• Commercial and Industrial
  • Energy Storage
  • Power Outages

C&I Energy Storage Systems Are Increasingly Providing Backup Power

Ricardo Rodriguez
Oct 22, 2019

Overhead Power Lines 1

For many commercial and industrial (C&I) facilities, power interruptions are an expensive disruption. Several factors are fueling this phenomenon, including overloaded transmission networks, mothballed primary generation facilities, and the influence of climate change on the frequency of severe weather events. These factors make power interruptions an unavoidable part of operating a business. These interruptions have catalyzed a growing interest in distributed energy storage systems (DESS) for backup power.

Why Is Backup Power Becoming More Popular?

Traditionally, funding backup power solutions was prohibitively expensive. They’re a major CAPEX that offers no return, only OPEX savings. In addition, accurately measuring both the value of lost load and the ROI of a backup power solution is complicated. Three factors are uniting to create the market for DESS-driven backup power solutions.

  • Lower DESS Technology Costs

Even though the DESS market is just beginning to grow, it has seen rapidly decreasing system costs. Decreasing system costs combined with changes in regulations and utility rate structures will stimulate the DESS market, which will contribute to the growth of DESS driven backup power solutions.

  • Emergence of Ancillary Services Revenue

DESS vendors are pioneering business models where DESS that provide services directly to utilities or participate in competitive markets for energy capacity and ancillary services. These services will be provided by a single DESS installation and a networked series of DESS installations that can operate as a virtual power plant (VPP). These new business models are defining new revenue opportunities for DESS installations that will allow C&I facilities access to lower cost of DESS driven backup power solutions.

  • Improved Software Platform Functionality

DESS software platform providers have developed sophisticated software algorithms to evaluate the effect of multiple DESS applications to forecast potential project revenue across a single DESS installation and a VPP. The functionality of these software platforms to forecast the impact of multiple applications on project revenue will aid the evaluation of DESS driven backup power solutions.

NantEnergy’s SmartStorage Systems Provide  

As C&I customers increasingly search for UPSX solutions, energy storage companies are offering solar plus storage solutions that provide resilient power for significant durations. For example, NantEnergy's SmartStorage systems were installed at six sites within the Santa Rita Union School District in Salinas, California. The systems provide up to 7 hours of power at each school during a grid outage while at the same time offsetting the school’s energy and demand usage. These multi-campus systems will allow the schools to support the community as a Powered Emergency Response Center during disasters that cause prolonged outages.

While orchestrating these solutions can be challenging, namely because of the upfront capital required to install systems that deliver payback over time, NantEnergy is offering energy as a service financing options for both new solar plus storage systems and for storage retrofits to existing solar installations. Depending on the project, power purchasing agreements for solar plus storage systems are available for up to 25 years, while retrofitted systems are offered a 10-year storage-only lease option. In addition, NantEnergy offers a performance guarantee made possible by the company’s system control software.

Distributed Scale Energy Storage Overview Report

Navigant Research’s upcoming report, Distributed Scale Energy Storage Overview, will explore the growth of interest in DESS for backup power solutions. The following areas contribute to this interest:

  • Grid reliability risks
  • Growth of DESS to reduce tariff-specific demand charge reductions
  • Power market rules changes to allow wholesale power market participation by aggregated DER
  • Resilience factors for facilities with economic motivations for a more secure power supply

The report will also feature market trends, business models, and global DESS market forecasts.