Energy storage solutions have been gaining ground over the last decade - by Jim Dumas

Jim Dumas, Solect
Energy

Energy storage solutions have been gaining ground over the last decade, and we’re finally seeing technologies emerge that could make storage a possible common reality. It seems obvious that energy storage increases the value of a solar installation, especially where modifications to net metering policies have occurred or are being considered. But is that truly the case? Is the impact big enough that it justifies the costs? What other benefits does energy storage paired with solar provide?

What is energy storage? Energy storage refers to the ability to hold electricity safely and reliably for future use. When deployed, energy storage can reduce price volatility, make the grid more efficient and consistent, and mediate between variable sources and variable loads. An energy storage system provides power when solar is not available, smoothing intermittent solar production and allowing for greater self-consumption by providing power when the sun has set.

Benefits of pairing energy storage with solar PV When installing electrical equipment, your business can install equipment that’s utility-owned, which has greater benefits to the grid, or you can install on the premise before service entrance to the utility, which has greater benefits to your business. This is called “behind the meter” energy storage. When paired with solar photovoltaics (PV) in commercial and industrial applications, a “behind the meter” energy storage solution can often yield a holistic, successful solar and energy storage marriage. State and federal financial incentives are available to make storage adoption even more attractive.

Cloud cover or other weather/environmental conditions sometimes shadow solar panel arrays, which affects their ability to maintain constant electricity output. Pairing an energy storage system with the solar array allows an intermittent electric supply resource to be a firm, constant power source.

Beyond the ability to provide intermittent energy to solar PV systems, energy storage can help to optimize the cost of energy consumed from the grid by reducing demand charges levied by the utility, shifting the timing of energy consumption to manage time-of-use (TOU) rate utilization, and enabling and simplifying participation in demand response without effecting operations. Additionally, energy storage can improve operational resiliency by increasing electric service reliability and autonomy.

Understanding a typical energy tariff Large retail energy tariffs typically have an energy charge and a demand charge (as well as other fixed costs/fees). Some tariffs use a time of use (TOU) structure for their energy—and even demand—charges wherein the retail energy prices change depending on time of day.

In typical net-metering models, the “buy-from” and “sell-to” prices are equal, effectively allowing the grid to act as a low-cost virtual “energy storage” for excess PV generation, and removing a key economic driver for real storage. Local storage may assist in optimizing net-metering with steep TOU rates, and is an area for additional study.

Solar changes energy consumption and profile As the solar array generates electricity, it is taking away from what would originally be supplied by the grid. In this case, solar generation acts as “negative load,” reducing consumption from the grid and changing a business’ or property’s energy load profile. The monthly energy bill is reduced as less kilowatt hours (kWh) are consumed. Demand charges may be impacted, but that is dependent upon whether the peaks coincide with the solar generation.

Why solar and storage are complementary When a business or organization adopts a solar energy solution, they experience a decreased energy load factor. For example, if your business consumes 100 kW on average throughout the day, there would be times where your business is requiring power that is greater than or less than that amount—and the load factor is measuring the peak, or maximum, amount of energy demanded from the grid. The “peakier” load created by solar allows for extra demand reduction by mitigating consumption. Energy use and demand charges are easily apparent on monthly bills, but other site-specific available services such as demand response participation and ancillary services revenue also need to be accounted for.

The economic value of the additional benefits provided by energy storage, such as back-up power availability, energy independence from the utility and contributing to a “greener” electrical grid are hard to monetize as they are user-specific and based upon internal behavior. Defining or estimating those soft values should be assessed when considering a solar plus storage project.

Solar PV and energy storage systems are quickly maturing, resulting in reduced costs and enhanced performance. With the right combination of energy load profile, energy tariff in terms of energy and demand charges, grid services such as demand response, internal valuation of electrical availability and resiliency, and incentives or grants, pairing Solar PV and energy storage is economically viable. With continued cost declines and economies of scale, the occurrence of solar plus storage will greatly increase and become more the norm than special use case.

Jim Dumas is co-founder and chief operating officer of Solect Energy in Hopkinton, Mass.