The Economics of Commercial Energy Storage Systems

There is no doubt in my mind that Energy Storage Systems (ESS) will be as ubiquitous as solar – in all market segments. Utility companies are installing these systems to balance their intermittent demand and generation of electricity. Homeowners will install these systems for backup power and to store their daytime solar power for use at night. But for pure economic reasons, perhaps the most compelling market of all is for commercial and industrial (C&I) building operators.

Electricity bills for commercial and industrial buildings are composed of two charges: energy usage (measured in kwh) and demand charges (measured in kw). C&I customers often pay thousands of dollars a month for the peak power demand they encounter during any 15-minute period. Depending on the equipment being used in the building, these demand charges can exceed the energy usage charges. For example, a facility’s average demand may be 100 kw ($2,000 a month with a $20/kw demand charge), but for several hours a month the demand may spike up to 300 kw ($6,000 a month). An ESS that senses when these demand peaks occur – and then discharges batteries instead of drawing power from the grid – can completely eliminate these high peak demand charges.

To learn more about the economics of commercial energy storage systems — and why these systems are rapidly gaining market traction — Listen up to this week’s Energy Show on Renewable Energy World.