Why Would a Commercial or Industrial Electric Customer Want a Battery?

by Bob Shively, Enerdynamics President and Lead Instructor

In a recent two-part series of blog posts, we looked at reasons a residential electric consumer would want a home battery. We concluded that in almost all cases, home battery systems don’t currently make sense for residential consumers other than as a threat to energy collagekeep utilities from creating overly punitive rate designs for those customers installing solar. But we mentioned that batteries may indeed make sense for commercial customers. So let’s explore why…

Walmart Wants Batteries to Manage Utility Bills

In a recent webinar[1], Walmart Director of Energy David Ozment described Walmart’s Vision 2020 energy procurement goals. By 2020 Walmart plans to increase procurement of renewables by 600% over 2010 and to accelerate efficiency so that the energy intensity of its buildings is decreased by 20% over the same time period. As Ozment described, Walmart is on the path to procuring 100% renewable electricity. But as Ozment also noted, this is an economic decision not a “feel good” or marketing strategy. Each project has to make economic sense.

Walmart plan for RE

A piece of this strategy includes using batteries to improve project economics. Walmart began pilot projects in 2013 with small 15-30 kW batteries that are charged at night and discharged during the day. This year, Walmart will pilot larger 200 kW batteries that are designed to be charged by roof-top solar systems. Its pilot partner is, interestingly, Solar City/ Tesla.

The smaller batteries have been used to time shift purchased power to take advantage of Time-of-Use (TOU) rates and to shave overall facility peak demand.  The larger batteries will be used to manage solar output so that it can be used at the time that will best reduce Walmart’s utility bills either through time shifting or peak shaving.  The larger batteries offer much more flexibility to manage bills since they can store an amount of power equal to a typical demand for a Walmart store.

Walmart is Using Batteries to Give Utilities What Utilities Want

Note the key point here – Walmart does not plan to use batteries to disconnect from the utility but simply to manage its utility costs by giving the utility what the utility rate structure tells Walmart it wants: power use at night rather than during the day, and lower monthly peak demands. Down the road, sophisticated commercial and industrial (C&I) customers in certain markets may also be able to increase the economics of batteries through participation in capacity and/or ancillary services markets.

Not too far in the future, it is likely that batteries will become a key asset for C&I customers to manage electricity procurement costs. Successful utilities will recognize this and devise rates and services that reward customers for using their assets to benefit the overall distribution grid.


Footnotes:

[1] See:  “Not Taking No for an Answer” available at  http://info.aee.net/advanced-energy-webinar-archive

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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