts of “latest and greatest technologies,” gadgets and widgets that offer a one stop, one size fits all approach to helping us save energy. What if writing a large check wasn’t required to reap these promised energy savings, nor was it the optimal way to maximize your energy savings? What if instead, a thoughtful proven and pragmatic approach brought you the majority of, if not more, energy savings at a fraction of the cost. The jury is out... It can and it does!

THE TRUTH IS...

The energy use of all data centers is a product of their design & operation and most share similar challenges affecting their energy usage, such as; ›› HVAC cooling not driven by rack inlet temperatures ›› Unnecessarily high HVAC fan usages ›› Lack of optimal HVAC cooling distribution

One of the markets that has seen the greatest rise in the number of products claiming to save energy is the data center market. Due to the nature of these mission critical facilities and systems, the price tag for these technologies often comes at a premium cost. Some of these technologies do offer significant energy savings, but what they fail to do when delivering these savings is tell you how much of the savings can be reaped through means other than the fancy shiny technology.

Through a pragmatic field testing and engineering scope of work, the operation of the existing HVAC system can be aligned to meet the needs of the critical systems in an optimal manner, minimizing energy usage. This can be done through the crafting and subsequent completion of a four step field testing and engineering plan: ›› Field testing of existing HVAC systems ›› Dynamic field measurement and data logging ›› Implementation plan for low cost optimization ›› Measurement & Verification Plan & On-going Cx Would you buy a new car to save on your gas bills because your gas tank has a leak? Or would you fix the issue at hand? Fixing your gas tank gives you instant savings as well as a true baseline to evaluate the value of a new car. The same goes for your facility and specifically, your data center.

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The Solution | Quarterly | January 2019

DATA CENTER ENERGY CONSUMPTION According to the US Dept. Of Energy Federal Energy Management Program (FEMP), data centers can consume up to 100 times more energy than a standard office building. Often, less than 15% of original source energy is used for the information technology equipment within a data center. ›› For more data center energy saving tools and resources, click here.

Q&A Is it possible to incorporate present day, state of the art, data center energy efficiency features into existing data centers in order to achieve energy and cost savings, as well as reductions in emissions?

The “clear” and concise answer to this question is YES and NO. First, the bad news. It is much easier to incorporate energy efficiency best practices on a “clean sheet” in greenfield data centers as compared with older data centers. The potential for disruption and associated cost is very high in the implementation of certain measures in existing data centers that may impact the basic configuration and architecture of the IT equipment. For instance, implementation of optimal hot/cold aisle depends on integrating IT rack design with the HVAC equipment, which is very difficult and disruptive to implement after the fact. A very careful risk assessment needs to be conducted on any measure.

The good news, however, is that depending on each site’s configuration, there will typically be several measures that can be fairly easily implemented. We have found that it is typically possible to improve the site’s PUE (power utilization effectiveness) to in the range of 1.4 to 1.7.

PUE is in basic terms the ratio of total data center energy efficiency to the power drawn by the IT equipment, so a lower PUE is better. Although this is worse than can be expected in an optimal new design, it is often times about half the way there as compared with the existing data center operation.

What are some of the typical opportunities in existing data centers?

It is critical to carefully evaluate all measures for potential adverse impact to the data center, and particular measures are highly site specific.

Here are some of the measures that we have successfully identified and implemented in the sites that we have worked with: ›› Implement a type of economizer (free-cooling) if it does not exist ›› Optimize existing economizer operation ›› Air-flow management (in all its various forms) ›› Controls upgrades to optimally manage redundancy and diversity, and control set points ›› UPS efficiency upgrades ›› Lighting efficiency upgrades and lighting controls (often overlooked)

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Featured Project Washington Adventist White Oak Medical Center Central Utility Plant (CUP) NOVEMBER 2018

Progress continues at the site of the new White Oak Medical Center Central Utility Plant. Edison Energy was contracted to assess the capacity and asset arrangement for a new 1.2 MW CUP to be built as part of a new hospital campus. Our team was also selected to provide building construction, equipment procurement, and the installation of utility and all ancillary equipment including boilers, chillers, emergency generators and a CHP generation plant for the hospital.

See below for some project progress photos over the past few months.

DECEMBER 2018

JANUARY 2019

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The Solution | Quarterly | January 2019

Spotlight On Edison Energy Collaborates with the RMI Business Renewables Center (BRC) Risk Mitigation Report Executive Summary Available Now! Our team had the opportunity to collaborate with the BRC in developing the "Corporate Purchasers Guide to Risk Mitigation", which details risk mitigation tools and strategies for corporate leaders.

Read more on our website.

