The U.S. Department of Energy’s National Renewable Energy Laboratory and Clean Energy Group (CEG) have released the first comprehensive public analysis detailing the potential size of the commercial behind-the-meter battery storage market in the United States.

NREL analyzed over 10,000 utility tariffs in 48 states, finding that more than five million of the 18 million commercial customers across the country may be able to cost-effectively reduce their utility bills with battery storage technologies.

These findings, grouped by utility service territory and state and illustrated in a series of maps and tables, are presented in NREL and CEG’s white paper, Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges, available here.

The researchers looked at the number of commercial customers eligible for utility rate tariffs that included demand charges of $15 or more per kilowatt, an industry benchmark for identifying economic opportunities for behind-the-meter storage.

They concluded that nearly five million customers were at or above this demand charge threshold, accounting for over 25 percent of commercial customers in the United States. This represents a substantial market opportunity for behind-the-meter battery storage, which can be installed to control peak demand and lower electricity bills by reducing demand charges.

The analysis determined that economic opportunities for storage exist not only in first-mover states like Californiaand New York, but also across the Midwest, Mid-Atlantic, and Southeast. For example, tens of thousands of commercial customers in Georgia, Alabama, Kentucky, Michigan and Ohio may be subject to utility tariffs with sufficiently high demand charges to make storage a viable economic investment. Anticipated future declines in battery storage costs would enlarge the market potential in these and other states.

“With this analysis, we have identified the areas where customers have the greatest potential to benefit from investments in battery storage,” said Seth Mullendore, coauthor of the paper and a project director at CEG. “Utilities know where these opportunities exist, and now the rest of us have that information too.”

Nearly all medium to large commercial customers in every state are subject to utility demand charges, yet customers often do not understand how these charges are structured or accounted for. (For more information about demand charges, see the accompanying fact sheet here).

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WASHINGTON (August 24, 2017)—Department of Energy (DOE) Secretary Rick Perry released a study late yesterday reaffirming what energy experts, including those at the Union of Concerned Scientists (UCS), have been saying for years—low natural gas prices are the main reason for recent coal and nuclear power plant retirements. Based largely on input from experts at DOE’s national labs, the study shows recent growth in wind and solar power is creating new jobs and is not a threat to reliability, contradicting previous claims made by Perry.

However, the report fails to mention the growing threat of climate change to grid reliability and resilience, the important public health and climate benefits of renewable energy, and the enormous subsidies fossil fuels and nuclear power have received for decades.

Below is a statement by Steve Clemmer, director of energy research and analysis at UCS.

“Despite his initial efforts to pre-determine the results, Secretary Perry was unable to whiteout the truth—just as diversifying investments strengthens a financial or retirement portfolio, diversifying the U.S. electricity mix with renewables is making the grid more reliable and resilient. The market-driven reality is that cheap natural gas, wind, and solar are outcompeting aging, expensive coal plants. Renewable energy is creating American jobs and lowering electricity prices for consumers, while ensuring cleaner air and water for all of us. In fact, wind and solar industry jobs now far outweigh all coal industry jobs nationally and in at least 40 states.

“The study cites overwhelming evidence from real-world experience, as well as multiple scientific studies by the department’s own national labs and regional grid operators, confirming that the U.S. can safely and reliably operate the electric grid with high levels of renewables. These studies project renewables will be able to provide 80 percent of the nation’s electricity mix by 2050, while maintaining reliability. Wind and solar already provide many essential reliability services as well or better than inflexible coal and nuclear plants.

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The US Department of Energy’s (DOE) assessment of reliability and security of the country’s electrical grid network is “encouraging”, the Energy Storage Association’s head has said in her initial reaction to the report’s publication.

Energy secretary Rick Perry ordered his staff in April to produce the report, which was published on Wednesday. Described as a comprehensive analysis and including recommendations to policymakers, regulators and the general public on future policy options, the DOE has now invited the public to offer comments on the “Staff reports on electricity markets and reliability” report via its website.

Our sister site PV Tech reported today that the omission of passages supportive of renewable energy economics – in relation to fluctuating fossil fuel prices – found in a leaked early draft of the document were expunged from the final version. Some PV industry figures also commented to say that the report overstated the challenges in integrating renewables, while others expressed their satisfaction that the study was undertaken in the first place.    

Meanwhile, DOE appears to consider energy storage as a vital part of the grid-level toolkit – if there is a desire to integrate increasing levels of variable renewable energy.

