The Industrial Conservation Initiative (ICI) is a great way for Ontario businesses to save money on their electricity. Simply follow these 10 easy steps to maximize your savings in the program.
The Industrial Conservation Initiative (ICI) is a great opportunity for large businesses in Ontario to reduce their electricity costs by up to 70%.
For many businesses that qualify for the ICI program, this program may seem daunting at first. This article will outline the ten steps you can follow to see if the ICI program is right for your business.
- Understand the basics of the ICI Program
- Check if your business qualifies
- Research the specifics of the ICI Program
- Access your interval usage information
- Opt-in to the ICI Program
- Choose your prediction provider
- Build your curtailment strategies
- Run a test peak day with your staff
- Begin saving money
- Track your results
1) Understand the basics of the ICI Program
The Industrial Conservation Initiative (ICI) is a government program that was introduced by the Independent Electricity System Operator (IESO) to reduce the costs of managing Ontario’s electricity infrastructure.
The purpose of this program is quite simple. Since it is very difficult to cost-effectively store electricity, nearly all electricity grids need to be built to meet the highest electricity demand of the grid, even if that level of demand only lasts for a single hour. For the rest of the year, the grid has excess capacity.
As a result, demand response programs, such as the ICI Program, are introduced to incentivize businesses to reduce their usage during periods of peak usage. This then lowers the peak usage of the entire province during these peak hours and allows the grid to be built smaller – reducing the total investment required in electrical infrastructure.
The ICI program changes how you are charged for Global Adjustment (GA), a cost which is roughly equal to 70% of electricity bills in Ontario. Rather than being charged a $/kWh that you consume each month, you are charged a percentage of the Province’s total costs based on what percent of the Province’s electricity usage you consume during the highest five peak-hours each year.
For example, if you are normally 1% of the Province’s electricity usage, you would be expected to pay 1% of the Province’s Global Adjustment costs each month. However, if you were able to reduce your usage during the five peak-hours to 0.5% of the Province’s electricity usage, your Global Adjustment costs would be cut in half.
Through this program, businesses in Ontario can reduce their electricity costs by up to 70%. Depending on the size of a business, this can easily equal millions of dollars in potential savings.
2) Check if your business qualifies
Now that you understand the basics of the ICI Program, the second step is to see if your business qualifies. The ICI Program was initially introduced in 2010 with only a handful of participants. Since then, the program has expanded rapidly, with several thousand businesses in Ontario now able to participate in the Program.
Simply put, there are only three main requirements needed to participate in the ICI Program: your business must be located in Ontario, your monthly peak usage must be on average 500KW, and you must primarily be a manufacturing business or greenhouse. However, there are actually three different levels of participation in the ICI Program as outlined below.
Level 1 Class A Consumer
These are the companies that have been members of the ICI Program from the beginning. They are automatically included in the Program and must actively request to opt-out of the Program if they wish.Requirements:
- Ontario business.
- Average monthly peak load greater than 5,000KW.
Level 2 Class A Consumer
These are companies that have gained access to the ICI Program starting in 2016 and 2017. They must opt-in to the Program but otherwise have no major restrictions on their ability to benefit from the savings.Requirements:
- Ontario business.
- Average monthly peak load between 1,000KW and 5,000KW.
Level 3 Class A Consumer
These are companies that have recently been permitted to access the ICI Program starting in 2017. They must opt-in to the Program and must also meet the following requirements.Requirements:
- Ontario business.
- Average monthly peak load between 500KW and 1,000KW.
- Designated as a manufacturing business or greenhouse operation as described by their NAICS code.
To see if your business qualifies, you can either ask your utility or you can analyze your historical electricity bills. As long as your average monthly peak usage is greater than 500KW and you are a manufacturing or greenhouse business you can qualify for the ICI Program.
Note that if your business has multiple meters at the same property, for example you have 4 accounts in the same building, it is possible to merge these meters into a ‘virtual account’ for the ICI Program. As a result, if each account uses 200KW they would not be able to join the ICI Program on their own, but by merging them into one virtual account, your peak load would be 800KW and this virtual account could opt-in to the ICI Program.
3) Research the specifics of the ICI Program
Once you understand the basics of the ICI Program, and you have verified that your business can qualify for the Program, it is now important to understand some of the more complex challenges in the Program.
This includes understanding the timing of the Program with its June 15th opt-in deadline, understanding the previous peak seasons including how to set your peak threshold, and understanding why it is becoming increasingly difficult to predict when these peak hours are going to occur.
EnPowered has previously outlined these issues in greater detail in other documents. You can read our ICI Whitepaper here and you can read our 5-part series on the Ontario electricity market here, of particular interest are parts 4 and 5 which outline how it has become increasingly difficult to predict the peaks in the ICI Program.
4) Access your interval usage information
The fourth step is to access your interval usage information, which is your electricity usage at a detailed level (at least hourly, but can be every 5 or 15 minutes). You will need this data to calculate your Peak Demand Factor which is needed to see how much money you can save in the ICI Program.
