Energy Storage May Already Make Sense for Many Commercial Customers

Seth Mullendore 
May 12, 2015  |  

In the wake of Tesla’s recently announced entrance into the stationary energy storage market, there has been a wave of analysis of what this might mean for residential and commercial utility customers. The bulk of the headlines have centered on the sleek residential Powerwall, but far fewer have investigated the implications of Tesla’s commercial-scale product, the Powerpack. In a new report, titled US Solar & Alternative Energy: The Real Battery Storage Opportunity, the global financial research company UBS sees commercial and industrial (C&I) customers as the market opportunity for Tesla and other energy storage companies.

According to the report, the reason why residential systems may not offer as many economic benefits at this time, while C&I systems have the potential to net a positive return, has to do with how each customer segment is billed for its respective electricity use. Residential utility customers are billed based solely on the volume of electricity consumed, measured in kilowatt-hours (kWh). Commercial customers are also billed on a volumetric basis, but in addition, they pay a demand charge, a fixed charge calculated on the highest magnitude of electricity used each billing period, measured in kilowatts (kW). Demand charges can be significant, accounting for 35-40 percent of a C&I customer’s electricity bill in some parts of the country.

This maximum level of electricity demand is known as peak demand. By selectively discharging when a customer’s level of demand reaches a certain kilowatt threshold, energy storage can act to effectively cap peak demand — a process called peak shaving. The process is all managed through intelligent control system software, which can learn a building’s energy use trends over time to optimize energy storage performance accordingly. Reduced peak demand translates into fewer demand charges and lower customer utility bills.

So, residential customers do not pay demand charges, while commercial and industrial customers do. And it is in those demand charge markets where commercial battery storage will likely make the first foray — because reducing those charges is a straight economic play with a good rate of return. In fact, UBS estimates that energy storage as a way to reduce these demand charges is already economical in several U.S. markets, including parts of California and New York City.

The UBS report models the 20-year internal rate of return (IRR) for an energy storage system costing $400 per kWh, a price point UBS predicts will be reached by 2018. Tesla’s Powerpack is already approaching this target at about $50,000 installed cost for a 100 kWh system, or $500 per kWh. The report finds that energy storage systems begin to show a positive IRR at a demand charge of around $10 per kW. At a demand charges of $16 per kW, the IRR comes in at about 7 percent. A $20 per kW demand charge produces a return of about 12 percent. Demand charges in certain California and New York markets are already in the $30-$40 per kW range, meaning the economics are likely to be favorable even at today’s energy storage prices.

UBS goes on to note that additional value propositions, such as payments for participation in ancillary services and demand response programs, can further improve the economic argument in favor of energy storage.

One component that UBS fails to quantify, or even mention for C&I customers, is that energy storage systems can be set up to island, or disconnect from the grid, in the case of a grid outage. When islanded, energy storage can provide backup power for customers, allowing them to continue operations when the grid is down. While energy storage systems designed for demand charge reduction or ancillary services may not be able to power all of a facility’s systems throughout a power outage, they can certainly take on a reduced or critical load, augmenting the capabilities of existing backup generators and extending the lifetime of onsite fuel supplies during extended outages. When combined with solar power, a storage system could theoretically supply resilient power to critical loads for an unlimited duration.

In comparison to C&I customers, the UBS report finds that residential customers will have less financial incentive to purchase energy storage systems. UBS specifically examines the case of batteries for backup power as compared to fossil-fueled generators. Though the numbers for residential storage look less favorable as an alternative to natural gas generators, UBS fails to look beyond economics alone. The fact is, lithium-ion batteries offer a lot to like as opposed to generators. Generators can be ugly, noisy, and polluting, they are limited by available fuel supplies; and they emit carbon monoxide, a dangerous gas that can be fatal if not properly vented.

Lithium-ion batteries have no emissions, are quiet, and while looks aren’t everything…have you seen the new Tesla battery yet?

Lead image: Light bulbs. Credit: Shutterstock.

Solar Ready Vets: Preparing Our Veterans to Join the Growing Solar Workforce

The transition from military service into the civilian workforce can be a vulnerable moment.

