There are many ways to utilize energy storage to provide benefits to the local electricity grid. Depending on the size of the storage project and the technology, usage will vary. Here are some of the benefits:
Peak Power Supply
Utilities want to generate and procure the cheapest electricity possible to provide the greatest value to customers. However, there are seasonal and daily spikes in electricity usage that require utilities to spin up added power supply for a short period of time, such as on hot summer days. Energy storage can be used during these periods to serve demand spikes in a more affordable and sustainable way.
The American electricity grid runs on alternating current (AC) that must operate within an accepted frequency range. Utilities must keep this frequency within a narrow band to prevent damage to electrical equipment. They do this by ramping generation assets either up or down. However, it can often take several minutes or longer to adjust some generation units that run on coal, nuclear, or natural gas, the traditional providers of this service. This creates a unique opportunity for utilities to use energy storage as it can react in seconds rather than minutes or longer.
Some electricity customers have critical loads that must have fully reliable electricity supply. If a grid outage occurs, these customers can utilize an on-site generator to power these loads. Now that energy storage is more affordable, facility managers are choosing battery storage to provide backup power instead of fossil fuel alternatives like a diesel generator.
Most electricity customers pay different rates for electricity depending on the time of day when it is consumed. This is referred to as a “time-of-use” rate. When the electricity rate is “on-peak” a customer will pay more for each kilowatt-hour of electricity than if the rate is “off-peak”. Energy storage allows customers to play “energy arbitrage” by buying (charging) power at low rates and selling (discharging) it at a time of higher rates.
Non-residential and increasingly residential customers pay for both energy consumed over time and peak power usage during the course of a billing period. Every 15 minutes, the utility meter provides these measurements to the utility. Even if usage peaks during just a single 15-minute period of an entire month, the customer will pay as if this peak usage occurred every 15-minute period.
This drastically incentivizes customers to utilize energy storage for “peak shaving”. In this case, on-site energy storage will intelligently predict when a customer will use more power and respond by discharging electricity to prevent demand spikes.
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