Commercial, Energy Storage, Industrial, Utilities - September 7, 2017 - By Amy Poszywak
Storage sees record Q2 helped by C&I deployments
The second quarter of 2017 marked a record in the energy storage space, bolstered by a spike, led by deployments in California and New York, in the nonresidential market, which includes commercial and industrial installations.
Overall, 443 residential and commercial energy systems were deployed in the U.S. in the second quarter, representing 32 MWh of capacity, according to GTM Research and the Energy Storage Association's U.S. Energy Storage Monitor. The groups said in releasing the report Sept. 7 that the numbers mark the most grid-interactive behind-the-meter energy storage ever deployed in a single quarter.
The nonresidential market, which includes commercial, industrial, religious, military, and non-profit behind-the-meter deployments, rose to 27.3 MWh in the second quarter, a 151% increase over the first quarter of 2017, according to the report's executive summary. In California, favorable state policy, such as the mandate that investor-owned utilities install 1,325 MW of energy storage by 2024 that includes a carve-out for customer-sited installations, has been the primary driver of deployments.
Brett Simon, an energy storage analyst at GTM Research and one of the report's authors, said deployments within the commercial and industrial market are projected to experience significant upticks over the next few years, with a large boost in 2018 expected based on the procurements made this year that will begin to come online. Simon also cited an appetite among C&I companies for storage for bill management purposes.
"[There can be] an agreement whereby the developer will lease the system to the end customer and have some kind of utility contract where they will guarantee discharge at certain times, and then they'll either pass that along to the end customer in the form of bill savings or reduction in monthly payment," Simon said in an interview with Smart Energy Decisions. "Additionally, when the storage system is not needed by the utility, it could be used for bill management, generally through managing demand charges, which can be a significant portion of C&I customers bills."
Demand charges for C&I customers generally range anywhere from 30% to 40% but can be as high as 50% in some areas, he said.
New York also saw an uptick in nonresidential deployments of energy storage in the second quarter, though not at pace with California as challenges around lithium-ion system permitting in New York City have slowed the market. This is despite "a massive opportunity identified by developers," Simon said, adding that while the New York City Fire Department and the Department of Buildings are conducting an ongoing storage safety analysis, broad standardized rules have yet to be established.
"Even though New York City has been identified as a place for a lot opportunity given the high demand charges, grid constraints, it's still a place where the actual level of deployment has been fairly small and fairly erratic, quarter to quarter," he said.
Beyond New York and California, Massachusetts is the next state to watch for potential energy storage opportunities for commercial and industrial companies. In the past year, the state has laid a lot of ground work toward building an energy storage market. Examples include the state's "Advancing the Commonwealth Energy Storage" program, which could result in funding for C&I deployments, according to Simon.
Energy executives from Whole Foods Market and Cinemark shared their experiences with energy storage on a panel at the Smart Energy Decisions Innovation Summit earlier this year. An excerpt of that discussion is available here (page 26).
Other states that are moving forward with favorable energy storage policies and/or proceedings to encourage utilities to accommodate storage in distribution planning and renewable integration efforts include Arizona, Nevada, New Jersey, New Mexico and Virginia, GTM said in announcing the second-quarter report.
In total, 50.4 MWh of energy storage were deployed in the quarter, rising 6% from the same quarter last year. GTM Research expects 591 MWh of storage to be deployed across all segments by the end of this year.