Aggregation

Aggregation

Good Energy wants you to know the truth about aggregation:

Aggregation is a means of combining the loads (power requirements) of more than one electricity account with the goal of shopping the electricity supply market to get a better price for power. The idea is that all members of an aggregation pool would benefit from lower prices made possible by a large economy of scale.

When appropriate, Good Energy uses this technique to help customers save money on electricity supply costs in deregulated markets. As illustrated below, however, if the process is not performed properly, electricity demand aggregation does not always help all customers save money.

Here's why: Not all consumers of power are equal in the eyes of utility companies. From the utility's viewpoint, the best customer uses a constant amount of power all day long, throughout the year. This means that the perfect customer's peak demand for electricity is EQUAL to the customer's average demand for electricity. This customer would have what we call a 100% "load factor".

Such customers are extremely rare because in the real world, consumers of power will turn off their lights and equipment when appropriate, leading to varying consumption levels of power throughout the day.

office electricity demand

An office building might have a load factor of 49% because the vast majority of power to operate such a facility would be consumed during the day, while office tenants are in the building.

hotel electricity demand

A hotel might have a load factor near 84%, (which is much better from a power-shopping standpoint), because occupants of the facility would be using power from the early morning, throughout the day, and into the night.

theater electricity demand

A theater might have a load factor similar to that of an office building, (48%), but most of the power consumed by a theater would be immediately before, during and immediately after the performance, (in the evening), which means that the peak demand for power would not coincide with that of the office building.

office theater aggregation

Non-coincident peak demand for power is sometimes the key to successful aggregation. For example, if we add up the usage for the office building and the theater, we get a combined load factor of 58%, asignificant improvement over the customers' individual load factors. Both of these customers will receive a better deal for power supply if they shop the power supply market as one.

theater hotel aggregation

However, if the hotel and the theater were to shop for power together, the theater would get a better deal, but the hotel might be shooting itself in the foot. The combined load factor for the hotel and the theater would be 69%, which is respectable, but a far cry from the hotel's existing load factor of 84%

Although these examples are simplistic, they serve to illustrate the point that aggregation of electricity demand must be performed correctly to protect the interests of all parties. Good Energy fights for consumers of power to make sure they are getting the best deal possible in any power market, and will use aggregation as a means to get our customers the best price for power only when it makes economic sense to do so. Please contact a Good Energy professional today at (866) 955-2677 to find out what we can do to help your business save money on electricity costs.