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KUNTZ ELECTROPLATING INC. |
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It’s not every day you have the opportunity to earn up to $800,000 annually by not consuming electricity – but Kuntz Electroplating Inc. is facing that very scenario. A family-owned and operated business since 1948, Kuntz is one of North America’s premier metal finishing operations for original equipment manufacturers of steel and aluminum products. Headquartered in Kitchener, Kuntz has 600 employees responsible for the design, development and application of electroplating products and specialized performance coatings for clients like Harley-Davidson, General Motors and Ford. “Our business is very energy-intensive, so electricity is a considerable cost,” said Robin Leach, Environmental Manager for Kuntz. “It is absolutely essential that we have a reliable supply of energy at all times.” This need for reliability prompted the company to invest heavily in back-up generation in the mid-‘90s. Since that time, further investments have been made, and the facility now has five clean-burning natural gas-fired generators with a total installed capacity of 4.1 MW. Waste heat from the electricity-generation process is captured through low-pressure boilers that produce steam used for their plating process. The generators were first installed at a time when natural gas was relatively inexpensive. Since that time, Kuntz’s calculations have indicated that generating their own electricity no longer made financial sense. A new approach was needed, which was provided by the OPA’s Demand Response 1 (DR1) program. DR1 empowers customers to reduce their electricity consumption in response to emergency, peak load, and high price conditions on the electricity grid. Under DR1, Kuntz generates electricity only when asked to by the OPA, based on price and demand. The net benefit to Kuntz in the first eight months has approached $250,000. After months of participation in the program, Kuntz is now investigating DR3, the latest initiative in the OPA’s ongoing efforts to stimulate demand management, conservation and generation among Ontario’s high-volume electricity consumers. DR3, “Contractual Response Peak Load Shedding,” has been designed to provide the OPA with additional contractual demand response capability to alleviate electricity supply constraints on the power system managed by Ontario’s IESO. Eligible participants, who must have a demandresponse capability in excess of 5 MW, receive payments for their ability to cut consumption, on demand, when the IESO identifies risks to local or general system reliability. While Kuntz has not yet signed on the dotted line, Chief Operating Engineer Keith Laycock feels there is considerable upside to participating in DR3. “We have worked very closely with our demand response partners, Energent, to quantify the impact of participating in DR3,” he said. “On the surface, the numbers are pretty compelling.” According to Laylock’s calculations, Kuntz stands to earn up to $800,000 annually over a five-year term. For its part, Kuntz would agree to shed 5 MW of load from the provincial electricity grid, either through conservation or generation, when requested by the IESO for a maximum of 200 hours per year. The company would also agree to be on stand-by for up to 1,600 hours annually. Despite the impact on the bottom line, however, the benefits of demand response are not purely financial. It is a powerful tool that enhances system reliability, assures fair and competitive pricing, and supports environmental sustainability. To achieve the 5 MW minimum generation required by DR3 would require a considerable investment in new generation. “Even so, the financial side of DR3 looks very attractive,” Laycock said. “While it isn’t a program for small manufacturers, it presents a great opportunity for companies like Kuntz.” |
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