Calpine Generates Revenue With Real-Time Market Interface

In late 2001, San Jose-based energy producer Calpine Corp. saw an opportunity to create a set of real-time interfaces to several energy markets, with the twin goals of improving operational efficiency and gaining a competitive advantage.

The company's $136,000 IT investment has helped generate or protect millions of dollars in revenue, proving that Calpine succeeded on both counts.

The first interface, launched in January 2002, was applied to load telemetry for Calpine's industrial customers in Texas. Previously, gathering this data was cost-prohibitive. Leased-line modems and other equipment could run as high as $12,000 per customer site and take 60 to 90 days to deploy, says Barbara Kindel, Calpine's director of operations engineering services.

So the energy firm developed an approach that allows it to view customer load data and dynamically schedule those loads though a Cellular Digital Packet Data backbone with the Electric Reliability Council of Texas Inc., the agency that manages a major portion of the state's electric power grid. In some instances, Calpine uses spread-spectrum radio technology to "hop" to a local data site, says Darrell Scruggs, Calpine's manager of market operations and engineering.

Calpine was able to reduce its implementation costs per interface to $2,500 and slash deployment time to one or two days, says Kindel.

The top-line impact was even more impressive. The real-time interfaces helped Calpine capture several million dollars in new 2002 revenue from industrial customers in Texas and freed up electricity that could be sold to others, says Dennis Fishback, Calpine's CIO.

According to Zarko Sumic, an analyst at Meta Group Inc. in Stamford, Conn., Calpine's efforts reflect an increased need in the U.S. energy industry for wholesale market transparency. The ability to effectively exchange data among market participants, such as Calpine, and market operators can help participants reduce scheduling and planning time from days or hours to minutes, says Sumic. It also allows the companies to optimize dispatches to increase the payback on energy generation, he adds.

The project presented Calpine with relatively minor challenges. For the load telemetry interface effort, the biggest challenge was not knowing until Jan. 1, 2002, just how many customer sites would need interfaces, says Kindel.

11SPfishback.gif
1pixclear.gif
Dennis Fishback, Calpine CIO
1pixclear.gif
Meanwhile, big electric customers in Texas were recently given the opportunity to elect to be paid to have their electricity service interrupted under certain conditions, under what's known as the Loads Acting as a Resource (LAAR) program. Beginning last May, Calpine created a set of real-time interfaces to provide these services to large customers through their local retail electricity providers.

Calpine was able to deliver these services by leveraging its existing energy management system, wireless communications and field data acquisition devices and interfacing to the revenue meters and the load's Distribution Control System.

The payoff? Implementation of the LAAR service for just one customer generated a 37-fold return on investment in revenue retention alone, says Fishback.

"You don't have to spend hundreds of thousands of dollars to create a competitive advantage," says Kindel. "You can do it by thinking creatively and implementing innovative solutions."

1by1.gif
Calpine Corp.

www.calpine.com

red_bullet.gif
Business: This energy producer has 88 facilities with a total capacity of about 22,000 megawatts. Another 10 facilities under construction will add 7,000 megawatts to the total.

red_bullet.gif
Project champion: Dennis Fishback

red_bullet.gif
IT department: 209

red_bullet.gif
Project payback: A $136,000 IT investment has generated millions of dollars in new and retained revenue.

See full coverage of the Premier 100 conference.

Special Report

Premier 100 IT Leaders Best In Class 2004

Stories in this report:

Related:

Copyright © 2004 IDG Communications, Inc.

  
Shop Tech Products at Amazon