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Pros and Cons of Energy Storage and how it can shape Ontario’s future electricity

 

Energy storage is the next frontier of electricity. Until recently, there were no cost effective ways to store electricity. Literally, the best way to store electricity now is to pump water up a hill, and release it when the electricity is needed.That is all about to change, as the cost for batteries falls dramatically, and other innovative storage methods become commercialized.Energy Storage


So what does that mean for you, an energy manager?

It means that the Ontario electricity market could see some unexpected changes moving forward, for example the cost of ‘on peak’ energy, and the cost of ‘off peak’ energy will likely move closer together as time progresses. It also might mean that energy managers will have the ability to reduce demand charges, and increase reliability of their operations. Below I will examine the pros and cons of energy storage.

 

Pros of Energy Storage:

Reliability: some organizations suffer from utility reliability problems, such as brown outs, or blackouts. Having energy storage on site would allow you to instantly and dynamically turn on your storage device, and improve the service, resulting in less downtime. This would all depend on the size of your storage device (battery), and how much electricity you need at the time.

Demand Charge Optimization: Your utility charges transmission and distribution charges which are a product of the absolute peak (snapshot in time) of how much electricity you are drawing from the grid at the time which is the highest throughout the month. In theory, with a combination of smart software, and electricity storage, you could anticipate the peak draw, and use some energy from the storage device to reduce those charges. The results vary from customer to customer, but this is typically the most cost effective reason to look into electricity storage options.

Incentives: Many utilities and states are beginning to launch storage incentives similar to feed in tariffs for renewable’s. In the Long Term Energy Plan released in 2013, the government indicated they intend to procure 50 MW’s of storage at the end of 2014 onwards. The reason is because the more distributed storage that exists in the system, in theory, the less stress on the grid during peak times. This can save utilities money as well as result in less grid maintenance expenses in the future.

 

Cons of Energy Storage:

Regulatory: The incentives for energy storage are not yet clear in Ontario, and how this will be regulated with market rules is not yet clear. It wouldn’t benefit early adopters to install these systems yet, as they will likely see very favourable incentives sometime next year.

Unproven: There are not many commercially available electricity storage systems that exist yet, and therefore there are fewer case studies, and testimonials. Because the technology is relatively new, and only recently became feasible for business to use, it will take some time for this market to mature.

Expensive: There is no doubt about the fact that at current prices, it is hard to calculate/ prove an ROI for energy storage. It is possible, that as time goes on, if industry expert projections prove correct energy storage will be something which we talk about more and more frequently.

 

Overall, battery storage is an increasingly popular area, especially with the recent success of electric vehicles, and the rapidly falling costs, batteries could do a lot to change how our electricity grid functions. The first step involved in calculating whether battery storage might make sense for you is in big data. Energy Managers would typically do an audit of their system, gain a concrete grasp of how you consume energy, and when. From there the energy manage can begin to understand if battery storage is a feasible and beneficial option to their organization.

What do you think? Will battery storage take off, or will it be like the fuel cell was in the 1990’s, a lot of sizzle but no steak!