Big Returns for Utility Customers Using New Power Efficiency-Battery Storage Platform

Commercial and utility-scale battery storage and systems providers are getting a boost from state government initiatives in California, and, if a new proposal passes legislative muster, in New York. Integrated as part of intelligent demand response/reduction systems, and you may have the missing link that could drive the decarbonization, and decentralization, of US power infrastructure to new heights.

A new breed of smart grid, demand response and energy management systems is emerging in the US, spurred on by, and in turn spurring, fundamental change in the way electricity is produced, distributed, used and priced in US markets. Thanks in large part to financing provided by the Department of Energy via President Obama’s 2009 American Recovery & Reinvestment Act (ARRA), Santa Clara’s Green Charge Networks (GCN) is emerging from the margins into the commercial mainstream.

Already boosting power, as opposed to energy, efficiency and smoothing out load profiles among commercial customers including 7-Eleven, Avis and Walgreens, management anticipates demand for its flagship GreenStation intelligent demand reduction system scaling up another notch thanks to new state government grid and battery storage mandates and energy efficiency incentives.

GreenStation power efficiency dashboardA new energy infrastructure emerges

Coupled with a diversified mix of local renewable energy resources and electric vehicles (EVs), smart grid and intelligent demand response systems, a new, clean energy infrastructure is taking shape in the US, one that not only would be the most effective means of mitigating and adapting to a changing climate, but also enhancing the performance and resiliency of US grid infrastructure and providing a green economic boost that would generate good green jobs and boost local and the national economy.

Smart grid and intelligent demand response/reduction systems are an integral part of this emerging new energy infrastructure, and Green Charge Networks (GCN) looks to be well positioned to capitalize on this fundamental shift at the base of the US economy and society.

Formed in 2009 in the wake of the housing crisis and financial industry debacle with a $12 million Department of Energy (DOE) grant that came courtesy of the 2009 ARRA, GCN subsequently landed a partnership role in a $93 million DOE Smart Grid Demonstration Program project.

As a result, GCN, working in collaboration with New York City and Westchester County utility Con Edison, was able to develop its flagship products: the GreenStation intelligent demand reduction system and GCN GridSynergy smart grid energy management system for utilities.

Marking a first in the US, 7-Eleven had a pilot GreenStation system installed in New York in July 2011. GreenStation’s ability to reduce peak power demand, boost power efficiency and deliver savings month after month has since been driving GCN’s transition from bleeding to leading edge, and from pilot stage to commercial scale.

GCN today announced that it had reached a milestone, having signed 1 megawatt (MW) worth of 10-year Power Efficiency Agreements (PEA) with customers including 7-Eleven, Avis and Walgreens. The start-up’s client roster is expanding rapidly to include municipalities and universities, as well as other commercial businesses across California as well as New York, GCN founder and CEO Vic Shao stated in an interview.

A Bayesian decision making process

Lying at GreenStation’s core are proprietary, patent-pending software algorithms and service-delivery features, the former Shao likened to stock trading algorithms. Monitoring a client site’s power usage in real-time, GreenStation’s predictive analytics are then able to make forecasts that optimize power efficiency, smooth out load profiles and reduce electricity bills.

The other key aspect of GreenStation is energy storage. In addition to the client’s electrical systems, GreenStation is linked to the latest in Li-ion battery storage packs. Supplied by SAFT, these battery packs discharge and recharge on a second-by-second basis based on instructions from GreenStation’s controller.

“Building loads change minute to minute. We employ stochastic decision-making based on imperfect information to charge or discharge the battery pack on a second-by-second basis to even out demand and flatten out the load profile,” Shao elaborated.

By accumulating and analyzing an increasingly large amount of real-time data on clients’ energy usage and other real-world operating conditions, GCN has been able to realize drastic improvements on the ability of its system to predict power usage and minimize peak power demand charges. GreenStation’s primary cost driver, GCN has been able to reduce the battery storage capacity required at customer sites by one-third.

Reducing peak power demand charges, and costs

The peak demand rates utilities charge large, non-residential customers are based on power – and charged by the kilowatt (kW), as opposed to energy usage, which is based on kilowatt-hours (kWh). The latter have been falling, while the former have been rising at 7-10 percent a year. Hence, commercial, industrial and other non-residential utility customers are seeing peak demand charges growing to account for larger shares of their electricity bills, as high as 70 percent, Shao related.

That makes GreenStation’s ability to boost power efficiency and reduce peak power usage increasingly valuable. Utility peak demand charges during California summers are around $37/kW, Shao continued. “New York, it so happens, has the highest demand charges in the US, at $43/kW in peak summer.”

As a result, GCN and its customers are finding that the capital outlays for GreenStations are attractive even without federal and state subsidies. Electricity bill savings realized by customers in Con Ed territory in New York pay back their GreenStation investments in as little as 1.5 – 2.5 years. The story is similar in California.

Ninety percent of the proposals GCN is sending out to prospective customers in the Golden State have ROIs, or payback periods, of 5 years or less. The average is in the 3.5- 4 year range. “The returns are absolutely incredible when you factor in all these rebates and tax credits and so forth. Some really super attractive situations have ROIs in the 1.5-2.5 yr range, about 25 percent of our deal flow,” Shao stated.

Image Credit: Green Charge Networks

Andrew Burger
Andrew Burger
A product of the New York City public school system, Andrew Burger went on to study geology at the University of Colorado, Boulder, work in the wholesale money and capital markets for a major Japanese bank and earn an MBA in finance.

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