In the basement garage of a high-end apartment building in the middle of New York City, a few electricians are quietly installing a century-old product that is now poised to revolutionize an industry — and maybe lead the United States into a carbon-neutral future.
Taking up about two parking spaces is a wall of boxes. They are simple lead-acid batteries, similar to what keeps the lights on in your car. But these batteries are linked together, connected to the building’s electricity system, and monitored in real time by a Washington-state based company, Demand Energy. Demand’s installation at the Paramount Building in midtown Manhattan is going to lower the building electricity bills and reduce its carbon footprint, even while it doesn’t reduce a single watt of use.
Every night, the batteries charge up. Every day, they run down, providing a small portion of the building’s energy and reducing the amount of power it takes off the grid. This cycle of charging during low-use times and discharging during high use times helps level out the Paramount’s electricity use.
“The electricity grid as it’s designed today is a perfect just-in-time energy system,” Doug Staker, president of Demand Energy, told ThinkProgress. This means that for every computer turned on in the morning, the grid has to supply that amount of power. But it also creates opportunities. “At night, when all the demand goes away, there is a potential to have oversupply,” Staker said. That oversupply goes into batteries. It all comes back to flattening the demand curve — driving demand down during the day and up at night.
Apartment buildings like Paramount are perfect examples of demand. During the day, lights, elevators, and air conditioning are running. And for the past few years, on hot summer days, the local utility, ConEd, has asked building managers to dim the lobby lights, shut down some elevators, and kill air-conditioning in non-critical areas.
“Peak usage in the city is a critical issue,” Joshua London, vice president of Paramount’s management company, Glenwood Management, told ThinkProgress.
“We would get a notification that it is a critical time and we would have to draw down certain systems,” London said. “That, in our opinion, really kind of got maxed out, because the calls to do so were so frequent, and of longer duration.”
Last summer, some 800 city buildings participated in the so-called demand response program, which offers payments for participating in the program and bonuses for energy savings on those days. But those payments are small compared to what London’s building will save by installing batteries.
Follow the money
A quick word on electricity bills: American home bills usually have a flat rate for the amount of electricity the resident uses. No matter when it’s used, or how quickly power is drawn, the rate is the same amount per kilowatt hour. Flat rates are like an odometer saying how many miles were drive — or, in this case, how many kilowatt hours (kWh) have been used. But for commercial and industrial properties, including residential apartment buildings, the electricity bill also has a demand charge. The demand charge acts like a speedometer: Not only is a business charged for the total amount of electricity it uses, it is also charged for how quickly power is taken. A business will receive a higher bill for using 10 kWh in an hour than for using the same 10 kWh over, say 10 hours. In New York, demand charges make up, on average, half of commercial and industrial customers’ bills.
Electricity rates are designed like this because utilities don’t like peaks in demand. Peaking plants are expensive, wasteful, and dirty. But from the utility’s perspective, putting a lot of electricity on the grid is also bad news. The higher the peak demand, the more infrastructure — wires, generators — has to be built. And transmission congestion means a less efficient system. (Line loss, a phenomenon in which not all the electricity gets from point A to point B, is greater when the transmission system is overloaded). Not to mention the risks of brownouts and blackouts that increase with too much strain on the grid.
The regulator that oversees ConEd, New York State’s Department of Public Service, has undertaken a massive program to level out electricity use. ConEd, specifically, has been asked to reduce its peak demands by 100 megawatts (MW), according to engineer Robin Gray. One of the tools for reducing demand — or “peak shaving” — is battery storage.
“It’s good for our system to remove demand off the system.” Gray told ThinkProgress. “What they are doing on a building level, we are doing on a system level.”
A storage boom
This summer, ConEd even expanded its incentive program for storage, and it is also adding its own storage. At a substation in Brooklyn, ConEd is installing a 1 megawatt (MW) battery that will discharge over the 12-hour peak in the neighborhood. For the utility, it’s cheaper and easier to put in a battery than to build out more infrastructure, especially in the crowded city.
