Why Energy Storage---- Customer-Sited Benefits
On-site storage provides means for electricity end-users to manage their electricity costs, often behind the meter. End-users can also use on-site storage to reduce costs associated with unreliable and lower quality power. End-users may use storage they own to generate revenue, via spot markets and/or under auspices of a contract or power purchase agreement for energy, capacity, or ancillary services. Similarly, end-user sited storage could be aggregated by a third party or merchant power provider to provide such applications.
Time-of-use Energy Cost Management
Energy storage can allow consumers to reduce time-of-use (TOU) energy costs. By storing energy during off-peak time periods when the retail electric energy prices are low and using their electricity during times when higher on-peak energy prices apply, end-users can better manage their electricity bill.
For energy end-users to qualify, they must be subject to the relevant type of retail tariff involving prices for energy that reflect time-specific prices. Typically, energy time-of-use tariffs include prices that are specific to: time-of-day, day of week, and the season –typically “summer” (May through October) and “winter” (November to April), with different regions subject to different seasonal peaks based on climate.
Demand Charge Management
Energy storage can also reduce demand such that peak demand charges are reduced or avoided entirely. This opportunity exists because utility tariffs for commercial electricity end-users – especially those with power requirements that exceed 50 to 100 kW – include separate charges for energy and for power. Power-related demand charges are assessed based on the end-user’s maximum power draw (demand) during specified demand periods.
Like prices for TOU energy, most demand charges are specific to time-of-day, day of week, and season.
The highest demand charges apply during super peak or peak demand periods, typically between 10:00am to 7:00pm during summer weekdays (often with a duration of five to six hours – many utilities’ peak demand period occurs 12:00pm to 5:00pm). Lower demand charges apply during other mid-peak and off-peak times of the year. Demand charges – expressed in units of $/kW-month – are typically assessed monthly, based on the maximum demand within the respective month.
Given this, demand must be reduced during the entire peak demand period within a given month to avoid demand charges. For example, to avoid a monthly peak demand charge the end-user’s demand must be reduced during all hours of the peak demand period within a given month.
More specifically, the full monthly demand charge is assessed if load is present during just one 15-minute period on one day during the time when demand charges apply. To reduce power draw on the grid when demand charges are high (and to avoid demand charges), storage is charged when there are no or low demand charges. The stored energy is then discharged to serve load during times when demand charges apply. The energy discharged offsets the need for the customer to purchase high priced energy from the utility (tariffs with demand charges also include time-of-use energy prices).
Electric Service Reliability
A common use of energy storage is ensuring electricity service without interruption – as with the uninterruptible power supplies (UPS) used in homes and businesses. In the event of a power outage the storage system provides enough power and energy to ride through outages. In some cases electric service will be restored before all stored energy is used. Otherwise, storage allows time for an orderly shutdown of processes or a transfer to on-site generation resources.
Electric Service Power Quality
The electric service power quality (PQ) application is similar to that for the electric service reliability except that, as the benefit’s name implies, the storage is used to protect on-site loads from effects related to poor power quality from the grid. PQ challenges tend to be more pervasive, intermittent and they often occur over short durations. Key examples of poor PQ include:
- Voltage variations– short-term spikes or dips, longer term surges or sags and
- Electrical “noise” – high frequency transients or oscillations, usually injected into the line by other electricity using equipment and some utility operations.
The energy storage benefit for power quality applications is based on avoided costs related to:
- Equipment downtime (listed above for electric service reliability),
- Damage to electricity-using equipment, and
- Suboptimal equipment operation.