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What is Energy Storage? How Does it Work? How Can it Benefit Your Business?

What is Energy Storage? How Does it Work? How Can it Benefit Your Business?

By Vanessa Peng

There’s been a lot of buzz around energy storage recently. We go over the basics of the technology, break down terminology, and then show you how your business can benefit from energy storage.

Energy storage, battery storage, energy arbitrage. You may have heard about all of these recently. But what do they actually mean. And more importantly how can they benefit you. My name is Carl Kasalek and my goal in this video is to summarize the basics of energy storage technology, break down the terminology, and then give you a couple examples for their use. Stay tuned as this is part one in a series that will be continuing on what is energy storage.

Thermal flywheels, large volumes of water, and finally the one you probably hear about most is battery storage, and then beyond that you may have even heard about different chemistries of various battery storage technologies. There’s lead acid flow batteries, which by the way we’ll do a separate video on at some point, and then probably the most common is lithium ion, which is what you’re used to in your cell phone that’s in your pocket right now, or your purse, your laptop computer, or anything like that. It’s the most common across the marketplace.

Each has its own benefits and downfalls, but for now lithium ion makes up over 95 percent of the market so that’s where we’ll focus with this video.

So why are you hearing so much about battery storage? Really there’s two primary reasons. Number one is the cost of batteries have decreased dramatically with manufacturing advancements. Electrical vehicle growth has been a dominant form of helping to reduce the cost. And next is increased demand, as utilities need it more than ever to stabilize their grid especially as more renewables come online.

We’re seeing that the energy usage on the grid is changing the market in Southern California. For example the whole bell curve of energy consumption has actually shifted more into the evening hours because of the high volume of solar panels installed that are powering many systems on the grid throughout the day. Most businesses particularly near the coasts have been converted to smart meters that monitor power usage on a set interval. Generally every 15 minutes the businesses are then billed based on their usage within specific time periods of the day, days of the week, which vary from utility to utility. Utilities will charge you the most when there’s the highest demand and less when demand is down. In many areas the difference in rate can be three times as much or more expensive during those high peak demand periods. In addition, they charge you an additional flat-rate fee based on your highest point of usage within a set historical period and for some utilities that can be as long as six months.

Let’s think about it like a garden hose. The amount of power you use is the water that passes through the hose on your bill. That will be listed as kW, which is the maximum amount of power you need even if it’s for an instant, is the diameter of that hose. This is shown as the KW demand on your bill. The utility charges you the KW amount to show they can provide you that amount of power at any given moment. Even if you regularly don’t use that much the most common use for energy storage is in situations where your kW demand charge is high and or the differences between your off-peak and on-peak rates are considerably different. This is where the term energy arbitrage comes into play; use cheap power to charge the batteries then turn around and use it in the most expensive periods of the day.

As an example let’s say our business in California pays 35 cents on peak but only 7 cents off peak. You now have a spread of 28 cents that you can take advantage of with energy storage. Even just trimming off the highest part of your peak can have an outstanding impact on your overall energy costs. You would also see a dramatic drop in the flat-rate demand charge on your bill.

In the next part of this series we’re going to dive deeper into the common scenario of energy storage installation paired with solar production. Please make sure you subscribe below and hit the bell icon so that you’re alerted when the next video in this series is released.

Choosing the right energy storage system for your facility can be challenging.