TES Testimony

“TES Testimony” presented in 2009 to the California Public Utility Commission gives a complete overview of TES from the heydays in early eighties to the still bleak days of 2010. 

By:  Klaus Schiess, PE, CEM – KSENGINEERS

Mechanical Engineering Consultants & Energy Engineers


My name is Klaus Schiess and I am president of KSEngineers, a one man engineering firm which I started in 1987.  I am a totally independent engineer with decades of energy and energy cost savings experience.  I have no affiliation with any manufacturer and have always guarded my independence.  I have also worked on two other continents and have always thought that America is at the forefront of everything.  I took like fish to water when TES started to make inroads in the early eighties.  Yes, this is the answer to electricity storage.  Then something happened that is still a mystery to me.

From my white hair, you can see that I cannot have any selfish long term plans by trying to improve the conditions for or promote Thermal Energy Storage.  It is purely that I am frustrated that this technology is not at the forefront of our energy policy.  If I can make a slight difference even at this late stage, it would give me personal satisfaction that I may have contributed my little share to something that benefits society and helps the environment.


Personal History

My whole professional career seemed to evolve around the recurring theme of demand shifting applications.

My first job after graduating was in Switzerland working for Escher Wyss in the early sixties, a leading hydraulic turbine manufacturer who just started developing pump turbines for the then upcoming potential market for pump storage systems.  Switzerland is known for its pump storage systems that pump water up the Alps during the night to let it come down during the day when the grid peaks.  Overall efficiencies can reach 80%.

Then later in South Africa, which has no oil or natural gas resources and in addition was boycotted during that time, was forced to solely rely on coal fired electrical power plants.  Therefore, even heating was electric resistance heating.  I designed the largest hot water storage system in the country for a metallurgical laboratory complex in 1976, which required a lot of outside air.  Thus on a cold winter morning the demand rose to such levels that the electrical design engineer had a fit and we resolved the issue by spreading the load over 24 hours to bring down the peak demand utilizing a hot water storage tank.

When I came to the USA in 1978 I was enthused to see that thermal energy storage for cooling started to make its entry.  Electrical load shifting was right up my alley and I soon got involved with energy conservation and Thermal Energy Storage (TES) for cooling.  I was convinced that within two decades there would hardly be a chiller-based air conditioning system built in the USA without applying this relatively simple technology.

Millions are spent on finding a battery that can store large amounts of electrical energy.  Until such time as somebody invents such a battery it is obvious that America with the high air conditioning loads is the ideal place for TES, produce the “coolth” at night when it is cheap and the grid load is low and cool the buildings with the stored cooling energy during the day.  It is a nearly 100% efficient process and the energy is stored right at the site where it is produced and used up, relieving the electrical distribution system at the same time.

In the eighties the utilities fully supported this new approach with rebate programs and promotional material.  I was soon involved in feasibility studies that looked at TES for new projects and retrofit projects.  As each project is usually unique, it was necessary that consulting engineers should become involved and familiar with all TES technologies, which are basically split into three categories.


Chilled water storage

The idea is to store chilled water, which requires large but relatively cheap tanks.  Various ways were developed to ensure that a constant temperature difference could be maintained.  In the end a vertical tank utilizing the stratification effect became the most economical method.  As there is no phase change of the cooling media is involved it is called sensible heat only.

 Ice Storage

An alternative way is to utilize the latent heat effect of a phase change of liquid to solid.  As water is abundantly available and in addition has the highest phase change energy requirements of any liquid it is a good opportunity  to make ice at night and then melt it during the day to cool the building.  Ice storage however introduces new aspects such as an ice machine is required involving temperatures about 10 degrees below freezing.

Various methods of ice making developed such as ice harvesting, encapsulated ice or ice freezing on coils or tubes or even on plastic panels that originated from the solar heating industry.