Creating Competitive Advantage Manufacturing in Focus Magazine Edison Energy was recently featured in the December 2018 issue of Manufacturing in Focus magazine.

The article, featuring an interview with CEO Jay Zoellner, highlights Edison Energy's role in creating competitive advantage for our customers through by identifying their energy risk and creating a portfolio solution to minimize that risk.

Check out the article here.

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Year in Review A look back at noteworthy projects, publications, happenings from 2018.

DEMAND SOLUTIONS & INSTALLATIONS ›› How Building Systems Can Function at Peak Efficiency with Fault Detection and Diagnostics Analytics ›› Edison Energy partners with NYSERDA for free P-12 Benchmarking Program ›› Breaking ground and topping out at the Adventist Healthcare White Oak Medical Center Central Utility Plant (CUP) site ›› Blueprint For Efficiency: New York's 80x50 Plan ›› A Landmark of Culture and Sustainability: Lincoln Center’s AwardWinning Corporate Energy Management Program

RENEWABLES & SUSTAINABILIT Y ›› University at Buffalo Spearheads Clean Energy Initiative ›› Renewables Advisory Summer 2018 Market Report Please click here to contact Emily Williams, Sr. Director of Energy Markets & Sustainability, and request a copy of the report

›› Renewable Energy World's Solar 40 Under 40 ›› Bloomberg – From RECs to RE100! ›› Supporting Novartis in 100 MW Virtual Power Purchase Agreement ›› Boston University's 48.6 MW Wind Power Purchase Agreement ›› University of Richmond and the Road to Carbon Neutrality ›› Retail Industry Leaders Association (RILA) blog on setting Renewable Energy Goals

SUPPLY SOLUTIONS ›› Advanced Energy Workers for Ohio ›› What is Real Savings When it Comes to Energy Expenses? ›› How to Choose the Best Natural Gas Deal That Fits Your Business

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The Solution | Quarterly | January 2019

We pride ourselves in giving back to our communities & those around us. Here are some of the organizations we've supported this year.

SPECIAL OLYMPICS NEW JERSEY ›› The sixth annual One More Tri triathlon benefiting Special Olympics New Jersey took place at the end of the summer in Asbury Park. This year's event raised over $70,000!

MOVEMBER FOUNDATION ›› Our Boston team raised $2,300 as part of the Movember Challenge (5 million participants globally in 2018). The Movember Foundation addresses some of the biggest health issues faced by men: prostate cancer, testicular cancer, and mental health and suicide prevention

JORDAN'S CROSSING RESOURCE CENTER ›› Our Dublin, Ohio office collected over 50 coats, 15 hoodies and sweaters, and numerous hats, gloves, scarves, and socks as part of a coat and warm winter items drive. Items were donated to Jordan's Crossing, a non-profit organization that helps those in need in Columbus’ Hilltop neighborhoods by providing meals, clothes, basic health care services, vocational training, sobriety mentoring, and many other services to help individuals and families get back on their feet.

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Insights from Supply NATURAL GAS MARKETS 2018 in Review So far 2018 was an interesting year for natural gas.

This time last year, in mid-December 2017, much of the U.S. was basking in a much warmer-thannormal December. In fact, in October last year, NOAA was projecting a warmer-than-normal winter for 2017-18. Natural gas inventories were about 200 Bcf below year-ago levels and 2018 natural gas contracts were setting new lows.

However, just three weeks later, everything changed! Most people in the Midwest and Northeast had learned what the term “bombcyclone� meant and many areas had experienced record low temperatures and record snowfall in parts of the east and northeast. The February 2018 natural gas contract had rallied from just $2.63/ MMBtu on December 15th, 2017 to $3.16/MMBtu on January 15th, 2018. It eventually settled at $3.63/

MMBtu. Meanwhile, the year-on-year storage deficit had ballooned to 415 Bcf. We ended last winter with a storage inventory of 1.35 Tcf which was nearly 700 Bcf below the year prior. However, beginning with the Bomb Cyclone in late December last year, the market experienced bullish weather almost continuously right up to the end of this past summer. Last spring began with colder-than-normal weather which drove up heating demand and then the last month of spring was significantly hotter-than-normal which boosted demand for electricity (and natural gas) for airconditioning. By the end of April, the year-on-year storage deficit had peaked at 913 Bcf. Even with record production in 2018, storage inventory levels are still below average. Current inventory levels are at 2.77 Tcf as of December 14th, which is 697 Bcf below year-ago levels. Today, the January 2019 contract is trading near $3.78/MMBtu which is reflective of the relatively low inventory levels with most of winter still ahead of us.