“Energy storage will be critical in the future if higher levels of VRE are deployed on the grid and require additional balancing of energy supply and demand in real time,” the report says, in a section on energy storage.

Perhaps ominously, the same section concludes: “However, the need for storage may not be as great for a grid more reliant on traditional baseload generation.”

With President Trump extolling the virtues of so-called “clean coal” in the past few days, some alarm bells might be raised by the ambiguous language.

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The US Army will add a 1 megawatt energy storage system to accompany its 10-megawatt SunPower-built solar PV system which recently broke ground at the Redstone Arsenal US army post in Alabama.

US-based solar company SunPower revealed on Wednesday that the US Army will be adding a 1 MW (megawatt) energy storage system to a 10 MW solar project being developed by SunPower at the Redstone Arsenal in Alabama — a project which will drive employment of up to 200 jobs at the peak of construction. The project was jointly developed by the US Army Office of Energy Initiatives, Redstone Arsenal’s Directorate of Public Works, and the US Army Corps of Engineers Huntsville Center’s Energy Division, and its development is being financed by a power purchase agreement (PPA) which opens the way for the US Army to buy 100% of the electricity generated by the project without having to pay for the construction, maintenance, or operation of the project. Specifically, the Army will purchase 18,000 MWh of electricity from the project at a cost equal to or less than Redstone Arsenal’s current and projected utility rates.

“This project reinforces the Army’s commitment to advancing adoption of reliable, cost-effective, home-grown renewable energy at Redstone Arsenal,” said Col. Thomas Holliday, Garrison Commander, Redstone Arsenal. “We’re continually looking for ways to grow our capability and reduce our cost to provide the nation with a more efficient defense.”

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If you’ve heard that energy storage can reduce what you pay in demand charges, and you’re wondering if it would work for your operation, check out a paper issued today by the National Renewable Energy Laboratory (NREL) and Clean Energy Group (CEG).

The paper finds that 25 percent of commercial customers in the U.S. – five million – pay demand charge rates of more than $15/kW, a threshold that may justify investment in energy storage.

“With this analysis, we have identified the areas where customers have the greatest potential to benefit from investments in battery storage. Utilities know where these opportunities exist, and now the rest of us have that information too,” said Seth Mullendore, co-author of “Identifying Potential Markets for Behind-the-Meter Battery Energy Storage: A Survey of U.S. Demand Charges,” and a CEG project director.

The report notes that many customers do not fully understand how demand is measured and billed — despite the fact that demand charges often represent from 30–70 percent of a commercial electric bill.

Defining demand charges

Demand charges are a somewhat murky and daunting. Applied to commercial and industrial customers (not usually homeowners), they are typically calculated based on the point in time when wholesale prices are highest. If a company can pinpoint that 15 minutes or so and reduce its consumption, it can lower its energy bills for the billing cycle.  To do so, the company must predict correctly when the grid will reach that period of peak demand and then act fast.

Battery energy storage is a particularly good tool for the task because of its flexibility; it’s relatively easy to discharge the battery so that your facility uses its energy – rather than grid power – at the right moment. On-site solar can be used to reduce demand charges too, but not if the sky is cloudy just then.

Battery software is a key factor here. Advanced platforms use what the report calls “learning algorithms” to gauge when a facility is approaching peak demand. Add solar and the management software can employ a more sophisticated demand management strategy. It may make sense to incorporate microgrid-level intelligence if more forms of distributed energy are added to the system. Or, as the paper points out, a microgrid may be warranted if the facility wants the added ability to island and secure power from its onsite resources during an outage.

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Nine-hour requirement adds big cost

A recent project in California may be the first of its kind—at least in the U.S.—in which large-scale batteries actually fired up a generator to restore the grid operations without a power feed from the transmission network or backup source. In May, the Imperial Irrigation District’s (IID)  new energy storage system provided the electricity needed to get its 44-MW combined-cycle natural gas turbine going at the El Centro station .

This is a big deal in the expansion of energy storage capabilities, proponents say.

“From where I sit and what I know, I’m not aware of anybody else able and willing to do so,” said Mirko Molinari, manager of distributed energy resource development for GE Power, one of the partners in the IID energy storage project.  “It was not a simple task.”

Energy storage systems play several roles within the grid connection, from load following to load smoothing to frequency regulation. Now, at least in this case and likely others to follow, it can play a startup role before converting back to absorbing power from the functioning grid.

