Full of Energy: Insights from the Association of Energy Engineers

In anticipation of AEE’s (Association of Energy Engineers) World Energy Conference, UMS President Brian Coughlan and Sol Rosenbaum, mechanical engineering consultant, sat down with AEE to discuss real-time and market-based energy costs.

The conversation explored innovative pricing models, shifts in energy consumption behavior, and the impact of grid stability — highlighting both challenges and opportunities for businesses and energy consumers.

Understanding Real-Time and Market-Based Energy Costs

Traditional utility rates are typically flat and predictable, offering limited variability regardless of demand or market conditions.

In contrast, real-time pricing (RTP) fluctuates based on actual energy market conditions. This means energy costs can be lower during off-peak hours but may increase significantly during periods of high demand.

This shift represents a major change in how organizations think about and manage energy consumption.

How Real-Time Pricing Works

During the discussion, an analogy was used to simplify this concept:

“Just as our grandmothers would wait until 10 PM to make long-distance calls to take advantage of lower rates, businesses can shift their energy usage to off-peak hours to save costs.”

Real-time pricing essentially rewards flexibility. Businesses that can adjust when they consume energy may benefit from lower rates, while those that consume during peak demand periods may experience higher costs.

Benefits Beyond Cost Savings

Coughlan emphasized that real-time pricing offers more than just potential savings.

One of its key benefits is improved grid stability. By sending real-time pricing signals to consumers, utilities can encourage reduced energy usage during peak demand periods.

This demand response helps:

• Prevent blackouts
• Improve system reliability
• Support grid performance during extreme weather events

In this way, pricing becomes not just a financial tool, but also a mechanism for maintaining energy infrastructure stability.

Challenges of Real-Time Pricing

While the benefits are significant, real-time pricing also introduces new challenges.

Coughlan and Rosenbaum noted that this model requires:

• Ongoing monitoring of energy usage
• Greater operational awareness
• Active decision-making around consumption timing

Unlike traditional flat-rate structures, organizations cannot simply “set it and forget it.” Instead, they must remain engaged to fully realize cost-saving opportunities.

Despite this, the potential upside can be substantial. In some cases, organizations can achieve significant savings, even reaching millions of dollars depending on scale, usage, and operational flexibility.

The Future of Energy Pricing Models

Looking ahead, both experts expect real-time pricing to continue evolving rapidly.

Key drivers of this evolution include:

• Advancements in metering technology
• Artificial intelligence and predictive analytics
• Improved energy usage optimization tools

At the same time, regulation will remain important to ensure fairness and stability in how pricing models are implemented. However, potential deregulation could also drive innovation and create more competitive pricing structures.

Why This Conversation Matters

This discussion highlights the growing importance of understanding real-time and market-based energy pricing models.

Energy is no longer just a fixed operational cost. It is becoming a dynamic, strategic factor that can directly influence:

• Operational efficiency
• Cost management
• Risk exposure
• Long-term financial planning

Whether you are an energy professional, business owner, or simply interested in the future of energy, these insights provide valuable context on where the industry is headed.

Listen to the Full Discussion

To hear the full conversation and gain deeper insights into how these pricing models can be used to reduce costs and improve grid efficiency, click the link below.