Resiliency Driving Demand, Financing for Smart Energy Storage

As populations grow and storms become bigger, utility operators and consumers alike are spending more time thinking about the resiliency of power grids. How much stress and strain can they withstand, and how quickly can they bounce back after wind damage, flooding or other difficulties? How much will it cost to increase that resiliency — and, just as critical, who will pay for it?

Boosting the grid’s resiliency definitely carries a cost, of course, and it’s businesses that so far have proven willing to open their checkbooks to pay for it, according to industry experts speaking on a panel at the REV4NY Exchange conference, held in September in New York. But as improving technology translates to lower costs for both hardware and software solutions, a more resilient power supply should become more attainable for everyone.

Solutions to increase the resiliency of the grid include microgrids, combined solar/battery systems, and combined heat and power (CHP), said Janet Joseph, vice president for innovation and strategy at the New York State Energy Research and Development Authority (NYSERDA), who moderated the panel discussion on bolstering resiliency. “Our challenge is trying to figure out how to get those systems to scale,” she said. Other barriers include how to value that resiliency, possibly outdated tariff structures and regulations, and a lack of customer awareness.

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Walgreens is one company that is rethinking its approach to its electric supply, according to Vic Shao, founder and CEO of Green Charge Networks, which provides smart energy storage solutions to reduce demand charges and help businesses save money. Walgreens is one of Green Charge’s clients.

The company had trouble getting enough power to operate its stores after Superstorm Sandy in 2012, even though it had solar panels atop some of them; regulations didn’t allow those systems to backfeed into the grid during system-wide outages, Shao explained. “That’s when we got involved with Walgreens and other New York customers, to look into this problem,” he said. “I think there is a willingness to pay for resiliency, because it makes business sense.”

Indeed, some residential and business customers already pay for resiliency to some degree, said David Hebert, director of business development at Sunverge Energy, which provides integrated solar plus storage systems. “They pay in the form of natural gas generators, they pay for small generators from Home Depot,” while others have solar panels and battery energy storage, he said. “The question is, can you make that resiliency work for the grid? Because today, they treat them as isolated systems. The expense is 100 percent on the consumer. It’s an underutilized asset, in our view.”

Sunverge, along with SunPower and Con Edison, is participating in a demonstration project for New York’s Reforming the Energy Vision (REV) program, in which the companies are integrating residential behind-the-meter storage. The demonstration project is expected to help trim peak demand, and it’s also hoped that it will save consumers money, Hebert said. Con Edison calls the energy storage assets a “virtual power plant” that will have a total capacity of 1.8 megawatts and be offered through its solar partners.

“The concept of the demo is that energy storage that will be placed at homes ultimately has function for the grid,” Hebert said. “So we will see what resiliency is worth to various consumers.” He added: “We have a feeling that there is value, because people do want some level of resiliency. How much value is going to have to be tested. We’ll figure out exactly where that that bar lies.”

Sunverge Raises New Venture Funding & Project Finance Capital

In 2014, Sunverge raised $15 million in a Series B venture capital funding round from Siemens Venture Capital, Total Energy Ventures and Southern Cross Renewable Energy Fund. Now, the company is raising a new round of venture capital funding. Sunverge is activity engaged in discussions and is open to speaking to other investors interested in the market space, CEO Ken Munson tells CleanTechIQ, declining to disclose the amount being raised.

The company is also planning on raising project equity finance capital as part of its next funding round, though the timing of that round has not yet been determined. According to Munson, Sunverge has a number of projects, in the US and globally, that are actively seeking project finance capital when combined with its platform.

At the REV4NY conference, Gary Wetzel, vice president for U.S. sales at S&C Electric, which offers switching, protection and control solutions for electric power systems, noted that different types of customers have different views on resilience, and will be willing to pay different amounts. A residential customer, for instance, may be willing to go without power for a few days rather than incurring the cost of buying their own diesel generator. A retailer like Walgreens, or a data-heavy user like a bank or credit card company, on the other hand, will have a far greater requirement for an interrupted power supply, and thus be willing to pay more.

