Leaders in the fledgling commercial and industrial (C&I) sector in the US have made energy storage ‘as-a-service’ the core of their proposition, a market analyst has said.
Julian Jansen, senior market analyst in energy storage at IHS Markit told Energy-Storage.News that his team’s latest work, looking at opportunities and business models in the behind-the-meter C&I space, which he said that to date has been “under-analysed”, for the most part.
In the US, C&I users of electricity, from retailers to factories are charged premiums for the portion of their power drawn from the grid during peak times on a monthly basis. These so-called demand charges can make up 50% of a C&I customer’s electricity bills in some cases. Storing energy in batteries and discharging them to mitigate those peaks is one way that energy storage companies can earn money. The customer pays a fee to the energy storage provider, who in turn commits to delivering bigger energy savings to the customer via demand charge reduction or management.
While C&I energy storage can also offer other benefits, such as backup power and resiliency, could increase or enable self-consumption of onsite solar generation or can be used by utilities as a capacity or grid services resource, the primary focus of IHS Markit’s analysis was on “techno-economic modelling” of the business case for demand charge management, as the current biggest business opportunity available.
Payback times for C&I installations in the US can be as short as one year, in some cases, although the analyst and his team were keen to point out that project economics vary greatly and can be customer-specific.
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