As the mix of distributed generation and storage resources continue to evolve, these operators are beginning to envision and seek new demand-side products that offer the ability to shift demand more rapidly, and at increasingly granular levels. Who’s involved in this value equation, and how do they benefit? Well, the first (and sometimes overlooked) beneficiary of ES flexibility is the grid itself. Sites that operate in states who offer a combination of open energy markets, aggressive renewable generation and storage goals or mandates, and some meaningful opportunity to reduce transmission and distribution demand-related costs can benefit from these states’ attractive economic propositions. One important point to mention when discussing energy market-based financial benefits: They can vary significantly, and not unlike the Real Estate market, are very much driven by location. If your storage asset is being deployed with a qualifying asset such as solar, that would present an opportunity for storage portion of the project to also qualify for the incentive. On the federal level, incentives are have typically taken the form of a tax incentive. To support these initiatives, states like California, Massachusetts, and New York have created incentive programs to provide funds to support either standalone energy storage or energy storage paired with renewables. Many states have mandated renewable generation energy storage targets and mandates. This starts with the independent system operators’ (ISO’s) capacity programs, and includes utility level capacity programs, ancillary services like reserves and frequency regulation, non-wire alternative utility programs, and anticipated “flexibility services” programs which are expected to require faster acting and more granular capacity services.įinally, there are energy storage financial incentives, which can occur at the state or federal level. These are external revenue streams or sources. Second, there is what I’ll refer to as the “Off Bill” value stream. Depending on location (and this category definitely depends on location), savings are predominately derived from some mix of demand charge management savings, system level coincidence peak management, and/or energy arbitrage. Let’s consider the spectrum of potential energy market value streams that a battery energy management system can support. Flexibility is key: a battery energy management system’s flexibility and its ability to generate a combination of revenues and/or cost avoidance of value streams allows battery storage projects to become economically viable in an increasing number of situations, energy markets, and geographies. These battery assets offer an attractive mix of operational flexibility, responsiveness, energy density, and rapidly decreasing costs.
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