Published to LA Confidential, Winter 2018
At this time, most utility batteries are being installed to manage frequency regulation, provide synchronized reserves, and other ancillary services of interest solely to grid operators. How much a retail power customer may save by installing a battery system, however, depends on a customer’s utility tariff rate, and how the power storage system is operated.
There is no question that the state of the art in battery storage systems is advancing rapidly, while at the same time, expanding production capability at locations such as Tesla’s “Gigafactory” is causing prices to fall significantly (in dollars per kWh of storage capability). Following a trajectory much like solar photovoltaic (PV) systems, battery storage is becoming cost effective in more and more applications.
While battery pricing has been rapidly dropping, care is needed to consider the balance-of-system expenses that can significantly increase total installed cost. But even if costs fall enough to yield an attractive payback, is power storage an out of this world option? Not necessarily. Let us look at a few of the other “tribbles” that need to be addressed, regardless of pricing.
Fire codes – While a few applications of batteries (e.g., “hoverboards”) have given some people pause about installing them in their buildings, recent New York City Fire Department regulations on stationary lithium-ion batteries have favorably addressed fire prevention and suppression concerns. In a 97-page report issued earlier this year, NYSERDA and the City found that “The installation of battery systems into buildings introduces risks, though these are manageable within existing building codes and firefighting methods when appropriate conditions are met.”
Any battery big enough to actually manage a building’s daily peak load will be large and heavy.
Regarding a potential fire, the study found that the batteries it tested emitted toxic gasses that may be “mitigated with ventilation rates common to many occupied spaces” finding that “toxicity is similar to a plastics fire” already a factor in most office environments with their computers, copiers, printers and furniture. Among the other key findings in the report are that water, by far the most common fire suppression agent, is the most effective extinguisher for a battery fire, and that thermal runaway (i.e., fire spread among battery cells) may be addressed by cell module design.
Space and weight considerations – Any battery big enough to actually manage a building’s daily peak load will be large and heavy. While basement floors may be capable of holding stacked battery cells, locating on an upper floor or roof may require structural enhancements.
Leasing issues – To get around the high first cost, a few firms lease their batteries to customers. They secure the large dollar utility and/or governmental incentives up front, and the leases offer them a guaranteed revenue stream for 7 seven (or more) years. Customers need to understand that a lease does not assure that power storage will indeed cut their electric bills. Smart battery software is needed to optimize charging and output, with a performance guarantee that delivers a stated minimum savings, or a payment if it is not achieved.
Software – Key to securing serious dollar savings are the algorithms (i.e., computer formulae) that determine when, and how much, power should be stored or discharged. At this time, there is no easy and standardized way to compare them. A good program needs algorithms that, in real time, take into account:
- Supply price/tariff structures, and/or a third party’s contract terms.
- Day Ahead and hour-ahead wholesale supply pricing.
- Seasonality and timing of the existing delivery tariff.
- Wholesale ancillary service opportunities and requirements (e.g., response time).
- Facility’s recent and projected daily load and reactive power profiles.
- Projected output profile of on-site generation (e.g., solar PV system).
- Projected weather conditions.
- Battery condition/degradation.
Navigating such issues requires expertise in tariffs, power procurement, and energy contracting. Luthin Associates has all three, and would be happy to offer its guidance to customers ready to explore the options of power storage.
For a more extensive explanation, please click on the link for the related article: The elusive art of predicting energy storage savings in the real world