Consumers are increasingly looking for ways to manage electricity costs & consumption, & peak shaving using BTM systems presents a powerful strategy. Read on explore how behind-the-meter (BTM) energy storage systems can be used to provide significant cost savings!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
Residential, commercial, and industrial consumers are increasingly seeking ways to manage their electricity consumption and reduce costs. One powerful strategy that deserves attention is peak shaving, which involves reducing your electricity demand during peak hours, or the times of day when energy usage is highest and, consequently, most expensive. By strategically managing when and how you use energy, you can significantly lower your utility bills and contribute to a more stable and efficient power grid.
Utilities face a constant challenge in meeting fluctuating electricity demand. These fluctuations, driven by everything from heating and cooling needs to industrial operations and EV charging, can strain grid infrastructure and require more expensive power generation sources during peak times. To incentivize customers to reduce their consumption during these critical periods, utilities often implement peak demand charges and time-of-use (TOU) rates.
Peak demand charges are typically applied to commercial and industrial customers (C&I), where bills include a charge based on the highest average power demand (in kWs) recorded over a short interval (e.g., 15 minutes) within the billing cycle. This single peak, even if brief, can result in substantial charges, sometimes accounting for 30% to 70% of the total bill. On the other hand, TOU rates divide the day into different periods with varying electricity prices, with significantly higher rates during on-peak hours (typically late afternoon and early evening) compared to off-peak hours. These peak periods often coincide with increased HVAC usage in summer and winter in many parts of the U.S.. The price difference between peak and off-peak can range from $0.10/kWh to $0.20/kWh, and for a significant load like 500kW experiencing 1500 hours of peak rates annually, this could translate to an additional $75,000 in electricity costs.
Behind-the-meter (BTM) energy storage systems offer a powerful solution for implementing peak shaving. These systems can be strategically charged during off-peak hours when electricity costs are lower or when on-site renewable energy generation (like solar PV) is abundant. Then, during peak demand periods, the stored energy can be discharged to power the facility or home, thereby reducing the amount of electricity drawn from the grid at the most expensive times
Peak shaving through the implementation of behind-the-meter energy storage offers a powerful strategy for consumers to reduce their energy costs, particularly in regions with demand charges & TOU rates.
The economic advantages of peak shaving with BTM storage are manifold. By reducing peak demand, C&I customers can significantly lower their demand charges. For all customers under TOU rates, discharging stored energy during high-price periods and relying less on the grid translates directly into lower energy bills. Furthermore, pairing BTM ESS with on-site renewable generation allows for greater self-consumption of the generated energy, further decreasing reliance on the grid and maximizing cost savings.
The true value of battery storage lies in its inherent versatility and ability to stack multiple value cases. While peak shaving provides significant cost savings, the same battery system can also be used for demand charge mitigation by leveling out energy consumption peaks throughout the billing cycle. Moreover, BTM ESS can enhance overall reliability by providing backup power during outages. Already, sodium-ion battery technologies are showing positive economics for just the demand charge mitigation use case. A battery employed for demand charge mitigation can also be strategically utilized for peak shaving or to enhance energy resilience, highlighting the multi-faceted benefits of these systems.
Emerging battery technologies like sodium-ion batteries (SiBs) are particularly promising for BTM applications. Research indicates that SiBs are becoming increasingly cost-competitive with lithium-ion options. Their wider operating temperature range can also simplify system design and reduce the need for complex climate control, potentially lowering upfront installation and operational costs. While lithium-ion batteries currently dominate the BTM market, the growing affordability and improving performance of sodium-ion technology position it as a strong contender for future peak shaving applications.
In conclusion, peak shaving through the implementation of behind-the-meter energy storage offers a powerful strategy for consumers to reduce their energy costs, particularly in regions with demand charges and TOU rates. By strategically storing and discharging energy, businesses and homeowners can lessen their reliance on the grid during peak demand, leading to significant financial savings and contributing to a more resilient and sustainable energy system. With the continued advancements and decreasing costs of battery technologies, including the promising economics of sodium-ion batteries, peak shaving is poised to become an even more integral component of smart energy management for a wide range of users.