Battery Energy Storage Systems Are Smart College Investments

BESS Costs Fall as Grid Reliability Risks Grow

The growing popularity of BESS is driven in large part by a precipitous fall in battery technology costs. Cheaper batteries are the result of lower commodity prices, advancements in battery storage technologies, and emergence of new financial incentives. Over the past year, lithium-ion battery pack prices have come down by 14 percent.

Federal, state and utility incentives are available that could potentially further lower the upfront cost for BESS installations. Notably, the federal Investment Tax Credit (ITC) was recently expanded to cover BESS projects. A new “direct pay” option currently allows tax-exempt entities who install certain clean energy systems to receive up to a 30-percent credit as a cash payment from the Internal Revenue Service.

Source: International Energy Agency

At the same time, higher education institutions are facing greater pressure to better manage energy costs and utility performance. U.S. colleges and universities collectively spend more than $6 billion per year on energy. When power outages occur, the cost of maintaining or restarting critical campus operations can be massive. Specialized research equipment is particularly prone to damage from an unexpected power loss or power degradation event.

The number of outages is on the rise as the grid struggles to keep up with load growth and extreme weather. Over the past five years, the U.S. experienced nearly 800 power outages — a 107-percent increase compared to the prior five years. Of those, 80 percent were related to weather events.

These factors combine to make BESS installations increasingly viable investments, especially for larger campuses.

Photo Courtesy of US National Renewable Energy laboratory

Source: Wood Mackenzie

Use Cases

BESS can serve multiple use cases. BESS installations help to balance supply and demand, mitigate electricity costs, enhance campus resilience, support the integration of standby generation and renewable energy sources, and serve as a backup resource for select critical loads.

To maximize the financial payback from a BESS installation, it’s important to understand the likely use case. Doing so will inform the BESS installation’s design, sizing and configuration — and ultimately the system’s costs and benefits.

Peak Shaving and Demand Management

BESS can lead to significant cost savings through peak shaving, shaping a facility’s load curve to avoid demand charges particularly during peak demand days. Peak shaving for cost avoidance involves discharging stored energy during periods of high demand to lower peak load charges.

Energy Arbitrage

Time-of-use arbitrage leverages lower off-peak rates by storing energy when rates are low, releasing the energy during high-rate periods. Economic opportunities include market participation in the real-time market, day-ahead market, frequency regulation market, or other revenue streams as applicable to the local distribution utility or regional transmission operator (RTO).

Grid Services

BESS can provide ancillary services to the grid for frequency regulation and voltage support, generating additional revenue if specific programs are offered by the utility. Participating in a utility’s demand response program can reduce grid congestion during periods of high demand, improving overall transmission and distribution asset utilization.

Source: ESource

Resilience & Backup Power

BESS can enhance campus resilience by providing backup power during outage events, ensuring continuous operation of critical systems. If BESS is installed primarily for resilience purposes, however, the campus may only be able to participate in demand response programs or utility markets if the system is oversized with a reserve state of charge. The BESS will need to remain charged and ready to provide ride-through energy in the event of a disturbance or serve as a stabilizing resource in a microgrid application.

Integrated Solar-Plus-Storage

BESS can support renewable energy integration by storing excess energy generation during peak periods, releasing it when production is low. This optimization maximizes the utilization of renewable energy sources, valuing these resources equivalent to the retail cost of electricity. The value of energy produced from solar photovoltaics (PV) is at times reduced under certain net metering tariffs.

In addition, PV smoothing, a specific application of BESS, can be used to reduce fluctuations and variability in solar power output and to create a more stable and consistent output of power.

Microgrid Enablement

BESS can maximize the impact of a campus microgrid. When operating in “island mode,” microgrids can separate from the grid and run entirely using on-site distributed energy resources such as BESS, solar PV, combined heat and power, thermal storage, or fuel cells. BESS can store power from intermittent resources, deploying power during times when utility rates are greatest or during a loss of power — either due to a disruption of on-site energy production or a grid outage.

Source: Wood Mackenzie

Scalable, Modular, Distributed Energy Resources

BESS solutions often feature modular designs. This offers the flexibility of incremental expansion, enabling higher-education institutions to increase storage capacity as needed without incurring significant disruption. Integration with existing campus infrastructure involves connecting the storage system to the campus’ electrical grid and renewable energy sources, which may require upgrades to existing systems.

For a successful BESS installation, recent experience has demonstrated the importance of campus leaders defining the use case for their installations, selecting scalable equipment sets that fit the use case, engaging stakeholders early in the planning process, and conducting thorough feasibility studies.

Burns encourages campus decision makers to initiate feasibility studies to evaluate the specific benefits of BESS for their campus energy system. Feasibility studies can also support stakeholder engagement processes. Given the modular and scalable nature of BESS installations, many campuses may want to first consider pilot projects to understand the technology’s potential.

The outlook for BESS in higher education is promising. Ongoing advancements and cost reductions make it one of the more financially attractive distributed energy resources. A BESS installation can align with institutional sustainability commitments, enhance campus energy management, and reduce operating expenses.