Small Battery Systems Give The Best ROI For Peak-Demand Reduction

The National Renewable Energy Laboratory (NREL) from the US Department of Energy (DOE) recently announced that small battery systems for energy storage to manage peak demand, barring incentives, could be the most attractive option for investors.

Using a Behind-the-Meter version of the Battery Lifetime Analysis and Simulation Tool (BLAST), the NREL worked out different energy storage system configurations that would provide the most favourable return on investment (ROI) in the shortest period of time looking at peak load reduction and electricity cost savings. In total, 6860 unique scenarios were generated based on utility rate structures and historic data on solar PV electricity generation.

In the absence of state or utility incentives that make longer duration, lower power-to-energy ratio systems more economically feasible, short-duration battery systems (discharge durations of 30min-one hour) are most cost-effective for demand-charge reduction under present utility rate structures. It is estimated that demand charges can account for over 50% of a commercial customer’s utility bill every month.

BLAST could be used to identify improvements in a variety of applications, such as in electric vehicles (BLAST-V) and stationary energy storage (BLAST-S) as well as to aid assessment of long-term performance of batteries.

This analysis delivers renewed promise that energy storage for demand-charge management can be economically attractive.

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