The energy storage revolution was off and running well before Tesla announced its much-lauded Powerwall and the monolithic GigaFactory, promising to drive down lithium battery costs and make battery storage more widely available. The prospect of low-cost batteries powering our cars, buildings and extending the reach of renewables has triggered a tidal wave of investment and entrepreneurial focus.
|Benefits to the Host Site
Benefits to the Electrical Utility
Lower peak demand charges through peak load shaving
Lower energy charges by storing inexpensive electricity (at night) and offsetting the consumption of expensive electricity (during the afternoon)
Reduce operational risk: back-up services allow hosts to maintain critical services during power outages, reducing business interruption and perishable inventory loss
Increase the value of solar PV by smoothing fluctuation in production (increasing demand savings)
Increase equipment lifespans (thermal batteries only) by decreasing the number of start/stop cycles and operating at more optimal conditions
|Defer major investments in transmission and distribution lines and substations in constrained
areas of the grid via peak load reductions
Reduce the need for peaker plants and spinning reserves by providing a “buffer” of on-demand energy storage at customer sites
Buffer grid imbalance: storage helps stabilize the grid, enabling more intermittent users & suppliers of electricity (e.g., EVs, solar PV, etc.) to safely interconnect
Provide ancillary grid services such as frequency regulation and demand response
Achieve compliance with mandatory energy storage targets (in MW)
Many people assume that electrochemical batteries (most commonly lithium-ion, or li-ion) can perform all these functions for every building type. While Li-ion batteries are an incredibly useful technology that is revolutionizing industries (personal electronics, electric vehicles, etc.), li-ion batteries have inherent limitations that can severely limit their applicability in many building categories. The good news is that other innovative energy storage technologies are now available to fill this gap in the rapidly developing behind-the-meter energy storage market.
Given the focus on lithium batteries, let’s take a closer look at their optimal application and limitations. One thing that li-ion batteries do very well in a grid setting, is “peak shaving,” or smoothing sudden spikes in electricity demand that can drive up electricity bills. This function is valuable in facilities such as manufacturing facilities or hotels that experience short periods of intense electricity usage. Li-ion batteries perform well for short, high-intensity bursts — typically 15–30 minutes in duration and their software leverages utility rate information to “shave” the most expensive energy spikes by rapidly charging and discharging the batteries many times a day. Many state and utility energy storage incentives (such as SGIP in California) are tailored for this sub-two-hour shaving application primarily because of its value to grid operators (mentioned above).
However, li-ion batteries have some key limitations, namely: cost, performance, and lifespan. These limitations make li-ion batteries unsuitable for many building categories, such as office buildings or supermarkets, that do not experience short, intense “spikes” in electricity demand.
Key Li-ion Limitations