“Traditionally, we would build new substations… which are very expensive. Space is difficult,” Gray said. “This opens many doors to us in terms of how we control our systems.”
In fact, ConEd is looking into putting battery storage, paired with solar panels, at points along the electricity lines, similar to a New Jersey project by utility PJ&E. The potential uses of batteries, it seems, are limitless.
This is good not only for utilities and management companies. Batteries can play a significant role in lowering our collective carbon emissions. These days, nearly a third of all U.S. carbon emissions come from the electricity sector. As the United States phases out coal plants — which are responsible for 70 percent of that carbon — and turn to renewable sources, it will be critical to incorporate battery storage. In fact, on a larger scale, stored hydropower has already been providing this service.
“There will always be some ups and downs in the grid,” Matt Roberts, director of the Energy Storage Association, told ThinkProgress. “System-wide efficiency is really the moniker that energy storage will use moving forward.”
He said the Department of Energy has identified 15 different services that energy storage provides. (Energy storage includes flywheels and pumped hydro. Batteries are a more modern utilization) “Energy storage can respond in a sub-milisecond,” Roberts said. “It’s good for the grid. It’s efficient, because you don’t overproduce. You give it the exact amount of energy you need.”
Those benefits are why some regulators are requiring their utilities to install storage. In 2013, the California Public Utilities Commission (PUC) introduced an energy storage target of 1,325 megawatts by 2020. Unsurprisingly, California’s three utilities — PG&E, Southern California Edison, and San Diego Gas & Electric — have more installed storage capacity than any other state.
Overall, the industry is on the upswing. Electric car company Tesla might have garnered the most headlines for batteries — building a “gigafactory” in Arizona and launching a new residential battery product — but there are literally dozens of companies jumping into the game. According to data from GTM Research and the U.S. Energy Storage Association, 5.8 MW of energy storage were installed in the United States in the first three months of this year, up 16 percent from the same time last year. Even more impressively, behind-the-meter energy storage — that is, batteries on homes and businesses — had its largest first quarter in history, up 132 percent from the year before.
As Roberts said: “We’re beyond the early adopters phase.”
The changing grid
For a long time, the only options for peak shaving have been in the field of efficiency. In fact, energy efficiency programs have been responsible for huge declines in carbon emissions in the United States, as our air-conditioners, driers, and even light bulbs suck up less power. But it is still critical to change the generation mix. Solar has been a success story in recent years, reducing emissions by as much as 23.5 million metric tons annually — the equivalent of shuttering six coal-fired plants, according to industry data.
Solar and storage are symbiotic. Solar panels start producing when the sun rises and continue through the hot, high-demand part of the day. That is perfect for shaving the top off the demand curve. But then people go home and turn on televisions, air conditioners, and lights. The actual electricity demand usually peaks between 4 p.m. and 8 p.m. During that time, the sun sets, cutting off supply to solar panels.
The electricity load chart below is known as the Duck Graph. (The duck’s belly is created by the dip in the load during the day, and the steep line that makes the neck represents the need to quickly ramp up generation as load increases at the same time the sun sets in the evening). Based on California’s demand, the chart predicts a time when California’s solar use will be so high it will destabilize the grid. Even while lowering overall demand (which, under the one-to-one model, is critical for lowering infrastructure needs), the rapid drop in electricity production creates a spike in demand from other sources.
CREDIT: Courtesy CalISO
Really, what we’re looking for is a shallow, flattish curve of demand. A turtle curve.
Now look at this chart from Demand Energy’s monitoring system. Demand is flattened on both sides — shaving the peaks and increasing demand during low times. In other words, the technology reacts in real time, evening out the building’s electricity use.
Not only does this save the building money, it’s part of a larger effort to make the city’s grid stable.
“[Batteries are] one way the utility might possibly move forward and not face the ultimate extinction of their infrastructure due to age and overuse,” London said bluntly. “This operation of the storage system will help us stabilize the neighborhood.”
First energy storage stabilizes the Upper East Side. Next up, the world?