Although everyone enjoys the numerous benefits of electricity delivered to their home, no one likes to pay the bills. Perhaps that’s due to an intuition that energy is inherently free, or maybe we just don’t like paying bills. In fact, it’s the availability of energy that we are actually paying for, as much if not more than the energy itself.
Many people don’t understand the way electricity pricing actually works. Of course, this varies by utility. There is usually a price for energy, plus another price for energy delivery, plus a variety of taxes and fees. There is also, especially in the case of industrial and commercial customers, a demand charge, which is an additional charge for the peak amount of power required at different times of the day. Though this type of charge originated with industrial accounts, it is now becoming more popular for residential accounts as well, particularly with the advent of smart metering.
What is the rationale behind demand pricing?
The utilities explain it with a single word: capacity. They need to be able to deliver every single watt of power to every single customer at any given moment of any given day. If they fall short, the whole system could crash. When you turn on a light or start your dishwasher, you’re probably not thinking about how many other people are making demands on the system at that moment. But your electric utility would like you to. Because if you don’t that could mean they need to build another power plant, to increase their capacity. And power plants are very expensive. So they charge a fee for demand, which in states like NY and California, can amount to as much as 40% of the entire electric bill. This is done both to incentivize limit-setting (they even pay customers for demand reduction) and to help pay for new capacity.
This, of course, represents an opportunity for cost savings, an opportunity that the folks at Green Charge Networks are taking full advantage of with their smart storage solutions designed to reduce peak demand. If you have storage available, you can spread your demand out over a period of time, which is exactly what GCN’s GreenStation™ does. GCN has been installing these systems in 7-Eleven and Walgreens stores, some of which have realized cost savings of as much as 56%. This system contains a 100kW battery that is combined with solar PV panels. The result is not energy efficiency, but power efficiency, because while the total energy use stays the same, the amount of peak power is reduced, sometimes dramatically. And because a portion of the energy comes from solar, there could also be a reduction in fossil fuel consumption.
GCN, which was founded in 2009 with funding from the DOE’s Smart Grid Program, is calling power efficiency, the “new frontier.”
The company just reached a milestone of 1 MW of installed capacity. According to company information, if smart grid technologies like GreenStationTM were implemented nationally they could save the energy equivalent of 4,000 coal plants per year.
The system software works directly with the tariff schedule to control the amount of stored solar power to utilize at any given moment. This, according to the company website, “provides greater value to solar PV generation while also minimizing, or even eliminating, demand charges to bring an overall lower utility bill to the customer.”
Other players in this space, which is sometimes referred to as solar microgrids, are Solar Grid Storage, and Tesla, which recently formed a partnership with Solar City to utilize the battery technology developed for electric cars to provide short term storage for buildings.