The cardinal rule of electricity is that supply must equal demand at all times. When you flip a light switch, you expect the lights to go on. This rule has challenged utilities, regional transmission organizations, independent system operators and commercial, industrial and residential consumers since the time of Edison. Generally fossil-fired and nuclear generation must run continuously while renewable energy is subject to the intermittency inherent in solar and wind resources. Moreover, forecasting demand is a function of uncertainty of temperature, hours of daylight, and unpredictable consumption patterns. Until recently there was no cost effective way to store electricity generated at one time for use at a later time when it is required.
Storage that allows inter-temporal deliveries of electricity offers many advantages:
- Utilities: decreases the requirement for costly peaker plants that operate only a few hundred hours a year
- Commercial, industrial and residential customers: allows for a substantial reduction in demand charges or time-of-use rates that are often a very significant component of a utility bill, while allowing the user resiliency to operate independent of the grid
- Regional transmission organizations and independent system operators: allows a more wide-spread implementation of demand response measures to balance supply and demand while serving as a source of ancillary products to stabilize the grid
Why now and where is this working?
Parties have experimented historically with various levels of success on technologies such as fly wheels, compressed air, thermal storage, and pumped storage. However, with the advent of lithium ion, flow and sodium batteries there is considerable promise that viable storage options will gain more wide-spread adoption, with lithium ion batteries being the most favored. According to Greentech Media (GTM), 260MW of storage technologies are expected to be installed in 2016 with forecasted installations of over 2.0 GW in 2021.
According to GTM, as California utilities impose some of the highest demand charges, it is no surprise that California accounts for over 85 percent of the non-residential market. California is 35 times the size of New Jersey (the second most active market) and 25 times the size of PJM.
Solar Plus Storage: 1 + 1 = 3 (not 2!)
With control software that optimizes the timing and duration of charging and discharging batteries in light of the customer’s demand patterns, utility tariff and grid conditions are just as important as the storage technologies themselves. The sum of the economic benefits from a solar technology plus a storage technology equals three (not two) because of the synergism of cost reduction and revenue generation.
Renewable energy such as onsite solar is growing exponentially as consumers are focusing on sustainability and favorable economics. Technological efficiencies are increasing while costs are dramatically falling so that costs are close to grid parity and expected to decline further in the future. As a result, there are very compelling arguments for having a fully integrated system consisting of solar, storage and control technologies. This integration will allow the user to substantially reduce demand charges that can often account for 50 percent of a utility bill, while concurrently receiving revenues by participating in demand response programs and selling ancillary services to the grid. Many anticipate that in the not too distant future customers will overwhelmingly install these integrated systems rather than just the renewable generating technology.
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About the authors:
Kyle Goehring is a Vice President and National Manager of Alternative Energy Services at JLL.
Todd Taniguchi is a Portfolio Energy & Sustainability Manager at JLL.
Steve Yatsko is a Vice President of Alternative Energy Services at JLL.
Lauren McAdam is a Project Manager of Alternative Energy Services at JLL.