Why now is the best time to buy into energy storage
February 17, 2017
Overall, energy storage costs are falling and peak energy cost are rising, making now the best time to buy into energy storage.
Dissecting the reports
Lazard, a financial advisory company, released its annual Levelized Cost of Storage Analysis report. In it, industry auditors revealed that energy storage costs are dropping among various categories—lithium-ion, flywheel and thermal energy storage, to name a few.
As manufacturing costs drop, so too does the price of storage technologies, making them a viable investment for power providers, universities, factories and any organization residing in a commercial building. Most prominent, perhaps, is the behind-the-meter use many devices offer.
“By incorporating an ice thermal storage system into Mather Hospital’s chiller plant operations, we are expected to reduce our peak energy demand usage by 20 percent.”
In properties that experience high energy consumption tools like behind the meter thermal energy storage can save facilities hundreds of thousands of dollars by shaving peak energy loads. Ice thermal storage systems specifically are already one tenth the cost of batteries and perfect for various commercial applications.
Hospitals, for example, which have an obligation to pull electricity no matter the cost, can store energy at night in the form of ice to run air conditioning at just a sliver of the cost during the day. Hospitals are always drawing a cooling load however not all rooms are utilized 24 hours a day, making them perfect candidates for ice thermal storage. Hospitals incur peak periods during visiting, laundering, lab and surgical suite hours. Chiller based cooling systems or co-generation systems can also utilize thermal storage. Co-generation systems would use waste heat to store ice.
According to Mather hospital's Director of Engineering, Design and Construction shifting their higher electrical demand to the overnight hours allows the hospital to take advantage of the lower off-peak electric rates. “By incorporating an ice thermal storage system into Mather Hospital’s chiller plant operations, we are expected to reduce our peak energy demand usage by 20 percent,” said Kevin Koubek, Mather’s Director of Engineering, Design and Construction.
Driving energy costs down
For readers of this blog, it comes as no surprise that the adoption of ice-based thermal energy storage is often fiscally driven. The most important cost to relieve from a utility bill are peak demand charges. Cre.tech reported that load shifting can result in an average of 50 percent cost savings, though in some places where peak demand charges are incredibly high that number can reach upwards of 80 percent.
The Alachua County Library Headquarters was able to save on their utility bill by incorporating thermal energy storage to capitalize on the fact that energy charges are 68 percent higher during the day. The facility has been able to avoid paying $9.25 in extra fees associated with each kilowatt of peak demand energy use by load shifting.
However, what about initial equipment costs? Economic of solar plus energy storage is making it easier for energy customers to disconect from the grid, according to the Energy Storage Report. The Rocky Mountain Institute explains that solar plus energy storage will achieve grid parity within 30 years. With more investment in demand-side improvements, grid parity may come sooner. In Hawaii off-grid solar plus storage is already economically competitive with remaining on the electricity network.
Ice thermal storage systems are comparable to conventional chiller plants with payback as little as 2-3 years for new construction. In addition, thermal storage shelf life is 40 plus making ice a sound investment. As for other less mature energy storage technologies, Solar Industry magazine reported that the real driver of getting newer energy storage costs down could very well be its application at the grid. In an era where grid modernization is sorely needed, energy storage could replace expensive peak demand power plants, which are turned on whenever demand outstrips supply—which, as recent blackouts and brownouts have attested to, is often.
"Solar plus energy storage will achieve grid parity within 30 years."
Jonathan Mir, head of Lazard's North American Power Group, told Solar Industry magazine. "As manufacturers and customers identify optimal technologies for different use cases, we expect further innovation and a continued drop in costs, which will help drive increased use of renewables."
The new path forward
Energy storage costs are trending down. With regions across the globe undertaking various efforts to improve resiliency and rely more on renewable energy, incentives to incorporate energy storage at the state level are growing. Today's incentives are not just utility driven. Incentives are also government mandated. We're seeing this new path forward in places such as Massachusetts and New York City, the first city to set an energy storage target.
New York City has a goal of 1GW of solar by 2030 and 100MWh of energy storage by 2020. There are other regions with similar mandates. California is another such state. California pioneered a massive integration of energy storage onto the grid and now aims to be 100% renewable by 2045. India, a country with 300 million powerless people, aims to add 175GW of renewable energy by 2022 and plans to supplement the renewable target with programs to procure and incentivize thermal storage. The future is clearly headed towards cleaner generation and distributed electricity networks. Has there ever been a better time to invest in energy storage?
