Energy Storage: Plenty in Store

Large-scale projects are emerging nationwide, bringing cost savings and more sustainable property operations.
Photo of battery storage unit courtesy of Kilroy Realty Corp.

It’s been a banner year for energy storage projects, a trend that perhaps indicates a turning point for a technology that is a linchpin of the renewable power movement.

Energy storage development has skyrocketed and now totals 2,169 projects worldwide encompassing at least 64,656 individual systems, according to Navigant Research’s fourth-quarter report. The tracker logs utility-scale energy storage projects and their commercial and industrial counterparts where energy storage systems are located behind-the-meter and batteries reduce demand, provide resilience and add value to solar installations.

The movement has resulted in a steady stream of major projects signaling the growing influence of storage systems. Among the examples cited by Navigant is the 316-megawatt Ravenswood project in Long Island City, which was approved in October by the New York State Public Service Commission.  which will be the largest battery plant in New York to provide emissions-free power during peak demand, with eight hours of generating capacity.

Another showcase proposal is the 690-MW Gemini solar power plant in Nevada that comes with a 380-MW battery to help offset peak energy demand. The $1 billion project is being developed by Quinbrook Infrastructure Partners, a global investment manager focused on lower carbon and renewable energy infrastructure investment and operational asset management. It entails a 25-year power purchase agreement with Nevada Energy and is expected to help reduce carbon emissions by 1.5 million tons annually.

On the commercial and industrial side, the all-electric Soleil Lofts apartment community in Utah will feature onsite energy storage in each of its 600 units. Sponsored by a partnership of Watsatch Group, Rocky Mountain Power, Auric Energy and sonnen, the project will be the largest virtual power plant in the U.S. to use decentralized storage. 

Utility-Scale Growth

Over the last five years the growth of utility-scale projects like Ravenswood and commercial and industrial energy storage has been exponential, according to Ricardo Rodriguez, a research analyst at Navigant Research. This trend has been supported by the falling cost of lithium ion batteries (down about 60 percent). Commonly referred to as li-ion batteries, the technology has become a favorite of project developers and system integrators and is projected to account for around 85 percent of newly installed capacity in 2019.

“The growing penetration of renewable energy–particularly solar–is really the second-most significant driver for demand for energy storage,” Rodriguez said.  The rapid growth of solar presents a what he calls a “fundamental challenge for system operators by creating an imbalance in the supply and demand of energy on the grid.” That’s what’s popularly known as the “duck curve,” which is characterized by a sharp midday drop in energy demand resulting from peak solar power production followed by a short, steep ramping up in the early evening hours when demand for energy increases and solar energy production falls.

Utilities, however, must maintain electric infrastructure in order to deliver electricity to all customers on demand as they need it. As a result, C&I customers charges include a delivery charge, which includes a demand delivery charge based on the timing of the customer’s maximum electricity demand during a specific period. That demand charge can make up 30 percent to 70 percent of a C&I customer’s monthly utility bill.

Distributed energy storage systems—onsite batteries at commercial properties—reduce these bills (for customers charged by demand) by charging when demand is low and discharging during peak demand hours. 

Depending on the market and regulations, energy storage and associated software can potentially provide C&I customers with multiple advantages, according to Navigant. At the top of the list, energy storage can deliver cost reductions, smooth energy spend fluctuations and guarantee the reduction of total energy usage.

“C&I customers are placing an increased focus on resilience and redundancy of supply by deploying distributed energy resources on their premises to self-generate and make their energy spend more predictable,” Rodriguez said. As cleaner energy is produced and consumed, sustainability managers are also able to meet greenhouse gas reduction goals and green their portfolios.

Scalable, modular future

The lower cost is also driving more scalable technology and enterprise-wide solutions to monitor, benchmark and optimize energy costs, Rodriguez maintains. Software therefore becomes the X factor that helps future-proof against technological advances while many of the larger systems are modular, allowing owners to replace a single battery cell rather than the entire system.

Energy storage as a service is another model that is gaining traction. The model entails a fee for service shared savings management model, thereby producing cost savings without capital expenditures.

In California, Los Angeles-based Kilroy Realty Corp. this year completed the installation of 4.3 megawatts at nine buildings. Batteries drive a modest growth in rent, help the company’s goals of increasing the resiliency of the grid as it increases its share of renewable power, and sets the company on the right path for more electric infrastructure, reported Sara Neff, the firm’s senior vice president of sustainability.

“Batteries that help deal with balancing electricity on the grid are very important, especially for an owner as we deal with more and more electric cars,” she said. “The electric demands on the building are constantly shifting.”

Kilroy’s move to install battery storage began in 2016. Since then, battery prices have plummeted as the technology has evolved and their efficiency has doubled within the same footprint. As batteries become more efficient, however, the incentives also decline.

“Trying to deal with these long-term projects where the technology changes rapidly can be tricky, but the changing technology can be a benefit,” Neff says. Over the course of one project, for instance, an bottleneck that arose because a battery did not initially fit on a loading dock was opened by the next generation battery, which was half the size of its predecessor.

Kilroy’s onsite batteries have an average footprint roughly equal to six parking spaces. Neff notes that finding that space in a Class-A commercial project is no cinch. Locating batteries also requires owners to stay on the right side of both fire safety permitting and insurance coverage. While solar panels are well understood, battery storage is less so.

Now Kilroy is actively looking in other markets to find suitable locations for battery storage. “Forward-thinking REITs are likely to consider battery storage as a key part of their overall sustainability strategy in the coming years,” Neff predicted.