Natural gas production steadily increased throughout 2018. Today, at 97.5 Bcf/d, production is 9.3 Bcf/d higher than last December. However, demand kept pace with the increasing production.

Demand for power generation in 2018 was significantly higher than in any previous year and exports are now approximately 3.3 Bcf/d higher than last year.

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PETROLEUM MARKETS 2018 in Review What a difference a year makes! Last year at this time, crude oil had been on a bull run that saw a whopping 35% increase in just over five months; it began from a low of $42.53 in July 2017 and steadily rallied every month right up to the expiration of the January 2018 contract which settled at $57.46/bbl.

Thanks, in part to continued production cuts by OPEC and Russia, the bull run would continue well into 2018. A strong global economy, weak inventory levels, and trading sanctions on Iran have provided support all year long with crude prices finally peaking in early October (this time without the help of destructive hurricanes), at nearly $77/bbl.

Last spring, domestic crude inventories were over 100 million barrels below year-ago levels. The rapid buildup of inventory levels in the past few months coincides with the sharply declining prices.

In the last two months, we have seen NYMEX crude prompt month prices fall from the 2018 peak of $76.41/bbl to a low in the past week of $46.24/bbl.

That is a 40% decrease in just over 53 trading days.

In fact, Tuesday’s closing price of $46.24/bbl was the lowest close since August 2017. The January 2019 contract settled on Wednesday at $48.17/bbl and this morning the February contract (now prompt) is trading below $46/bbl.

Strong global production has been eroding support for crude for the past several months. In Q32018 global oil production surpassed 100 MMbpd for the first time ever. U.S. production has been steadily increasing as well. Since January 2017, U.S. production has increased from 8.8 MMbpd to over 11.6 MMbpd. Likewise, crude inventories have been increasing. After a draw of only 500,000 barrels last week, current crude inventories in the US stand at 441.5 million barrels, which is (for the first time in more than two years) 5 million barrels above yearago levels.

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Natural Gas Storage Report 1/17/2019 for the week ending 1/11/2019

U.S. Natural Working Gas in Underground Storage

4,500 4,000 3,500 3,000 2,500

Regions

East Region

Weekly

Current

Year Ago

5-Year Avg

Change

Storage

(07/20/17)

(2013-17)

Bcf

Bcf

Bcf

YOY ∆

Bcf

5-Yr ∆

(31)

620

621

0%

666

-7%

2,000 1,500 1,000 500 0

1

4

7

10

13

16

GAS STORAGE RANGE (1994-2018)

Midwest Region Mountain Region Pacific Region South Central Region

(34)

729

726

0%

769

-5%

(5)

127

159

-20%

164

-23%

19

22

25

28

31

34

5-YEAR AVG (2014-2018)

37

40

43

2017

46 2018

49

52 2019

Weekly Storage Change vs Previous Year & 5 Year Average 150

(8)

196

245

-20%

264

-26%

(4)

861

859

0%

997

-14%

(81)

2,533

2,610

-3.0%

2,860

-11.4%

100 50 0 -50 -100

TOTAL

-150 -200

Historical Comparison of Data

-250

Expectations

- 89 to -80 , 3 Bcf weaker than expected

-300

5 Year Avg

- 223 Bcf , 142 Bcf weaker than 5-Yr Avg

-400

Previous Year

- 183 Bcf , 102 Bcf weaker than Prev Yr

-350

Jan-19

5-YEAR AVG (2014-2018)

Feb-19

Mar-19

Apr-19

May-19

2019

Jun-19

2018

Jul-19

Aug-19

COMMENTARY The EIA reported a withdrawal of 81 Bcf this morning, decreasing total U.S storage inventories to 2,533 Bcf. Market expectations for the withdrawal varied between -89 and -80 Bcf with a consensus of -84 Bcf. Going into the data release, the prompt contract was trading at $3.518, $0.134 higher than yesterday's close of $3.384. The 12-month strip was trading at $3.006, $0.048 higher than yesterday's close of $2.959. Immediately after

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storage was announced, the prompt contract (February) decreased by $0.036 and the 12-month strip decreased by $0.011 to $3.482 and $2.995, respectively.

The market decreased as a result of the withdrawal being weaker than the general market expectation.

Currently, the storage level is 3.0% behind last year and 11.4% behind the 5-year average.

Energy Perspective WEATHER NOAA’s 6-10 day weather outlook predicts below average temperatures for the majority of the country including the Plains States, Texas, Mississippi Valley, Great Lakes Region, Northeast, Appalachians, and Atlantic Corridor. The highest probabilities of below average temperatures, at 70%, are centered around the Heartland region. The Southeast and the Rocky Mountain States are forecasted to experience normal temperate during this period while the Pacific North and Southwest are forecasted for above average temperatures. The highest probabilities for above normal temperatures lie on the cost of the northern portion of California, with a 50% probability.