Eutectic Salt

A mixture of substances were developed to try to get the benefit of the two above described systems into one, meaning that ice making chillers and the lower temperatures could be avoided yet the benefit of the latent heat principle could be reaped.  Transphase developed the eutectic salt system with a melting/freezing temperature of 47 degrees.  Therefore, normal chilled water chillers could be used and the storage tanks became considerably smaller than for chilled water due to the latent heat storage of the eutectic salt.


In 1983 I moved to San Diego and took like a fish to water.  SDG&E and other California utilities heavily promoted TES with sharing in costs for feasibility studies

Late 1980s were the “heydays” of TES for the following reasons:

Rate schedules were favorable for TES by differentiating between day time and night time energy costs

On peak demand charges reached $25/KW

Even a special Super-TOU rate was created by SCE to promote TES which introduced a 4 hour on-peak window to keep storage capacities lower and with it initial project costs.

Utilities provided Rebates up to $300/KW shifted

Utilities offered free or 50% assistance for TES studies

Utilities offered special TES Seminars

EPRI developed “COOLAID” software for Utilities to explore and to assist in the evaluation and design.  I was personally involved with assisting with the development of that DOS based computer software.

KSEngineers had a high ratio of feasibility studies actually developing into projects, some of them under my design.


After a few years the interest and assistance of the utilities started to wane.  There were unfortunately some teething problems and especially one particular manufacturer caused a lot of damage to the industry when those systems did not perform and large lawsuits were filed that could have dampened any enthusiasm for the utilities to stay involved with TES.

There was also the impression given that the trend of the electric rates was going towards Real Time Pricing (RTP).  Metering technology would facilitate this methodology of charging customers rates that were a true reflection of the real cost to produce the power.

KSEngineers was actually commissioned to do a study on the effect of RTP on TES.  PG&E had a test site where this experimental rate was applied.  As a result I published a paper, which was also presented at one of the annual World Energy Congresses.  “The Effect or Real Time Pricing on TES” published in 1995 is actually today still totally up to date.  The conclusions reached were that RTP would greatly promote the feasibility of TES perhaps even more so than the normal time-of-use (TOU) rate structures.

With the onset of deregulation or the split into electricity providers and transporters a definite trend became evident in the fact that rate schedules started to eliminate the difference between on peak and off peak charges per KWH as well as lower the demand charges.  The rebates disappeared and it seemed everybody started to lose interest in demand shifting.

Representing the building owners, engineering consultants and designers are on the receiving end of rate structures, and we have to provide tools to calculate and predict the costs of any changes that a project would yield.  This is no easy task because there are so many different utilities with each one having their own numerous rate schedules that as an outsider are difficult to explain.  The impression is gained that rate design is a special breed of calculators that cannot see the forest for the trees, or I would even go further, they cannot see the beach for the grains of sand.

Again, as an outsider to the thinking process of utilities I could not decide if the rate and incentive designers knew what the changes they made did to TES, whether they actually cared or may be if it was intentional.


Reasons for the decline and why TES could not sustain itself:

No investor will risk capital if there is not a potential to get rewarded for the effort.  One of the major problems is that TES does not save energy at the site or very little but it saves at the source.  The source and the distribution are in the hands of the utilities.  Electricity is a monopoly that is regulated by a public commission.

The market is too small or too small to afford an effective lobby.  Chiller manufacturers associated themselves with certain manufacturers of TES equipment but the real reason was not to boost TES, it was more to not miss out in marketing and selling of chillers.

But the fact was that it got difficult to develop projects that had an acceptable pay back period.  By 1994 a collaborate of concerned professionals in the energy conservation industry was formed to try to stem this trend.  We all could not understand why this proven effective demand shifting opportunity started to become a wall flower and was not invited to dance anymore.


