December 4-5, 2017 | Toronto Metro Convention Centre | Toronto, Ontario, Canada

PV Plus Energy Storage: Can Companies Use This Strategy to Save Via Peak Shaving?

The rise of solar energy and energy storage options have both utility companies and end users looking at ways to integrate these new technologies to cut costs and maintain reliability. Incentives are increasing for solar power and energy storage installations in many areas, and in some cases mandates apply. For example, California passed legislation with a goal of 1.3 gigawatts (GW) of energy storage capacity by 2020 with 15% as “behind-the-meter” energy storage installed at customer sites.

One of the factors limiting solar energy penetration into the commercial market is energy demand peaks that drive up energy prices and make solar installations impractical unless paired with intelligent energy storage. Behind-the-meter systems can use “peak shaving,” using stored energy to cover the excess demand at peak times, to smooth out the demand profile.

A National Renewable Energy Laboratory (NREL) report released earlier this year explored behind-the-meter energy storage. The study focused on optimization toward peak shaving and the interactions with solar panel installations to decrease energy costs and increase return on investment.

It’s All About Demand
Surcharges proportional to peak power instead of overall usage, known as demand fees, can constitute large portions of commercial customers’ power bills. Demand fees can compose over 50% of the total.

These fees exist to allow power companies to economically maintain the capacity necessary to handle peak loads. However, high demand fees can work against solar power, since the unpredictability of solar energy’s availability generally keeps it from smoothing out uneven demand.

Peak shaving requires intelligent behind-the-meter systems to predict output needs in real-time and reroute the stored energy supply at precisely the right time. That’s true with or without a corresponding solar installation. However, if designed, sized, and installed correctly, a behind-the-meter system can produce symbiotic effects between solar panels and the battery storage/distribution component to significantly drop monthly utility bills and lower payback periods. In short, going solar becomes more effective and affordable.

As NREL points out, solar/peak shaving installations also need willing partners in power companies, who have less to gain from adjusting demand surcharges down.

Study Results
The NREL study found that smaller, shorter-duration batteries of around 30-40 minutes were the most cost-effective arrangement regardless of the solar power components. However, load profiles vary greatly by facility. The optimum combination of behind-the-meter battery storage system and solar panel installation will require case-by-case analysis and design.

In the beginning, systems are likely to err toward a larger safety margin—in other words, a larger capacity to handle potential prediction error. The NREL study assumed perfect forecasting, and a high safety margin could make projects economically non-viable.

Sharp Electronics Corporation, who recently unveiled the SmartStorage system, believes that a much higher battery capacity is necessary to maintain the safety margin. Carl Mansfield, head of Sharp’s energy storage division, suggests that the optimal battery system usually will be in the range of 1-1/3 to 2-1/2 hours. Without the necessary safety margin, solar installations will be hard pressed to maintain a proper combination of reliability and economic viability.

In essence, the NREL study highlights how important it is to continue to improve the technology and bring down its costs to make solar panel/battery storage combinations more viable at industrial scales, and shows how improved and cheaper technology can best be put to use.

In summary, solar energy can save significant energy and therefore money in the nonresidential market, but it needs intelligent on-site energy prediction and distribution systems and sufficient energy storage capacity to do so—along with some willing partners.