Another storm is expected to hit the West Coast Thursday bringing rain to California and the Pacific Northwest and snow to higher elevations areas as well as the Rocky Mountain States. The storm is expected to travel across the country leading to widespread snow and ice across the Plains, Midwest, and Northeast over the weekend. This system will also bring cold air to the Plains and Midwest.

THIS WEEK IN NATURAL GAS The prompt month February NYMEX contract closed Friday at $3.099; the 12-month strip closed at $2.901 and the winter strip closed at $3.032. Last week the EIA reported a withdrawal of 91 Bcf for the week ending Friday, January 04, 2019. Total storage inventories now stand at 2,614 Bcf, 204 Bcf lower than this time last year, and 464 Bcf below the fiveyear average.

According to the EIA, total storage inventories in each region are: ›› 651 Bcf in the East (-10% below 5-year avg.) ›› 763 Bcf in the Midwest (-9% below 5-year avg.) ›› 132 Bcf in the Mountain (-24% below 5-year avg.) ›› 204 Bcf in the Pacific (-27% below 5-year avg.) ›› 865 Bcf in the South Central (-19% below 5-year avg.)

THIS WEEK IN ELECTRIC Opposite of last week, nearly every hub tracked in this publication gained strength with the same exception of SP-15 hub. ERCOT-S hub saw the largest gain in pricing with a jump of $0.80 per MWh or a 1.97% change in weekly pricing. Houston and PJM-W hub both showed the next highest increase in pricing, adding $0.75 per MWh to each. PJM-W hub displayed the greatest upward change, with a 2.29% increase from the previous week’s pricing.

WCMA Massachusetts and Northern Illinois saw increases of $0.70 and $0.35 per MWh respectively.

SP-15 prices showed the most movement with a change of –5.37%, and a decrease of $2.35 per MWh.

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What's Next?

Catch us at these upcoming events.

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WIND POWER FINANCE & INVESTMENT SUMMIT

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WRISE LEADERSHIP FORUM Denver, Colorado • 2/19 - 2/21

San Diego, California • 2/5 - 2/7 Emily Williams, Sr. Director of Energy Markets & Sustainability, will be speaking on the panel: The Corporate Market - How the Market and Structures are Evolving

Edison Energy will be a Reception/Lunch Sponsor at this event. → Click here to register

→ Click here to register

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GREENBIZ 19 Phoenix, Arizona • 2/26 - 2/28

Edison Energy will be attending GreenBiz 19. → Click here to register

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WASBO FACILITIES MANAGEMENT CONFERENCE Wisconsin Dells, Wisconsin • 3/7 - 3/8

Edison Energy's Demand Solutions team will be exhibiting at this year's Wisconsin Association of School Business Officials Facilities Management Conference. → Click here to register

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SMART ENERGY DECISIONS INNOVATION SUMMIT Houston, Texas • 3/11 - 3/13

Edison Energy is a Silver Sponsor for this year's Innovation Summit. The Smart Energy Decisions Innovation Summit is a proven platform where executives responsible for energy, sustainability, and facility management learn, network and do business. → Click here to register

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MICROGRID GLOBAL INNOVATION FORUM (NORTH AMERICA) Washington, DC • 3/18 - 3/20

Edison Energy CEO, Jay Zoellner, will be presenting at this year's event. His presentation, "Managing Complex Energy Portfolios, Risk and Capital", will detail the methodology being employed by market leading corporations to change the way energy is managed, capital is deployed and sustainability goals are achieved. He will review a use case of a company's U.S. operations to highlight how energy management decisions can be viewed differently through the lens of Treasury, Finance, Sustainability, Energy, and Facilities. → Learn more about Jay's presentation

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GLOBALCON Boston, Massachusetts • 3/20 - 3/21

Sr. Regional Director, Saverio Grosso, will be moderating a panel on March 21st at 11am on "Commissioning M&V" → Click here to register

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EEI SPRING NATIONAL KEY ACCOUNTS WORKSHOP Seattle, Washington • 4/7 - 4/10

Edison Energy will be a General Refreshment Break Sponsor for the spring EEI Key Accounts Workshop. → Click here to register

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Energy is the largest unaddressed risk most companies face and can exceed foreign currency, interest rate and other operational risks.

We create competitive advantage for market leaders by quantifying this risk and designing the portfolio solution to protect shareholder value threatened by complex energy policies, technological advancements, and new products.

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