“The biggest question is whether this is a game changer,” said Matt Roberts, vice president of the Washington, D.C.-based Energy Storage Association. “No, but it’s one of the new value streams this system can deliver.”

Juggling all of those streams is exceedingly complex, GE’s Molinari pointed out. Software and control systems must wade through all the immediate and intermittent inputs of a grid system which is processing flow from renewables as well as facing resiliency challenges once a gap develops in electron flow.

“The grid is the biggest machine ever built by humankind,” Molinari noted. “All of these renewables are pushing a lot of complexity down to the grid management. . . How do you manage all of this together?”

IID’s energy storage system went online in October 2016, and the black start was performed nearly seven months later in May. The partners in the project include Coachella Energy Storage Partners LLC, ZGlobal Inc. and GE Energy Connections (now part of GE Power).

Historically, an operative grid would be restarted by a backup diesel generator or some other form of generation, giving the main turbine time to get going again and synchronize and keep frequency steady on the system.

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Lithium-ion batteries have the lion’s share of the stationary battery storage market, giving many manufacturers the opportunity to realize economies of scale, but on the flipside, makes it that much harder for new technologies to gain a foothold in the market.

So far this year, at least two battery manufacturers working on novel technologies have declared bankruptcy.

In March, Aquion Energy filed for bankruptcy. Aquion was known for its aqueous hybrid ion battery technology, which the company touted as a safer and cheaper alternative to li-ion batteries. Aquion emerged from bankruptcy last month, being acquired at auction by Juline-Titans LLC, a company about which little is known except that it has ties to the China Titans Energy Technology Group.

And late last week, Alevo USA and Alevo Manufacturing, both part of Alevo Group, filed for Chapter 11 bankruptcy court protection. At one point, Alevo was seen as a rival to Tesla. In 2014, the company said it planned to invest $1 billion to convert an old Philip Morris cigarette factory in North Caroline to a sleek new facility capable of producing several gigawatts of batteries a year.

Alevo was also trying to gain a market edge with a lithium-iron-phosphate battery chemistry that it claimed would be the first to use an inorganic electrolyte based on sulfur. The company said that chemistry would allow its batteries to cycle more frequently and with less heat and degradation than li-ion batteries.

Alevo had a three-pronged approach to the market. It planned to target state-owned utilities overseas, individual utilities, especially in the United States, and to tap commercial markets such as the market for frequency regulation in the PJM Interconnection region.

Alevo also did not want to limit itself to just selling batteries. It was looking to sell storage as a service. That may have been easier than convincing a developer of the merits of its technology, but it also meant that in addition to competing against established, incumbent li-ion battery manufacturers such as Tesla and Panasonic, Alevo was also taking on companies such as AES Energy Storage, Greensmith and S&C Electric.

The company also shunned government funding, relying instead on private investors, including funding from Russian oligarch Dmitry Rybolovlev.

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Regulations for the safe use of energy storage systems still need adaptation to “accommodate a broader use of energy storage with higher energy content like lithium-ion batteries in private homes”, experts at Fraunhofer ISE (Institute for Solar Energy Systems) have said.

In an exclusive technical paper article contributed to the last edition of Solar Media’s downstream solar technology journal, PV Tech Power, and now available to download from this website, Fraunhofer’s department head for electrical energy storage Dr Matthias Vetter and battery modules and systems expert Stephan Lux discuss two research projects into the safety of stationary energy storage systems for households, including their use for self-consumption of solar PV generated onsite.

With funding from Germany’s Federal Ministry for Economic Affairs and Energy (BMWi), Project ‘Safety First’ looks at the standards and quality of energy storage systems for homes currently available on the market, including how well they connect and interface with the grid. The other project, Project ‘SpeiSi’ looks specifically at the safety and reliability of stationary energy storage systems for PV self-consumption.

In the article, Vetter and Lux look at existing provisions for safety, mainly through the lens of their own domestic market in Germany, where more than 50,000 residential energy storage systems have been sold to date already and existing safety guidelines, published by national solar trade group BSW Solar, are voluntary.

From there, the authors explain what they think is necessary to bring energy storage into the mainstream, for utilities, financiers, other industry players and for customers. Key topics include battery lifetimes and charge-discharge cycling, the threat of thermal runaway, which causes lithium-ion batteries to combust and the safety and reliability of switching devices.   

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