Over the last few decades, commercial buildings have been at the forefront of a number of energy storage technologies including batteries, flywheels (primarily in uninterruptible power system (UPS) applications), and thermal energy storage (TES). While the former market segment is mature, TES technologies are poised to take off in the next few years as building owners and managers look to curb energy costs and improve the reliability of the cooling supply.
At first glance, the business case for TES in commercial buildings isn’t readily apparent, as storing energy for later use doesn’t directly reduce the building’s overall energy consumption. In fact, although the round trip efficiency of ice-based TES is high (approximately 95 percent), some energy is lost in conversion. The key drivers of TES are actually utility pricing programs, such as dynamic pricing schemes and demand charges. Dynamic pricing schemes, such as time-of-use (TOU) pricing, charge more for electricity during on-peak periods than during off-peak periods, serving as a proxy for the higher wholesale cost of electricity during those periods and sending a price signal to customers to reduce loads. Such pricing schemes are on the rise throughout the United States and globally.
Demand charges, equally as important, charge customers for their maximum power draw at a peak moment during a billing period at a fixed rate, measured in $/kW. For example, demand charges for commercial and industrial (C&I) customers in ConEdison’s New York City territory are about $30/kW during the summer months. To put that into perspective, if a building occupant turns on a 2 kilowatt hairdryer during a peak load event on a hot summer afternoon in July, the building owner would have to pay about $60 more just to cover that extra bit of power.
So why are these pricing programs in place at all? Utilities in the United States invest significantly in generation and transmission assets that, in some cases, are used only a few hours a year in order to meet demand during hot summer days. By creating incentive schemes that transfer a portion of peak load to off-peak times by temporarily boosting retail electricity costs during peak periods, utilities can avoid the considerable costs of operating and maintaining those little-used assets – and pass the benefits through to their customers in the form of lower electricity rates.
Large energy consuming facilities, therefore, are finding that they stand to benefit from shifting as much of their energy consumption to off-peak times if their utility offers or mandates such schemes. There is about 1 gigawatt of grid-connected thermal energy storage on the grid globally today. Given that the key driver of TES is dynamic pricing schemes, TES has emerged in a number of pocket markets, most of them major urban centers, where these schemes exist. In the next decade, as penetration of TES grows in existing markets and dynamic pricing schemes and demand charges appear more broadly, TES will find its way into the energy management portfolios of a growing number commercial and industrial facilities. Pike Research estimates that the global market for custom ice-based TES installations could reach as high has $92 million by 2016 at an annual growth rate of 25 percent.
Article by Eric Bloom, appearing courtesy the Matter Network.