Many veterans indicate that finding a job is one of the greatest challenges they face in their return to civilian life, and one aspect of that challenge is translating military skills and experience in a marketable way for civilian employers.

At the Department of Energy, we like to say we’re solutions people. And there is a great opportunity here to help by connecting our talented veterans with a dynamic sector in our economy that needs them. Solar electricity generation doubled last year alone, and the solar industry is adding jobs 10 times faster than the rest of the economy. That’s why the Department of Energy and the Department of Defense joined forces to create the Solar Ready Vets program, which provides training to help military personnel translate and build on their skill sets and transition to careers in this thriving renewable energy field.

http://energy.gov/articles/solar-ready-vets-preparing-our-veterans-join-growing-solar-workforce-0

Amazing New Solar Panels Are Completely Transparent

Just so we’re totally clear, this is a huge deal. (Get it?)

posted on Aug. 27, 2014, at 3:51 p.m.

Kasia Galazka

BuzzFeed Staff

http://www.buzzfeed.com/kasiagalazka/transparent-solar-panels#.ou6byrdMk

Find Financing for Energy Efficient Upgrades

http://www.energy.gov/eere/buildings/find-financing-energy-efficiency-upgrades

IEA Report Predicts Solar Power Domination by 2050

Two reports released simultaneously last week by the International Energy Agency (IEA) say that by the year 2050, solar power could eclipse fossil fuels, hydro, wind and nuclear as the world’s most widely used source of electricity generation.

Vince Font, Contributing Editor 
October 08, 2014  |  

Utah, USA -- According to the IEA, solar PV could conceivably be used to generate as much as 16 percent of the world’s electricity needs by mid-century, with solar thermal electricity generated by concentrating solar plants (CSP) accounting for another 11 percent.

The reports state that when combined, PV and CSP could cut annual carbon dioxide emissions by more than 6 billion tonnes – effectively equaling the current output of worldwide transportation emissions and exceeding all CO2 emissions produced in the U.S. today.

According to Technology Roadmap: Solar Photovoltaic Energy, a decrease in the emission of 4 billion tonnes of CO2 per year could occur with worldwide installation of 4,600 GW of PV capacity by 2050. In order for this to occur, total PV capacity will have to reach an average of 124 GW per year, rising to 200 GW per year between 2025 and 2040.

Scott Sklar, chair of the Steering Committee of the Sustainable Energy Coalition and president of The Stella Group, says these targets in PV capacity are entirely within the realm of possibility. “I do think PV can hit these growth levels,” Sklar said, adding that a combination of “reduced loads and storage” – in addition to the use of other renewable energy sources like biomass – will have to be factored into the overall equation to achieve round-the-clock power generation.

By the beginning of 2014, total worldwide PV capacity had surpassed 150 GW and the IEA reports an estimated 100 GW of capacity being installed on a daily basis throughout 2014. “Massive cost reductions” were cited for the exponential growth, which saw more PV capacity installed in the last four years than in the last 40 years combined. The IEA believes the cost of PV will continue to drop, eventually hitting a cost decrease of 65 percent by 2050.

Sklar is also confident PV cost will plunge, if not quite by the margins predicted by the IEA. “Just by the aggregation of purchasing of materials, and scale-up of both module manufacturing and delivery chain, we can reduce costs at least by 50 percent by 2050,” Sklar said. “Possibly more.”

The second report, Technology Roadmap: Solar Thermal Electricity, stresses the inherent abilities of concentrating solar plants (CSP) to store thermal energy and provide necessary backup power on during peak times, on cloudy days, and overnight. Currently, the sum total of global solar thermal deployment is 4 GW – but the report projects with the installation of 1,000 GW of CSP capacity by 2050, 2.1 billion tonnes of CO2 emissions could be eliminated every year.

Additional deployment is expected to occur as a result of developing markets throughout Africa, Australia, China, India, the Middle East, and North and South America.

Frequently looked on as two competing technologies, the IEA sees PV and solar thermal energy ultimately achieving a complementary relationship that will serve to make up for the shortcomings of PV on overcast days and through non-daylight hours.