>That’s a double-edged sword for utilities, depriving them of demand charges that help finance improvements to the transmission system but also helping them keep balance the grid and avoid blackouts or having to fire up a carbon-spewing fossil fuel power plant when demand suddenly spikes.
I'd like to see a quote or statistic that says that this is true and that the utilities are really price-gouging customers for peak demand charges. It would not surprise me at all to learn that the added cost to utilities of handling peak demand was more than the surcharge they are recouping from businesses - in which case they would be happy for everyone to install load-balancing units in their buildings.
This is supported by the article itself, in saying that the utilities are rewarding customers for using less electricity during peak times (by controlling their air conditioners).
In Ontario, we've had time-of-day electricity billing for a few years. I'm home this week, so I just heard from a friend that the government is increasing the rate charged for off-peak energy usage. After reading this article, it seems that all rates are being increased, but the off-peak rates are going up by a greater percentage.
So it seems that our government has succeeded in shifting consumer energy usage to off-peak hours, and has now decided to penalize those people by charging them more by closing the gap between peak and off-peak hours.
I think it's pretty outrageous and goes to show that peak demand charges are just a gouging technique and a scam.
There's one possible 'rational' explanation: the underlying economy between day and night electricity rates is mostly due to non-elasticity energy generation, which is a common thing for coal, hydro and nuclear plants. Recently, the US has got lots of gas and lots of gas plants which are pretty elastic, so that the utilities can produce the energy on demand (so, there's smaller losses for them).
You have to look at the utility bill of a commercial building. Demand charges are right there in the bill. Even if you cross preset limit once during the year, you will be pushed to a higher slab, and your base rates will go up.
Charging the customer extra when there's not enough supply is inefficient and leaves money on the table. They just end up selling less electricity. In fact, they're depending on it to stop their grid from crashing. In general, raising prices in response to demand spikes is always worse than just increasing supply to meet it (assuming you can) because of demand elasticity. Having the customers all buy batteries fixes that, but in practice I don't see how it can be very efficient to have your customers tackle your supply problem one-by-one. It would make more sense to just charge some sort of premium to exempt them from high-demand-time surcharges. Would cover the battery cost and prevent the market distortion.
Look at it from the top down: would electrical companies rather be able to meet the full demand for electricity or not? Clearly, they would. Otherwise, why make electricity at all?
I'm not an economist, so I'd be happy for someone to take that apart. One objection is that this charge-more scheme allows the power company to price discriminate against customers who are less price sensitive (like hotels, who just need AC), but...well, I need to be convinced.
I think this is regulatory lag. Most peak power is provided by NatGas these day, and NatGas is cheap. If Lithium-ion made sense at the wholesale level, then power companies would do it. I'd bet this is because some regulatory commission decided on rates for peak/non-peak based on information that is no longer relevant.
Natural gas may be currently cheap, but power plants are still pretty expensive. Peaker plants amortize their construction and maintenance costs across much a smaller amount of time, so peak pricing will never go away.
Commissions don't decide peak power prices, the marginal producers of power do. And, yes, natural gas is a large portion of the power stack, but peak days (which only happen a nominal number of times per year) are driven by plants that come online for short periods of time at high marginal costs.
Power companies just pass through market rates, they are mostly ambivalent to driving down rates as they just tax tolls on each transaction.
Not sure where you're describing, but it varies by jurisdiction. In California, a commission called the California Public Utilities Commission (CPUC) sets electricity prices charged by all the major operators. See for example:
Of course this is subject to a long-term constraint that rates must be sufficient to support generation and wholesale purchase... but there's no direct "pass through of market rates" on an hourly, daily, or monthly basis.
Natgas may be cheap but utilities are not in a particularly competitive market. So it's possible this saves money basically by directly taking a chunk out of utility profits which are pushed highest during peak demand.
Modeling the organizational behavior of monopolies as a steady state, or an example of rationality, is a perilous process. Many utilities are starting to flirt with it, but they really do think in decades -- if you can call their deliberations thinking.
In the meantime, nimbler companies can make a lot of money filling a market need while taking a little more risk.
It sounds like they are trying to game the system by lowering their Peak Load Contribution (PLC.) Good article explaining Capacity charges in PJM http://energysmart.enernoc.com/bid/188545/Deconstructing-You...
They only have to use these batteries for a few hours a year to save money all year round.
But, the capacity charge for PJM for 6/1/2013 - 5/31/2014 is $27.73 MW / day.
So if you can drop your PLC by 54kW, you would save $27.73 * 0.054 * 30 = $44.91 a month.
Hardly enough to make the $100k 54 kW system worth it.