You can either ask your utility to provide you with your Peak Demand Factor directly, or you can use your interval usage data to calculate your potential savings.
Alternatively, you can simply reach out to EnPowered here and we can complete these calculations for you free of charge.
5) Opt-in to the ICI Program
After determining your Peak Demand Factor, and verifying that you will save money in the ICI Program this year based on your usage in the previous 5 peak hours, you can now opt-in to the ICI Program. To opt-in, you simply need to ask your utility for an opt-in form which must be signed and returned by June 15th.
Most businesses will be able to save money simply by joining the ICI Program, even without requiring any significant curtailment, and so it is usually recommended that businesses join the Program. That being said, it is important to first calculate your expected savings before opting-in to the ICI Program as some businesses may find that their electricity costs increase by joining.
6) Choose your prediction provider
Arguably one of the most important steps is to choose your peak prediction provider for the ICI Program. Depending on your strategy and what data you rely on, you could be curtailing electricity usage as little as 5 times per year or as much as 40 times per year. In general, there are three options available.
Publicly Available IESO Predictions
The first and simplest option is to use the publicly available IESO predictions that are given through the IESO Peak Tracker, which can be found here. These predictions are used by most companies in the ICI Program, and are also used by many of the other prediction providers in the Province. The IESO Peak Tracker is good to provide a high-level view of usage in the Province, but cannot be relied upon to predict the exact peak hour. At best, it will warn of potential peak days approximately 40 times per year. Rather than checking the IESO website every day, you can also receive email notifications of the IESO Peak Tracker using EnPowered’s free basic prediction service here.
The second option is to use one of many different peak prediction providers in the Province of Ontario. These companies usually still base their predictions on the IESO Peak Tracker, but help to reduce the number of peak calls using their own models. These companies are still unable to predict the actual peak hour, and often still make 20-30 calls per year.
The third option is to use a peak prediction provider like EnPowered to predict the exact peak hour, enabling you to maximize your savings in the ICI Program while minimizing the impact to your operations. EnPowered uses complex machine learning algorithms to not only predict the usage in the Province of Ontario, but also to predict how the market will respond during peak days. This allows us to predict the exact peak hour over 24-hours in advance. What this means to your business is that you can curtail usage for 1-2 hours each peak day, instead of 4-6 hours. In addition, it also means that your business will only need to curtail its usage 5-10 times per year instead of 20-30 times per year. For more information, see here.
7) Build your curtailment strategies
Based on the length of the prediction windows provided by your peak prediction provider (number of hours you need to curtail), your business should create both a moderate and a strong curtailment strategy.
The moderate curtailment strategy would include curtailing all non-essential equipment such as external lighting, extra chillers, or recycling equipment. This strategy would be used for most peak days, especially when you are not confident that it will become one of the top 5 peak days each year.
The strong curtailment strategy, on the other hand, would include curtailing as much equipment as possible. This usually means curtailing production-level equipment and disrupting your operations. This strategy should only be used when you are very confident that this day will remain as one of the top 5 peak days in the year.
By developing these two peak strategies, it allows your business to maximize its savings in the ICI Program while minimizing the impact to your operations.
8) Run a test peak day with your staff
Once you have chosen your peak prediction provider and developed your curtailment strategies, it is a good idea to run a test peak day – similar to a fire alarm. The purpose of this test day is to ensure that all your systems are in place and working properly, and that your staff understands what to do during a peak day.
EnPowered normally recommends that you run this test peak day near the end of May, and that you use this day to test both your notification tools and your actual curtailment efforts with your staff.
9) Begin saving money
After you join the ICI Program, you will begin to receive your new Global Adjustment rate starting July 1st. This new rate will appear on your electricity bill and will replace your old Global Adjustment line-item in your bill.
10) Track your results
To understand the impact of the ICI Program on your bottom-line, it is important to track your Global Adjustment rates, costs, and savings each month. You can either choose to do this yourself or have a provider like EnPowered do it for you.
To calculate your savings yourself you would need to compare your new rate with your old rate every month. Your new rate is easy to find, it is simply the rate that appears on your electricity bill every month and is equal to your Global Adjustment costs divided by your electricity usage in kWh. Your old rate is also easy to find, simply visit the IESO website here and take the Class B Global Adjustment rate, 1st estimate, for each month. Comparing these two rates will give you your savings.
Alternatively, providers like EnPowered will track your savings in the ICI Program for you as part of their normal services. This includes tracking your electricity usage, as well as your old and new Global Adjustment rates, costs, and savings. All this data is then presented online in your personalized Energy Portal.
The ICI Program offers a great opportunity for Ontario businesses to reduce their electricity costs by up to 70%. It is easier for some businesses to manage the Program than others, but almost every large business can save money in the Program. If you would like more information or would like help managing the ICI Program, browse our Class A Resources here or feel free to reach out to the EnPowered team here.