The collaborative worked out a white paper that the CEC published as their report that clearly defined all the benefits of TES to the State and to the Nation.  Some of the main statements are repeated here:

In 1995 the CEC stated and confirmed that:
“TES is an energy technology offering compelling energy, environmental, diversity, and economical development benefits to California.” (CEC TES Systems Report P500-95-005 Page 51)

“TES is the best tool a commercial facility manager has for managing power costs under Real-Time Pricing, which the California Public Utilities Commission has proposed as the dominant type of pricing in a deregulated competitive electricity industry.” (CEC TES Systems Report P500-95-005 Page 6)

The report estimates all the potential savings in reducing California’s peak demand and the associated pollution reduction.  Clearly it was concluded that TES benefits the State and the Nation.  Certain legislation was past that required utilities to encourage demand shifting opportunities.

That was 1995.  We are now going into 2009.  What has happened?  Why have we wasted 15 years of valuable time to utilize the “best battery money can buy”?


7.1 Technical Reliability

Like with any energy conservation measure it takes some input to achieve savings.  Unfortunately with mechanical things it is not quite as easy as changing a light bulb.  Chillers have to run now at night but with our vastly improved control technology with remote warnings etc. things have become a lot more user friendly than just ten or twenty years ago.

I have personally designed TES projects of all three types chilled water, ice storage and eutectic salt systems that are still in use today after nearly 20 years of operation. Many of them are still in operation today.  I try to stay in touch with “my children” but owners change or operators change and they then deal with their own advisers if any.

There have been some problems with some installations but they really had nothing to do with the technology.  It was sometimes bad quality control, bad designs, and neglected maintenance or control sequences being changed.  But that happens to any machinery.  TES is a technology that works and if maintained and controlled properly delivers what it is planned to do.

Over the years I have had many trouble shooting consultations, they were mainly due to human lack of interest or misconceptions.  But again this happens in any technical field.  Right now I am in the process to provide consulting advice on what to do for two ice systems that are still operating but may need to be replaced with new, abandon them and replace with new chillers or try to hang on until the TES renaissance is happening.

7.2 Economical Reliability

Like with any energy conservation and energy cost savings measure there is no free lunch.  It takes upfront cost to achieve savings.  It is always a compromise.

The past history of the utilities in guaranteeing the economical long term feasibility to invest in TES has been badly shaken by the mere fact that the rates have smothered the economical reliability of TES.  The disappearance of incentives also contributed to the fact that the TES market slowed down considerably.   The savings potential was just too little for investing in new TES projects or even retrofits.

Owners are discouraged when they find out that rate structures have changed in such a manner that the savings are progressively reduced.  As an example, about two years ago SDG&E switched the on-peak demand charge from approximately $12 down to $5, but at the same time increase the NTR demand from $5 to $12.  Nobody realized this except a TES expert.  I had to inform the owners that as a result the monthly summer savings potential has been reduced by $2,000 for a TES system of about 1,500 ton-hours.  Why?  The new highest demand now that gets hit with the $12 demand charge is the 15 minute interval just before the on-peak period.  The shift that was originally worth $12 has now been de-rated to $5.

In an attempt to reduce this damage and salvage some of the savings potential, completely new control methodology has to be introduced.  In stead of on-peak shaving, which shuts down chillers at a certain time, a control strategy has now to be implemented which makes use of load leveling techniques.  This is a much more complicated process as the building electrical load profile comes into play with the TES sharing cooling with the chillers at the same time.


TES projects are totally dependent on a favorable rate structure or incentives in the form of rebates or tax credits.  Hospitals, schools, universities, office buildings, manufacturing facilities all use chilled water systems that make a TES system feasible if and only if:  SHOW ME THE MONEY.  That applies for new projects but even the retrofit market could contribute tremendously to a State wide reduction in peak demand loads.

I have been named the “Moses of TES” as at one ASHREA conference I gave a presentation where I introduced “The Ten Commandments of TES”.  Here the first two.

 First Commandment of TES:

There shall be a Rate Schedule that makes the extra effort and cost to implement a TES project economically feasible.

Second Commandment of TES:

There shall be some financial incentive in form of rebates or tax credits to make TES economically feasible.