Disclaimer: I know enough about the energy markets to be dangerous. I mostly know about PJM, so YMMV in CAISO.
Looking at what I think is the right PG&E tariff for them [1], I can't quite figure out what it means. However, I found a helpful guide [2] that includes an actual hotel electrical bill.
Reading that, their summer difference is $0.07/kWh, so the box only could save them $3.50 a day on cheaper energy. There they are paying $13/kW for peak capacity, $8.58 for off-peak, and $2.99 for "partial peak", whatever that is.
So it sounds like being able to level peaks in your power consumption could be a big win. Even if you level it within peak, therefore saving nothing on a kWh basis, a little curve smoothing could pay big dividends.
The interesting question for me is how much this is incentive gaming versus solving a real problem for generators.
I've met one of the Stem management execs, and heard the pitch.
What they're doing is to smooth out the spikes in the day to day energy usage. Their software will learn the usage pattern over time, and try to predict when spikes will occur. The battery will then discharge during spikes to prevent triggering additional peak demand charges.
Strange. I would honestly have thought that the losses involved in storing energy in a battery (I would expect at least 20% loss) would have out-shadowed the savings by avoiding extra charges for high demand. It's surprising to me that batteries were chosen as the energy storage method and also that the energy provider themselves is not doing this on a large scale if it's a big issue to them. A very interesting read.
People don't fully appreciate how long the tails get on power pricing when alternate sources have to come online. Not uncommon to see 10x base pricing a few times per year: http://www.eia.gov/todayinenergy/detail.cfm?id=9510
Also, there would be a loss when converting the batteries' DC back to AC to drive the hotel's air conditioning and other systems. And doesn't charging a battery generate heat, which you would need additional air conditioning to remove on a hot day?
I wonder whether it would be environmentally sustainable if every home or business in the world started using batteries for power storage and electric vehicles. For example, how much environmental damage would be incurred from mining lithium on a massive scale? Are there even enough known lithium deposits in the world to make this practical on a large scale?
Exactly what I was thinking about reading the article: you've got a huge, fixed energy storage system to set up, why not use a flywheel? That's pretty much a best-case situation for them even if you don't need the transient load ability of a flywheel.
Pumped hydro scales awesomely and is relatively low maintenance, but it has a fairly low energy density, wikipedia quotes 272Wh for 1m^3 at 100m (~30 floors). That's 0.272Wh/kg. You either need tremendous amounts of water, significant height, or both.
By comparison, your ultra-basic low-energy-density lead-acid battery pack is 30~40Wh/kg, 100 times the energy density, and a Li-ion is 130~200Wh/kg.
It's fun to throw out numbers for pumped storage. The Ludington pumped storage plant [1] is pretty big at 1.8 gigawatts. At full power, that's 33 million gallons per minute. The reservoir is 27 billion gallons of water (about 100 billion liters).
I looked at that in the past: storing energy in a massive ball going up and down a well. But you need tons of mass traveling a long distance. The energy density is just too low.
To give you an idea: E(energy in Joules) = mgh(mass in kg x gravity in m/s2 x height in m). So one ton (1kkg) traveling 10m would store about 100J which is about 27Wh (1J = 1Ws), which is about nothing.
Does anybody get why they're going with lithium ion batteries over lead acid?
Looking at a comparison [1], the cost and lifetime look substantially better. And the technology has been proven out over decades by, e.g., telcos. I'm not getting why they'd use fancy laptop-style batteries when weight isn't an issue.
Just looking at table 2 from the article you link, it looks like lithium ion has the following advantages over lead acid for this application:
* Greater energy density, which means you need to carve less space out of your existing floor plan to make room for batteries.
* About twice the cycle life, so batteries need replacement less often.
* Can discharge more deeply without harming cycle life, so for applications where discharging happens frequently that means either the effective energy density or the effective cycle life is even greater.
* Better efficiency for <24h charge-discharge cycles.
These are all things that are more advantageous in this kind of application, where you can expect to see a lot of repeated cycling during hot summer months. For a telco application, where you're presumably only expecting infrequent use during occasional power outages, they'd be of negligible value.
Keep on reading to figures 5 and 6, where they look in more detail at cycle life, and the lead acid batteries start to look like a straight-up bad choice for this kind of application.
The cycle life of lead acid batteries is terrible. Lithium-ion has a shorter shelf life if you treat them both well, but can cycle without much degradation.
Yes. Even without subsidies, a grid-tied solar power system will pay for itself well within the lifespan of the cells (the lifespan of solar panels is 25-50 years). A battery-backed "off the grid" system is not there yet, because the batteries are expensive. How soon it pays off will depend on how cheaply you obtain the panels and how much you pay for installation; these vary wildly depending on the location and vendor.
