Permanent load shifting and the future of energy storage

By Mark M. MacCracken

Energy storage is critical to creating a more reliable, efficient electrical grid by optimizing other grid assets and utilizing them more intelligently. Simply put, energy storage disconnects when energy is created (or collected) from when it is used. In the case of building-scale energy storage, it shifts a large portion of a building’s energy demand from on-peak to off-peak times. Grid scale storage captures large amounts of excess energy that may be available from renewable energy and stores it for use when called upon by the electric grid.

To increase the widespread use of both building and grid scale energy storage giant steps have taken place across the United States. In Congress, Senator Wyden has introduced S.1030: Storage Technology for Renewable and Green Energy Act of 2013. Most recently, the California Public Utilities Commission (CPUC) has released a proposal to consider the adoption of procurement targets for viable and cost effective energy storage systems. One of the targets would be the implementation of 1.3 gigawatts of storage by 2020. This proposal is a result of the 2010 California Assembly Bill 2514, the first state law in the nation for energy storage.

In addition to the Green Energy Act and CPUC proposal, California has also introduced Resolution E-4586. This will implement a standardized permanent load shifting (PLS) program applicable to SCE, PG&E and SDG&E, three of California’s public utilities. As defined by the California Resolution, “Permanent Load Shifting” refers to the shifting of energy usage from one period of time to another on a recurring basis, often by storing energy produced during off-peak hours and using the energy during peak hours to support loads. Examples of PLS technologies include ice storage and batteries. Ice storage systems use a standard chiller to produce ice overnight which is stored in tanks. The stored ice is used to cool buildings the following day. This type of energy storage is especially important since the creation of cooling has been the major cause of electric grid issues. Summer spikes in electricity demand are largely due to the need for cooling. Technologies such as ice storage can make more efficient use of underutilized night time generation and help enhance the viability of renewable wind and solar energy by capturing the generation when loads are low. The energy can then be dispatched quickly to help offset the intermittent availability that is associated with renewable energy. 

Utilization of energy storage technologies increase the reliability of California’s power grid, enable two-way flow of electricity, increase the usefulness of renewable energy, and reduce air pollution from greenhouse emissions and smog forming nitrogen oxides. They also keep electricity prices lower than the alternative high costs of building new power plants and transmission lines. The PLS program would accelerate the deployment of renewable energy sources by offering incentives for the use of energy storage by the utility customers. 

Implementation of the PLS program shall commence 90 days from the issuance of the California commission’s resolution dated May 13, 2013. It is set to provide $32 million in incentives. Through the program customers will receive $875 per kW shifted from the peak electric period, up to a maximum of $1.5 million per project, for storage systems that “permanently” move a building’s demand from hot afternoon peak times to other times. Peak electric periods are from noon to 6pm for SCE and PG&E and 11am to 6pm for SDG&E. Incentives would be capped at 50 percent of total eligible project costs. 

In order to ensure the feasibility of an installation, a study must be done by a qualified mechanical engineer. Once a commissioning report is submitted and the project verified by the utility, customers may receive up to 25 percent of the cost of the study (up to $10K). Other stipulations of the program include measurement and verification with quarterly reporting to the utility, automated control and a 5 year warranty from the equipment manufacturer. Lastly, the project must remain installed and functioning for a minimum of 5 years.

After years of careful considerations, the future of energy storage is rising. A leading industry research firm recently estimated that revenue from energy storage systems for commercial buildings will top $7.5 billion by 2022. By mid-August SCE, PG&E and SDG&E should be announcing their PLS programs to customers. Additional programs and legislation will be needed in order to reduce peak demand and change our energy consumption patterns. To support the pending Storage Bill, energy storage supporters should contact their local congressmen. As for AB214, let’s hope to see other states follow suit in putting energy storage to the forefront as a critical strategy to meeting low carbon energy goals.

Mark M. MacCracken is the former chair to the US Green Building Council (USGBC).