The Top 5 Ways to Save on Global Adjustment Fees

Here are some of the most effective ways for Class A customers to cut costs.
17 March, 2022 by
The Top 5 Ways to Save on Global Adjustment Fees
T&T Power Group.

Customers who participate in Ontario’s Industrial Conservation Initiative (ICI), pay Global Adjustment fees based on their percentage contribution to the top five peak hours of energy use in Ontario over a 12-month base period. Customers who opt into this initiative are known as “Class A,” and for this particular Class, Global Adjustment fees can make up more than 60% of their electricity costs if no mitigation strategy is executed.

In this article, we will evaluate the five most common approaches to reducing Global Adjustment fees for Class A customers.

1. Reduce your peak demand by reducing your average demand

For Class A customers, Global Adjustment fees are determined by how much electricity they use during the top five peak hours in system-wide demand each year. While each of the other strategies included in this article rely on accurately predicting when these peaks will occur, reducing your electrical indiscriminately will result in a lower demand during the top five peaks as well. While the reduction in global adjustment fees may not be nearly as substantial compared to the more clinical approaches below, using less electricity each month on average will result in considerable savings overall.

Common methods to reduce your average electricity demand include retro-fitting LED lights, as well as implementing smarter climate controls and improvements to the building envelope.

2. Predict peaks for free and manually turn off what you can

Ontario’s Independent Electricity System Operator (IESO) publishes tools and information to help participants in the Industrial Conservation Initiative (ICI) identify when a peak hour may be occurring, or is likely to occur. Savvy business owners can keep an eye on the IESO’s free Peak Tracker and get a reasonable estimation of the province’s predicted demand in the coming hours and days, allowing them to curtail their facility’s demand from the grid accordingly.

Businesses that rely on the IESO peak tracking tool typically shed load by manually turning off as many non-essential motors, machinery, and other power-hungry devices as possible. While this approach can yield significant savings in Global Adjustment fees, it requires a lot of effort and attention to execute effectively. Manually shutting off most loads in a facility is also quite disruptive, and due to the limited insights available through the IESO peak tracker, you may find yourself shutting down for 15-20 “false peaks” each year and, even then, still missing one or two of the real ones.

3. Sign up for a more accurate peak notification service

Relying solely on the IESO peak tracker can be hit-and-miss, resulting in many businesses opting to leave the science of peak prediction the experts. By signing up with a private peak-notification service, you will simply receive timely notifications of when a peak is likely to occur, leaving you with more time to focus on running your business.

The companies that provide these services perform their own complex analysis and modelling of the electricity system, compensating for many additional factors such as the weather and the anticipated actions of other participants in the ICI. Because of this, they can predict the top five peaks with a much higher degree of certainty than you could come to on your own, and drastically reduce the number of “false peaks” that you will have to curtail for each year.

Considering that each peak missed could cost up to $100,000 per MW in demand, the cost of signing up for a premium notification service is well worth it, and many come with performance guarantees to give you additional peace of mind.

4. Switch your facility to battery power during peak hours

If manually shutting down equipment in your facility isn’t an option due to safety, operational requirements, or other complications - then switching some or all of your load to battery power during the top five peaks can be a sensible option. The transfer can usually be performed rather seamlessly – allowing your facility to continue operations “business as usual” while still reducing your demand on the grid.

Apart from the high capital cost required to have a battery-based peak shaving system installed, the main drawback to this approach is the limited discharge time available to work with. In part due to an intended result of the ICI, peaks have become more difficult to predict. As more and more large energy consumers engage in peak shaving and curtailment activities, the province’s demand profile becomes flatter - and the exact hour in which a top five peak will occur becomes less certain. This means that even with the best peak notification service providers, participants are being told to curtail for longer periods of time to mitigate the risk of missing a peak. A typical battery system for peak shaving will have at most two hours of discharge available, leaving little margin for error.

5. Use a generator

Many commercial, institutional, and industrial buildings already rely on a conventional generator for back up during power failures. Familiarity with the technology may be one of the reasons why it is still the most common approach to reducing Global Adjustment fees, but cost and reliability are the most compelling factors.

Whether you choose to rely on your own interpretation of the IESO peak tracker or opt to use a peak notification service, installing a generator to power your facility whenever a top five peak is likely to occur is an easy decision. Compared to batteries, a generator is the low-cost option - and unlike a battery, it will happily run for hours or all day if need be, helping you guarantee that no peaks are missed. As an additional perk, a peak shaving generator can also provide back up power to your entire facility should there ever be a blackout.

To learn more about how to mitigate Global Adjustment fees, check out our Complete Guide to Ontario's Global Adjustment fee.

Ready to start saving significantly on Global Adjustment fees?

Our team of experts at T&T Power Group is ready to design a turnkey peak shaving system to suit your needs.

Contact us today for your free consultation.

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