I did my own solar installation for about $1000, and it's enough for me to live lightly on (no AC, no microwave, no electric heater, but laptop and phone and hotspot stay charged, and fans can run indefinitely). Fridge runs on propane, when I'm off-the-grid. I'd need to quadruple that to turn on the AC or electric heat for any length of time, and would need a lot more batteries (I have three group 27 deep cycle batteries and a 3000 watt inverter).
Anyway, I got sidetracked a bit. We're currently at the point where a DIY installation can pay for itself in under 9 years. Maybe even as little as 7. Professionally installed systems, with subsidies, are probably around the 10 year repayment mark. And, the panels get cheaper every time I look into it. The batteries stay pricey, though.
I'm also off the grid, and fortunately it's sunny now so I can write this message :)
Can you please explain what kind of batteries are you using?And what are your usage patterns? For example I'm using two 12V 200A lead batteries, I'm trying to use then only on 30% discharge so that they will last longer.
I have three Interstate group 27 deep cycle marine lead acid batteries. They are rated for 65 amp hours (more at lower amperage draws...which is why having more batteries is helpful); which is enough to where I almost never have to run my generator, unless it rains for a couple of days.
They're nothing special, just heavy as hell lead acid batteries. I also try to never discharge too low...my rule of thumb is 50%, though I've run them until the inverter shut off due to low power. So, I've obviously gone below 50% a few times. They're three years old, and starting to show signs of degradation. I bought them at Costco for, I think, $98 each, and I'm pleased with the return on investment, given that they've gotten me out of being stranded on more than one occasion (I'm in a motorhome, and the chassis battery has been an interesting component, having more than it's fair share of failures, always in very bad places to have a motorhome that won't start).
I should point out that when I am off-the-grid, I am extremely conscious of my power usage. I charge everything during the day, religiously, so that I don't even have to turn the inverter on, some nights (lights, fans, water pump, and fridge igniter are 12V). It's a ritual...actually, it's a really satisfying ritual that I miss when I'm living plugged in. I need to go get lost in the desert or in Mexico this winter; been parked too long.
Is that lifespan number a conservative estimate? Solar panels are just high-purity silicon (simpler than drywall, as Musk puts it), what can make them stop working?
Yes, that is a conservative estimate. The warranty on my Sharp panels is 25 years...they are expected to last longer. Though, as I understand it, the output of panels does degrade over time; I don't know by what mechanism that degradation happens. And, there are electronic components in the whole configuration that may not last forever due to corrosion.
It's called the "death spiral", and utilities are terrified about it. Once you reach a tipping point of self-sufficient energy consumers vs utility supplied consumers, it no longer becomes economical to provide power to the utility supplied customers, thereby eliminating the power production and transmission market for all but the largest consumers who can't generate on-site.
I suspect it's less cutting into their business and more messing with their pretty spreadsheets.
Building a power plant is a multi-decade bet. The people who put up the money for that expected a certain rate of return. That gives them an incentive to cry, cry, cry at anything that would reduce their expected rate of return.
I think they'd be happy to build a lot of industrial-scale solar plants, but not before they've paid off and worn out their existing plants. It'd be sort of like the government mandating that everybody buy a hybrid. If it's just that all new cars are hybrids, people will deal with it. But if everybody has to go out and pay to replace a perfectly fine existing car, people will be pissed.
Well people cry cry crying about their bonds that can't be paid our a source of a market inefficiency. They are a sign that people over invested in utilities instead of putting that money to a more productive use.
I await the day when a single article is published with a proper unit of power or energy. If it's not a 54 kW battery it's a windmill that generates 3 MW per year.
As well as recharging these things with solar, hotels could hook their gym treadmills into the system and turn their guests into power-generating hamsters: http://www.californiafitness.com/sg/en/node/587
Now in Europe, there are solar batteries for less than 1Eu/Watt, on E-Bay for less than $1.6/Watt, you can buy for these money more than 60kWatt of solar panels, but with bulk prices you could buy even more, and all this energy will be available during peak hours during day, to power condition systems.
I'd like to see a quote or statistic that says that this is true and that the utilities are really price-gouging customers for peak demand charges. It would not surprise me at all to learn that the added cost to utilities of handling peak demand was more than the surcharge they are recouping from businesses - in which case they would be happy for everyone to install load-balancing units in their buildings.
This is supported by the article itself, in saying that the utilities are rewarding customers for using less electricity during peak times (by controlling their air conditioners).