Five key factors impacting utility business models for energy storage

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A new report released by the US Energy Storage Association (ESA), in partnership with the Smart Electric Power Alliance (SEPA), highlights key factors that influence utility business models for energy storage.

 The five key factors impacting utility business models include:

  • Monetising multiple value streams
  • Incorporating storage as part of a microgrid
  • Addressing renewable intermittency with hybrid configurations
  • Storage as a non-wires alternative (NWA)
  • Locational constraints and demand cost reduction.

Robert Tucker, Director, Industry Strategy at SEPA, said: ”Energy storage, more so than other asset types, requires utilities to think creatively in order to realise potential value streams.

“This report highlights the business models we see utilities using to extract these value streams to the benefit of the grid and customers.”

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Other key study findings include:

  • Multiple battery storage technologies offer viable solutions as grid-connected assets, with lithium-ion batteries already demonstrating cost-effectiveness under certain business models.
  • Regulatory challenges remain in some states and jurisdictions regarding utility ownership of energy storage, limiting the ability of those utilities to maximise the value of storage for the grid and customers.
  • Energy storage is a preferred non-wires alternative (NWA) solution for many utilities due to the flexible services it can offer and its cost-effectiveness as compared to traditional capital expenditures.
  • Grid-connected energy storage projects can optimise value streams between project partners through operational control agreements that codify operational parameters and prioritise dispatch rights between parties.
  • Creative programme designs can enable utilities to leverage grid-connected energy storage to provide grid value, while also providing direct customer benefits.

Some four innovative energy storage use cases are explored in the report and they include projects deployed by:

  • SMUD Energy StorageShares
  • Con Edison and GI Energy
  • Maryland IOU Energy Storage Pilots
  • Oakland Clean Energy Initiative (OECI) and PG&E-Vistra Energy

The report explores how utilities can adjust their business models to reap the value of energy storage as storage prices decline.

Learn more about the report Utility Business Models for Grid Connected Storage.