What is AQEW?

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AQEW doesn’t have to be complicated, let’s take a look together.

When I say AQEW, you might want to say bless you, but this series of letters is not an onomatopoeic rendering of a sneeze, nor is it the result of someone mashing the upper right hand corner of a keyboard. AQEW stands for ‘allocated quantity of energy withdrawn’ and refers to an important factor in how Peaks are calculated in Ontario.

Many energy consultants don’t talk about AQEW, but it is important to understand, especially when you’re considering investing in battery and other energy infrastructure.

The Independent Electricity System Operator (IESO) manages Ontario’s grid and uses AQEW to more accurately determine the amount of energy consumed in the province. Specifically, AQEW calculates Peak Demand Factor based on overall consumption (including energy storage injections at the distribution level), rather than simply on the amount withdrawn from the IESO grid.

While the IESO offers real-time consumption reporting, AQEW provides more accurate analysis; however, the numbers for any given day are released 20 days after the fact. This means that while Peaks are predicted using Ontario Demand Values, they are only confirmed after the AQEW numbers are consulted.

While Peaks are predicted using Ontario Demand Values, they are only confirmed after the AQEW numbers are consulted.

The AQEW data retrospectively refines the IESO’s Peak predictions, which can lead to some or all of the 5CP or five Coincident Peaks (the ones that count towards determining Global Adjustment (GA) costs) being shifted to a different hour or even different day after-the-fact.

Since 2013, AQEW has shifted Peaks by between 300MW to 900MW on average. This is important because determining which five Peaks really matter can be tricky when the differences in energy use between these Peaks falls within this adjustment range.

For example, in 2018 the difference between the 4th and 10th largest Peaks was roughly 700MW – so a Peak you initially thought would count towards the 5CP can turn out not to matter, while other Peaks that you may have overlooked are bumped up relative to the others.

While it used to be fairly easy to predict Peaks with a one to two hour window, the weird weather that we experienced during 2018/2019 Peak season highlighted the dangers of relying on a shorter window: AQEW shifted the peak hour of each of the three largest Peaks in the summer of 2018.

3 hour Peak windows offer more safety

As more companies join the Industrial Conservation Initiative (ICI), it is becoming harder to predict Peaks because more consumers are responding (and thus collectively over responding) to the IESO’s Peak data, which in turn is making the ways we used to predict Peaks increasingly obsolete.

As things stand, it is no longer enough for companies to rely on a two hour Peak window, because AQEW data could easily shift the Peak by an hour in either direction, putting you at risk of missing the real, final Peak hour.

Let’s look at a real-world example to highlight this point. On September 5th, 2018 EnPowered called a Peak with a three hour window for between 4pm and 7pm. Demand during all three hours were within 200MW of each other, and 5pm-6pm looked to be the clear Peak according to Ontario Demand.

The problem was that after AQEW data was consulted, the actual demand for each hour was reduced, which in turn saw 4pm-5pm becoming the real Peak. If you were using a two hour window then your company had a 50% chance of missing the real, AQEW-informed, Peak because you would have only been looking at 4pm-6pm or 5pm-7pm.

Many companies looking to invest in energy storage are opting for a cheaper, two hour capacity, especially given the costs associated with each additional MWh of capacity. Investing in a 3-4 hour battery system is the more expensive option but it offers greater security against Peaks.

That being said, a two hour system can still provide benefits, such as running at 67% capacity to stretch coverage to three hours. The question in that case becomes whether the trade off of reduced operating load is worth the initial upfront costs of investing in greater battery capacity.

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