Navigant Research Blog

Storage Helps Ease Schools’ Demand Charge Pain

John Gartner — April 7, 2015

For many businesses, demand charges are like room service delivery charges for travelers, only more painful. Utilities levy demand charges on customers for short duration peak power usage during a month, which can add between 15%–50% to the cost of a utility bill for the entire month. In some cases, this can mean hundreds or thousands of dollars for a few minutes of excessive power use.

Utilities justify these substantial fees because high consumption of power at peak times can strain transmission and distribution assets or cause them to invoke their most costly generation equipment.

No Money Down

In power-constrained California, where demand charges run high, five school districts have turned to batteries to save money by reducing or avoiding demand charges. Energy storage solutions provider Green Charge Networks (GCN) developed energy storage systems using battery packs from Samsung SDI for Mountain View-Los Altos Union High School District, Oak Park Unified School District, Butte Community College, Peralta Community College District, and California State University, Fullerton.

GCN’s CEO Vic Shao told me that because of the high demand charges (Shao says San Diego Gas and Electric charges $45 per kilowatt), his company can provide the systems for free to the schools. The company can recoup its investment quickly by receiving a share of the savings that the schools receive from avoiding demand charges. For perpetually cash-strapped schools, a no-money-down solution for cutting energy costs can be compelling.

Solar Fee

Since the partnering schools are focused on reducing emissions, GCN also threw in free Level 2 electric vehicle (EV) chargers to incentivize employees and the districts to buy EVs. Shao said that thanks in part to California’s incentive program for storage and other clean energy technologies, the company has done more business aimed at combatting demand charges in the last 2 months than in the previous 3 years. New York City is another attractive market for storage systems, according to Shao.

Similarly, demand for energy storage systems in Arizona could be on the rise thanks to a controversial new demand charge being levied exclusively on solar customers by the Salt River Project utility.

GCN is one of several vendors, along with Stem and CODA Energy, offering storage products aimed at demand charge mitigation, as described in Navigant Research’s report, Community, Residential, and Commercial Energy Storage.

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