John Powers is the co-founder and CEO of Extensible Power, a load-flexibility software program firm.


We’re in the midst of essentially the most exceptional transformation within the historical past of the electrical energy grid — from soiled and centralized to wash, distributed, and digital. Many policymakers and pundits consider that if solely we had sufficient batteries, we might adapt to this new mixture of technology assets and proceed to faux that nothing however just a few working conventions have modified.

And certainly, utilities, regulators, and state legislators are allocating ever-larger piles of ratepayer and taxpayer cash to subsidize lithium-ion batteries on either side of the meter. Subsidizing batteries sounds easy and great, however the unstated drawback is that the emperor has no garments. There is no such thing as a financial mannequin of behind-the-meter batteries for grid functions — interval.

Don’t get me incorrect: I like batteries. I drive a battery to work daily. I’ve checked the maths behind utility-scale batteries mixed with renewables as an alternative choice to fuel peakers, and in lots of locations it checks out. I even perceive the attraction of batteries in microgrid or resilience initiatives, as a clear however costly different to mills.

However as an vitality economist and former utility charge designer, I’m cursed with the flexibility to do fundamental arithmetic, so to be clear: The economics of behind-the-meter (BTM) batteries in grid-connected business buildings are and can proceed to be wasteful, inefficient, and impractical, to place it kindly.

I do know, I do know. You’re saying, “However lithium-ion batteries are actually low-cost, they usually preserve getting cheaper, and that modifications all the things!”

Besides that it doesn’t. I learn the identical studies as you do, however these $150-headed-toward-$100/kWh numbers for battery capability costs don’t have anything to do with the put in price of a battery in a business facility. We don’t make grasp electricians any cheaper, nor allowing any simpler, nor fireplace suppression any much less mandatory, nor business flooring house any extra extensively accessible.

In our expertise with real-world small to medium business photo voltaic buildings, the precise all-in put in price of BTM batteries is about $1,000/kWh — or extra. That signifies that even when the worth of lithium-ion batteries on the manufacturing unit gate reaches $zero/kWh (not a typo), the put in value will nonetheless exceed $850/kWh. That’s price prohibitive in grid-connected business buildings in every single place.

The value distinction between EV storage, utility storage, and business storage is straightforward to clarify: In an electrical car, you’re spreading the engineering price of integrating batteries throughout tens of millions of automobiles, and at utility scale you’re spreading the engineering price throughout gigawatt-hours of capability. In a small-to-medium business facility, you’re spreading all of the non-battery prices throughout tens or a whole lot of kilowatt-hours, and that’s by no means going to vary.

Which brings me to the purpose of this put up. In my residence state of California, our taxpayer and ratepayer dollars — a whole lot of tens of millions of them — are being flung into the Self-Technology Incentive Program void within the hopes that we’ll stimulate the BTM battery market the way in which we did the PV market, and that’s plainly unattainable. Different states are following proper behind California.

Fortuitously, there’s another, and it’s referred to as load-flexibility software program. Load-flexibility software program can management the utilization patterns of varied energy-hogging hundreds in response to BTM or grid circumstances, so it may possibly ship the identical monetary worth as batteries at one-tenth the associated fee.

But someway, such software program doesn’t qualify for SGIP incentives. Certainly, the one strategy to get a payout from the SGIP cash cannon is to put in an especially heavy metallic field with a nameplate affixed to it, off which you’ll learn its rated kW and kWh capability. But it surely wasn’t at all times this manner.

SGIP was the product of laws handed within the wake of the Western U.S. Power Disaster of 2000-2001. It was designed to supply incentives for patrons to put in their very own distributed technology assets behind the meter, together with “inner combustion engines, microturbines, small fuel generators, wind generators, photovoltaics, gas cells, and mixed warmth and energy or cogeneration.” And the identical piece of enabling laws instructed the investor-owned utilities of California to “ … implement demand-responsiveness initiatives pursuant to AB 970.”

“Demand responsiveness” is an early type of load flexibility. I ought to know; I used to be there. Whereas I can’t fairly make a Bernie declare that “I wrote the rattling invoice,” my previous firm constructed, deployed, and ran the primary Web-based demand-response programs in California. We developed sensible demand-response software program for utilities and their clients to make use of throughout the disaster — and partially, we helped our shoppers to restrict the harm introduced on by the intensive market manipulations of that period.

You may say that it acted like a “digital battery.” Trendy load-flexibility software program follows the identical playbook. It reduces BTM peak demand, identical to its costlier lithium-ion hardware cousin.

Even in the event you don’t like my math, even when you’ve got some wishful pondering that can convey down the non-battery prices of storage installations (remark under, by all means), even in the event you consider that we must always preserve offering incentives for BTM vitality storage for business buildings — how will we justify the asymmetry between heavy crates and cost-effective software program?

My humble proposal boils all the way down to this: The powers that be on the CPUC ought to tweak the SGIP incentives to incorporate load-flexibility in order that photo voltaic and non-solar constructing homeowners can scale back their demand and time-of-use prices whereas utilities can cost-effectively decarbonize and stabilize the grid at one-tenth the price of BTM batteries.

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