Johnson Controls Buys EnergyConnect
Johnson Controls is a sustainability veteran. Back in 1885 it invented the first electric room thermostat. These days it operates in 150 countries and employs 142,000 people whose main job is to create products, services and solutions to optimize energy and operational efficiencies of buildings.
Recently the company purchased EnergyConnect as part of its drive to help customers reduce their energy consumption. EnergyConnect is a provider of smart grid demand response services and technologies. It offers building owners and operators a service in management of how much energy their buildings consume and when the energy is consumed.
Johnson Controls says this type of service is a critical feature of connecting smart buildings to the smart grid.
Energy Refuge caught up with Johnson Controls’ utility market director, Terri Laughton, to find out more about the deal and what the company’s plans are.
ER:Why did Johnson Controls choose to acquire EnergyConnect?
TL: The demand response technology offered by Energy Connect allows Johnson Controls to deliver on our vision of smart buildings. The acquisition provides a platform for new growth in a fast-growing segment and leverages the scale of Johnson Control’s installed base of customers.
ER: How do you define ”demand response?” What value does it provide?
TL: Demand response is the ability of energy users to drop electricity load when the electrical grid is at or near its peak capacity. This improves the reliability of the grid and decreases the chance of blackouts or power shortages from occurring. Demand response has been growing significantly in many part of the U.S.
ER: How does demand response work?
TL: Demand response relies on building operators reducing their electricity consumption in response to a price, capacity, or reliability signal from the electric grid or utility, communicated through a curtailment service provider (CSP).
In return for the drop in electricity consumption, the grid or utility makes payments to the CSP, a part of which is passed on to the building operator. That provides an incentive for the building operator to participate in demand response events.
ER: Is demand response available or applicable throughout the world?
TL: Demand response opportunities do exist around the world, but each market has rules and processes that are unique to its needs. Global expansion of EnergyConnect’s offering will be evaluated and an implementation plan established. Within the United States, some regions have strong demand response programs while in other areas programs are weak or nonexistent. Primarily, demand response is strong in the Northeast, Mid-Atlantic, California and Texas. Within each of these regions, the market rules are different and so the business approach varies. Currently, EnergyConnect operates in the Mid-Atlantic, Chicago area, and California.
ER: How does this demand response capability benefit Johnson Controls?
TL: EnergyConnect’s solution benefits Johnson Controls by creating another opportunity to add value to our customers. Demand response is another element that helps customers manage their energy spend. Today, if our customers want to participate in demand response programs they would have to work with another company. Now they can work directly with Johnson Controls and we can create the optimal solution for their facility that balances energy efficiency and demand response. This capability gives Johnson Controls the ability provide a larger and optimal bundle of products and services to our customers.
ER: How does this help differentiate Johnson Controls from our competitors?
TL: Many of our competitors are looking to expand into demand response, but each is approaching it differently. Johnson Controls is taking a very customer-centric approach. We believe that having an offering that is focused on the customer, giving the customer control over how and when their energy is used, fits best with our philosophy and approach to comprehensive energy solutions. Additionally, the demand response program offered by Johnson Controls will provide more than cash back to customers, it will provide a vehicle to secure and implement greater energy efficiency and facility improvements for our customers.
ER: How will the combination of Johnson Controls and EnergyConnect technologies impact utilities?
TL: Johnson Controls and Energy Connect combine demand response with automation, enabling more participation from the demand side in the operation of the grid. Automated response, implemented from a customer perspective to retain control over their operations at all times, will change the game in several ways. First, DR will become a regular part of managing energy. Instead of a handful of emergency events requiring 6-10 hour curtailment, the building systems will be able to monitor and respond to high prices whenever they occur.
A typical building in the mid-Atlantic region might provide 500 kW of peak relief during the 1,000 hours in the year when the grid is most burdened. The building technology provided by Johnson Controls and the market interface technology of Energy Connect make this scenario possible without adding any workload to the building staff. In addition, automation increases the reliability of the reduction from the grid operator perspective. Finally, automation unlocks the possibility of “fast DR,” where continuous signals between utilities and building systems interface with loads to provide additional services to the grid, such as standby reserves and frequency regulation.
These two new combinations – demand response with efficiency and demand response with automation – are important to utilities. In the first place, they support a more comprehensive approach to energy management, leading to a more intelligent demand side. From a business standpoint, this acquisition creates a new opportunity for utilities to break down conventional silos in their outreach to customers and unlock more benefits through integrated demand-side programs.
ER: What will become of the EnergyConnect brand name?
TL: The EnergyConnect name will still be utilized in the market place for the time being. You will see “EnergyConnect, by Johnson Controls.” Over the next two years, this will be evaluated and a transition plan will be implemented to the appropriate brand category.
ER: What happens to the existing EnergyConnect leadership?
TL: The EnergyConnect leadership is committed to the growth of the business and will remain in place.
Article by Antonio Pasolini, a Brazilian writer and video art curator based in London, UK. He holds a BA in journalism and an MA in film and television.
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