The Many Roles of Energy Storage
Rising in tandem with the proliferation of solar capacity are advanced energy storage technologies which are driving down the costs of storage.
As we dive into the second half of the decade, it is inevitable that renewable energy will play a leading role in the electricity generation mix. Wind and solar power represent the majority of new generation capacity added to the US grid. Rising in tandem with the proliferation of solar capacity are advanced energy storage technologies. Dramatic additions of energy storage capacity will allow for integration of large amounts of distributed renewable energy resources and improved grid resiliency.
Grid-Wide Role of Storage
Net load is the difference between the forecasted grid load and the expected production from renewables like solar. As solar resources amass, the load requirements met by traditional fossil generators decreases. The large dip in the graph above displays how renewable electricity production could displace significant amounts of traditional generation. The ramp-down, and subsequent ramp-up, caused by mid-day renewable production introduces a new set of operating conditions placed on utilities and the grid.
One way to minimize the cycling costs of fossil fuel power plants is to integrate energy storage battery units into homes and substations across the grid. This would allow for excess solar generation to be used later in the day, when the sun begins to set and folks return to their homes from work. Storage adds the flexibility to serve these loads as needed and begin to minimize extreme load cycling.
It is becoming increasingly clear that utility-scale solar plus storage is critical to the efficiency and reliability of the grid. Storage can also add value to the residential market. Solar plus storage is especially beneficial in territories experiencing time of use electricity rates. Residential solar plus storage improves the investment case in self-consumption regimes (in the absence of net metering) by allowing solar energy to be used later in the day when the sun's not shining. In a post net-metering world, the only way to capture the full value of a PV system would be to store the energy and consume it later throughout the day.
Time of Use (TOU) charges are one way utilities try to encourage users to time their electricity usage to avoid peak load conditions. For example, for the Colorado Springs Utilities peak hours in the summer are 3-7pm, and 4-10pm in the winter. Residences consuming electricity during this time will face a higher rate than consumption during off-peak hours.
In addition to TOU rates, utilities have recently incentivised residential energy storage to smooth peak events. California's PG&E has incentivized up to $0.50/Wh for residential energy storage, as part of the Self Generation Incentive Program (SGIP). The increasing prevalence of TOU charges in the marketplace, combined with energy storage rebates, encourages the adoption of solar plus storage in a residential setting more than ever. The SGIP was updated in July to allocate 75% of the program funds to energy storage, of which 15% is for residential projects.
As battery costs fall, the feasibility for solar plus storage at commercial/industrial (C/I) facilities increases. The business case of solar plus storage at C/I facilities is driven by the tariff structure of the electricity provider. Unlike residential consumers, who are charged primarily by their kWh consumption, larger electricity consumers must also pay demand charges on a kW basis.
To calculate the demand charge of a facility, the utility notates the highest average 15 minute period during a billing cycle. This is a surcharge on top of standard kWh rates and often times is a substantial portion of the total bill. With solar plus storage system on site, a facility can decrease both the total kWh and peak kW usage. First, solar production during the day can offset the energy needs of the facility. Second, a properly sized battery bank can respond to peak load events to lower the kW demand charges of the facility.
Other Storage Uses
For residences with limited grid accessibility or unreliable grid performance, an off-grid solar plus storage systems could make sense. With super storms and hurricanes increasing in both frequency and strength, installing solar with battery backup storage systems provides energy security when the grid goes down. Despite the low initial costs of fossil-fuel generator backups, batteries offer clean and dependable power that can maximize the value of your solar system.
In conclusion, there are many valuable uses for energy storage. Energy storage will pave the road for a smooth transition to distributed renewable resources tomorrow, while increasing both value and grid resiliency today.