That’s where ongoing New York REV projects will help, Shao noted. “You have to look at it from an economic standpoint,” he said. “There’s a certain customer base, such as Walgreens, that would be willing to pay for a resiliency option for certain critical loads at their facilities.” Efforts like the REV demo projects will help the industry “study the economics of the program, and find out what is the willingness of different customer segments to pay,” he said.

Battery Prices Dropping 

Technology, particularly lower prices for storage, will likely play a major impact in the coming years when it comes to resilience. “Lithium ion costs have been on the same trajectory as PV solar panels. It’s very much a logarithmically steep cost decline,” Shao said. “As that comes down over the next five to 10 years, I think a lot of these programs will become very economical.”

Indeed, “battery prices for storage are dropping dramatically,” Wetzel said, pointing to one of S&C’s suppliers for batteries, whose prices have fallen in half over the last three years. Wetzel also pointed to anongoing lithium ion battery research project at the Department of Energy’s Argonne National Lab. “They’re trying to get five times the density at one-fifth of the price in five years,” he said. He added that while the lab may not reach those goals, “even if they just get halfway there, that’s pretty good.”

For storage and resiliency to really take off, regulations need to change, Shao said. “I don’t think it’s a technology challenge. It’s more of a regulatory challenge, because the technology already exists,” he said. “All that a residential homeowner needs is solar plus storage. That’s resiliency right there.” Cutting red tape would help a lot, he said. “Getting that set-up approved through the regulatory framework so it’s a streamlined process, like it is for a solar-only option … I think that would solve 80 percent of the problem.”

For energy storage technology, Tesla has obviously been a major factor, the panelists noted, in terms of developing new technologies and, especially, in pushing down prices. “Tesla has done a lot to jumpstart the industry, simply because everybody had to respond to what they have done,” Hebert said. “And that’s led to a general price decline.”

Energy Storage as Mass Market Device

So will energy storage ever become a mass-market appliance, like a smartphone is today? Hebert’s take: “I certainly hope so. Our entire business is built on that premise. “ However, he said that energy storage is currently in the early adopter stage. “There will be folks that buy a [Tesla] Powerwall simply because they want a Powerwall,” he says.

Shao said he sees a parallel between the energy storage sector and the telecom industry — and that’s why he thinks the industry still has a ways to go. Advances in telecommunications “really didn’t make difference to consumers until it could fit in the palm of your hand,” he said. “The game changed once it became portable.” He thinks the energy storage sector needs such an iPhone moment. “My belief is that until the energy storage device can fit in the palm of your hand, and is portable … then all of a sudden it will make a difference.”

Green Charge’s Project Finance Capital Critical to Scaling Storage Globally

Green Charge raised $56 million in equity project finance capital in July 2014 from K Road Capital to fund its no-money-down financing packages for businesses. That followed $10 million in debt financing from TIP Capital.

Green Charge employs a shared savings model, called a “Power Efficiency Agreement,” in which it takes on the upfront capital and installation costs of the system and then shares in the resulting savings with its customers over the next 10 years. Project financing has been an important component to scaling the company, Shao tells CleanTechIQ in a separate interview. Its main customer focus is businesses that have the ability to adopt the technology in a centralized corporate function and then scale it to thousands of facilities, such as its current customers 7-Eleven, UPS, and Walgreens.

The company will soon have “tens of megawatts” of energy storage assets deployed across the country, according to Shao. And the proven financial outcomes of these projects should attract more banks and project financiers to fund the rollout of distributed energy storage systems, he says. The financial returns Green Charge is generating for investors in its projects is attractive, he says, and “there is no shortage of interest of people with money wanting to get into this space.”

Shao tells CleanTechIQ that the company is looking to expand internationally, as demand charges are prevalent globally, and is currently speaking to potential partners in Europe and Asia.





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