November 1, 2016
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. For this week’s blog post, we’re excited to introduce our first guest blog post featuring Philip Fischer of NEC Energy Solutions, Inc., a leading distributed energy storage solutions manufacturer and provider based in Westborough, MA. Read on as Fischer explains why Storage and Solar are the perfect marriage.
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 that enough it justify the costs? What other benefits does energy storage paired with solar provide?
Let’s take a deeper look into the basics of energy storage and the effects pairing it with solar can have.
What is energy storage?
Energy storage refers to the ability to hold electricity safely and reliably for future use. When deployed, energy storage has the ability to 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. The figure below illustrates this concept.
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 in order 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 as well as electric service power quality.
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 (and demand) 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 energy is generating its own electricity that’s being consumed by the business, it is taking away from what would originally be going into 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—or the way in which generation capability of the PV array would be positioned in terms of affecting consumption, billing, etc. 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 (LF)—or the ratio of peak power consumption versus average load consumption—requiring less energy to reduce the same amount of demand. 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. Anytime your business has a peak slightly higher than the average, it will result in more of a peak. The “peakier” load created by solar allows for extra demand reduction. Energy use and demand charges are easily apparent on monthly bills, but other site-specific available services such as demand response participation, ancillary services revenue, and future yet-to-be-designed revenue streams also need to be accounted for.
The economic value of 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 taken into account when considering a solar plus storage project.
Solar PV and energy storage systems are quickly maturing, resulting in reduced capital cost 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.
Philip Fischer is the Sales Director at NEC Energy Solutions.