Basically, it has to be realized that TES is intricately linked to rates and incentives that can make it feasible or not.  Or alternatively it is the rates that can kill a good thing.  The same thing is being realized in the electrical solar industry where it is found that photo voltaic projects do not realize sufficient savings because the high non-time related demand charge is hitting the bill in the morning before the sun can produce sufficient power.


9.1 The infatuation of the utilities with demand response programs

In recent years it has become more than apparent that the utilities are very much interested in shifting demand during peak periods.  Energy conservation measures obviously contribute to it but it is not enough.  Unnecessary loads need to be turned off.  And of course attempt to try to shift load from on-peak to off-peak.  Well, as it is, the giant economical rechargeable battery does not exist yet.  In the mean time there is the storage of potential energy (pump storage systems) and thermal energy storage systems that do a good job all over the world.

The utilities are offering programs that reward demand shifting but only during the time that it suits the utilities.  That means only during the time that the grid is in trouble.

The public is now offered programs via aggregators that reward the user if they reduce load in any fashion during the peak period but only if the grid is in trouble.  If, however, the user has found a successful demand shifting measure and thinks that is a good idea to do it permanently, then, hey wait a minute!  The utilities will punish you for doing something good all the time.  No, we want you to shift only when it suits us, the utility.  So the program only rewards the shift is achieved against the load profile of the five previous workdays.

This is a contradiction in itself unless there are other motives involved that are generally not known.  Until I know what they are I maintain that:

Demand response programs are like taking a pill when you get a headache.  Do Permanent Load Shift (PLS) like TES and you won’t get a headache.

It got so far that account representatives of a utility went around to their customers who still had functional TES systems and advised them to use them only as a demand response program.

9.2 Experience with Demand Response Marketing

KSEngineers has been employed by an aggregator to assist in finding demand response opportunities with potential clients that show interest in signing up.  A visit to the facility usually ended up in finding relatively little to do without some investment. The result usually was that it is not worth the trouble.  My experience so far is that it is going to be very difficult to sign up enough reliable load shift.

However, what I found is that there is plenty of opportunity to do some real load shifting on a permanent basis if some improvements are made however they needed some experienced engineering to develop.  The moment we talked about them, there was interest but who is going to pay for the project development and determine the feasibility thereof?

Funds for Technical Assistance (TA) reports were not available anymore.  The latest development is that the client cannot chose their own engineer or consultant to do any TA work, it has to be done by a utility selected consultant.  Therefore, I as an independent consultant cannot provide the same services for free, on the contrary I am now forced to compete against free services.  I have lost many potential jobs because of that.

9.3 The sad cases of this Engineer having to nix TES Projects

9.3.1   Prison

A prison located in desert climate proposed to add a chilled water storage tank of considerable size to shift of close to 1000 KW from on-peak to off-peak KSEngineers was appointed to evaluate the proposal from an ESCO company.

KSEngineers soon discovered that this was a typical proposal to get a project going with very flimsy cost savings calculations.  The rates at the time did not even have any difference between on-peak and off-peak.  The utility promised to adjust the rate structure once the project was implemented and offered a 2 cents/KWh difference with no demand charges.  The incentives were not really worth talking about.

Now if you are well versed in this business, you are going to laugh out loudly.

9.3.2   Large University

A large technical university had already done the design for a large chilled water storage tank under their baseball field.  It was a $7million project.  KSEngineers was required to do a peer review.  I soon discovered that the rates onto which the feasibility study was based had changed considerably and that the 6 year proposed simple pay-back period had now changed to about 25 years.  The University decided to shelf that project.  The main reason was that a NTD charge had been silently added as well as a ratchet clause of a year that alone nixed the first years’ savings.

When I called up the utility and asked them if they were in the business of providing $800,000 rebate for a 25 year payback TES system they said no way of course.  When I told them that with their rate change they had done that and just killed the project, the account rep told me that she would have to talk to her supervisor.

