Utility charges for commercial and industrial facilities are made up of two major parts, energy charges and peak demand charges. Energy usage, measured in kilowatt hours (kWh), reflects the total amount of energy consumed during a billing cycle; peak demand, measured in kilowatts (kWp), reflects the greatest amount of power or load during a specific period over the billing cycle (typically calculated for a 15-minute interval). In many regions of the U.S., peak demand charges are the fastest growing part of utility bills for commercial and industrial customers and can often represent as much as 50 percent of a company’s monthly utility bill. Behind-the-meter energy storage solutions are now emerging which can cost-effectively cap peak demand usage. Here are 5 Things You Need to Know about Energy Storage:
1) It Can Reduce the Peak Demand Usage Part of your Utility Bill Without Changing Day-to-Day Operations
As mentioned above, the peak demand charge is typically derived from the greatest power load over a 15-minute interval during a billing cycle. Energy storage systems used for demand management store energy during periods of low building load (often during off-business hours) and deploy that energy when building load is at its highest – decreasing the amount of peak power being drawn from the grid and lowering peak demand usage. This is an alternative to a curtailment program and allows the building to maintain its normal daily operations.
2) Solar Doesn’t Make Sense? Solar Plus Storage May
In some cases, installing solar on its own may make economic sense if a large enough system can be deployed to benefit from a favorable utility tariff. However, many buildings simply do not have enough rooftop space to support a solar system large enough to offset a sufficient amount of the building’s energy requirements. But, for these customers, a smaller solar installation paired with storage can be economically viable. Coupling an energy storage system with sophisticated analytics and system controls to manage the release of energy at an optimal time, together with a solar installation, enables optimized utility bill savings on both peak demand and energy usage. A solar PV system makes storage more effective by narrowing the demand peaks and storage makes solar more effective by firming the demand savings - the two work in concert.
3) You Don’t Need an Engineering Degree to Manage a System
As a building owner or facility manager, you don’t need to put a lot of thought into your system. The right system will not only predict the building’s energy consumption, but will know when a peak is about to begin. It will then discharge its battery to offset those peaks. Effective energy storage systems will be able to do this automatically, without any intervention from the building owner. When you select a system, you should also take into consideration the supplier’s available warranty and service agreement. Many systems today include maintenance packages that remove the headaches of managing a system and can eliminate operating and maintenance (O&M) costs. However, since energy storage is an emerging market, it’s important to understand and trust the company backing the system.
4) ROI Can Be Seen in Four Years or Less
The economics of solar plus storage are increasingly attractive. Select systems can provide a good return on investment with a payback period of less than four years in areas with high utility charges. We are also beginning to see the introduction of zero-down financing options for these systems, making them more financially accessible for those of you looking to take control of your bottom line but don’t want to worry about upfront costs.
5) Big or Small, Storage May Be a Good Solution For Your Building Size
There is not one specific building type or building size that is suitable for energy storage. Actually, there are a wide variety of commercial and industrial buildings that would benefit from an energy storage system for demand management, especially when the system is deployed together with solar PV. What matters in making this determination is the energy usage profile of the building itself. In general, facilities that are likely candidates for energy storage have somewhat consistent day-to-day operations, where they experience times of high energy demand throughout the day. For example, manufacturing facilities where heavy machinery is consistently operating at near maximum capacity every weekday between 10 a.m. and noon and again between 1 p.m. and 4 p.m., or schools that run most of their electricity between 8am and noon and again between 1 p.m. and 3 p.m. are likely candidates for peak demand management. Another factor in determining if your building is a good candidate for a demand management system is if your building is in a region being hit by high peak demand charges, such as California, Hawaii, Massachusetts, New York, Arizona, Colorado and New Mexico.
Carl Mansfield is General Manager and Founder of Sharp Electronics Corporation’s Energy Systems and Services Group (ESSG).
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