Leases and third-party ownership models have helped the global solar PV market grow dramatically in recent years, and now they’re spreading to the energy storage market. ViZn Energy Systems recently announced that it will offer a similar financing program from LFC Capital, Inc. for ViZn’s distributed energy storage systems. While several companies, including CODA Energy, Stem, and Green Charge Networks, offer leases that feature a shared savings model on energy storage systems for commercial and industrial (C&I) customers in the United States, ViZn’s offering will be the first to target larger facilities (system capacities of 80–500 kWh of storage) with a different leasing model that aims to be more beneficial to customers.
ViZn takes responsibility for the system performance and the risks associated with its relatively new zinc/iron flow battery technology. This move demonstrates full trust in the system’s ability to greatly reduce a customer’s energy bills. The leasing program, available for C&I projects combining ViZn’s energy storage with solar PV and/or cogeneration energy systems, is designed to eliminate construction-period financing costs and simplify the installation process. In contrast to complex and lengthy power purchase agreements (PPAs), LFC’s 3-page lease will be familiar to customers accustomed to leasing general business assets and provide them with a predictable low-cost of ownership in 6 or 7 years.
Fees and Incentives
The primary benefit from using ViZn’s system will be ongoing cost savings from reduced demand charges and energy management expenses. Pairing storage with onsite solar PV can improve the economics of both systems by minimizing the consumption of grid power during peak demand periods, as well as hedging against any future net metering restrictions or export limitations. ViZn has also designed its systems to participate in ancillary service markets by aggregating its fleet of distributed storage systems to act as a single, dispatchable resource.
While the leasing program is available nationwide, ViZn anticipates most of the uptake to come from states with high electric rates and strong local incentive programs, such as California, Texas, and several states in the Northeast. The leasing program is not available for use outside the United States at this time. However, with prototype systems already running in the United States and Europe, the company is well-positioned to move into new markets in the coming years.
Innovative financing solutions can be an important component driving an emerging market to further growth. It will be interesting to see if this business model is adopted by other players in the storage industry, and what impact it may have on the market.