It appears that those rate designers could not see the Relationship between NTD and On-peak demand.  It appears that rate designers have no clue what they are doing to the outside world.  They just see their own world and bottom line rules.  They can’t see the forest for the trees, no a tree is a good thing, they are worse, they cannot see the beach for sand grains.

9.3.3   Gas cooling SCE nixes hybrid project (City of West Covina)

KSEngineers developed a unique project for a police station in a City in SCE territory that involved utilizing a gas engine driven chiller that would produce cooling during on-peak periods.  But at the same time we could also use it as a generator in case of a power failure.  As this was going to be an experimental project the manufacturer guaranteed that after one year of close monitoring, the City could either buy the unit that was to be installed for free or give it back.

Now it is a known fact that it is a lot easier to implement a hybrid system in a utility territory that is served by a “Gas & Electric”.  I did not know that I would land up in a hot political battle between two sides consisting of the mayor and some council members and some councilors under the leadership of an employee of SCE who managed to squash the project.  I was verbally attacked at the City Council meeting by that account representative of SCE when I suggested that as an employee of SCE he should recuse himself from voting.


Rate Design Research:
Provide a rate schedule that guarantees the demand charges and the on-peak off-peak difference for at least 10 years but guarantees the utilities the necessary income that other rate schedules provide.  May be California needs a “Green Rate Schedule” that promotes TES, Solar Power and Wind Power.

The rates can go up and down with the market conditions but the differences must stay constant.  This needs cooperation with the major utilities and probably government input to achieve cooperation

Incentives, Rebates and Tax Breaks

If the rate schedule is made attractive enough, no further financial incentives like rebates etc. are needed after a few years of kick starting the process again with rebates or tax breaks.


Some State sponsored institution must offer educational programs to educate the potential investors and the engineers necessary to produce feasibility studies and eventually design and implement the project.


Ten years ago I gave a presentation at the Western Conference of the Association of Energy Engineers at Long Beach and called it:  “TES at the Crossroads”.  I then followed it up with an article that got published in the AEE’s “Strategic Planning for Energy and the Environment” (Vol 18, No. 4 – 1999).  It gives my thoughts at what should be done to follow what the California Energy Commission report reported and with its publication attempts to contribute to the welfare of the State of California.

Personally, I do not understand what the reasons are that we as progressive Americans have let things slide so badly that this needed demand management opportunity has been neglected if perhaps not kept on the backburner on purpose.  We have a public utility commission that has to keep a watchful eye on the monopoly of the electrical supply to the State.

After witnessing the trend in rate design and the flipping of on-peak demand with non-time related (NTD) demand charges one cannot help to come to the conclusion that the rate design is so grossly self indulgent that they have no idea what they are doing to any of the industries like TES or the photovoltaic and wind power industries even perhaps gas cooling.  These demand management opportunities need a rate schedule to make them economically feasible.

Here are my perhaps naïve thoughts on what is needed:

A simple rate structure, preferably state wide to ensure that these industries can overcome the initial capital investment and allow economically feasible projects.  The rates must reflect the difference in cost between on-peak and off-peak   Of course the rates may vary up and down according to the market, but the difference must be guaranteed for at least a 10 year period.

If Real Time Pricing reflects the real cost of electricity to be produced then let it be RTP and as far as I can gather from my past experience, TES will have a chance to flourish and make the contribution to society it should have done already for decades.


Dear CPUC:

Google talks of developing a smart electrical grid.  Everybody is starting to realize that something has to be done.  TES uses electricity on a site when it suits the grid.  It relieves the grid during peak time.  What more do you want, the storage is happening right there at the site.  It does not only even out the load profile, it also helps to improve the efficiency of the grid. Just like,  I am sure you agree, it is a lot easier to drive at night when there is no traffic.

Now is the time to act and make up the time lost.  It is in your power.  Rate design is not rocket science, it just needs the will from all parties for it to be done.


Copy of the article “TES at the Crossroads” on following page:


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