Energy Storage

Get in front of behind-the-meter energy storage

With “behind-the-meter” energy storage receiving increased attention these days as costs go down and customer deployments go up, now is a good time for utilities to consider what the buzz is all about and, more importantly, determine its potential implications for both customers and the power sector.

When you think of BTM energy storage, the Tesla Powerwall may come to mind. The technology underlying the Tesla Powerwall is a lithium-ion battery, which is the predominant BTM energy storage technology being deployed today, and that trend is expected to continue in the future as costs for the technology continue to fall. It’s also possible that you have heard about vehicle to grid technologies, which has the same underlying idea, it’s just that the lithium-ion battery being used is located within an electric vehicle. It is worth noting that while batteries grab most headlines and have increased in popularity in more recent years, grid interactive electric water heaters have actually been around for a while and can be more cost effective.

If I am a utility customer, why might I be interested in BTM energy storage? Key drivers may be desired bill savings, increased self-consumption of distributed generation, or resiliency. Customers under a time-of-use and/or demand charge rate structure may look to BTM energy storage as a way to save on utility bills. This can be especially appealing for commercial and industrial customer classes. Others may have solar or wind already installed and want to increase utilization of their clean energy resource. Then there are customers who may want BTM energy storage to help provide backup power in case of an outage. This could be a matter of comfort, or it could be more serious, like maintaining critical operations at a health facility.

From the standpoint of utilities, it is important not only to understand these types of customer motivations, but to consider implications for the power sector. For example, as customers utilize BTM energy storage to alter their load and lower their electric bills, utility revenue decreases. The issue here is not inherently that utilities are earning less money, but that utility costs may not be decreasing in correlation.

Another potential concern is “grid defection,” which is when a customer disconnects from the main grid. This issue has been flagged as more customers consider pairing distributed generation with BTM energy storage. However, grid defection has not taken off as it is not currently cost effective or technically possible in most places. This, in combination with other industry trends, such as electrification, suggest that widespread grid defection is unlikely anytime soon.

BTM energy storage can also bring benefits and new opportunities for utilities. Since BTM energy storage can reduce peak demand and alleviate stress on the system, this may provide an opportunity to defer or avoid investment in infrastructure upgrades. For utilities that pay wholesale power suppliers for demand or capacity, BTM energy storage could help lower those payments. BTM energy storage can also help address the challenge of renewable energy intermittency by charging during times of excess generation and discharging during periods of high demand. Many utilities offer demand response programs to help manage peak demand, and BTM energy storage can be another technology option for customer participation in such programs.  If BTM energy storage reduces peak demand, it can consequently improve the utility’s load factor, increasing system efficiency. Furthermore, utilities can explore providing new service offerings for BTM energy storage customers such as being the asset aggregator or owner. Services associated with BTM energy storage that are not performed by the utility could be executed by a third party.

Several public power utilities have developed BTM energy storage related programs. JEA in Florida, SMUD in California, and Salt River Project in Arizona all have incentive programs for BTM energy storage systems. Austin Energy in Texas has the Sustainable and Holistic Integration of Energy Storage and Solar Photovoltaics project, which includes BTM energy storage pilots. Investor-owned utilities Green Mountain Power in Vermont, and Liberty Utilities

in New Hampshire have pilot projects where they own their customers BTM energy storage system. Ultimately, utilities are exploring different ways to leverage this technology for the benefit of both the system and their customers.

To learn more about BTM energy storage, please read the Association’s report, “Behind-the-Meter Energy Storage: What Utilities Should Know,”

The report outlines the values and challenges of BTM energy storage systems, from both the customer and utility point of view. It also includes highlights of recent federal and state activities, and utility case studies.