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.
Recent Comments