California’s small-scale distributed energy storage – Stem’s solution for utilities


US advanced energy tech company Stem is actively participating in the California Independent System Operator market with distributed energy storage devices on the California grid.

Stem is bidding a collection of its behind-the-meter battery systems into a pilot demand response program with California’s grid operator, CAISO.

The aim of the project is to help utilities and grid operators pull together numerous small-scale distributed energy resources like solar panels, smart thermostats or behind-the-meter batteries. By aggregating these resources, participants can help assimilate megawatts which can be fed into grid services like frequency regulation or demand response programs.

The InterContinental San Francisco and InterContinental Mark Hopkins hotels are the elected host customers for the energy storage devices.  Stem’s participating customers will receive financial incentives for opting into the California ISO’s grid optimization programs. Olivine, a registered CAISO market participant will act as the program administrator for the ground-breaking initiative.

Market participation

This is the first time that an energy storage company has achieved market participation with aggregated, behind-the-meter energy storage. While itisn’t the first time that multiple energy storage systems have been aggregated in this way, it is the first time they’re being paid for the service.

Stem combines advanced, behind-the-meter energy storage and real-time data analytics to assist commercial and industrial businesses manage their energy expenses more effectively. [Engerati-The Value of Data and Analytics in Storage Solutions]

By aggregating these resources, Stem is able to dispatch power to the grid when it is required. This is done without inconveniencing customers’ day to day operations.

These grid response solutions are particularly critical in major cities like San Francisco, where electricity needs are high, but space limitations, air quality restrictions and other limits on fossil fuel production prevent the construction of new local power plants.

Distributed energy storage opportunities

While this project is in its pilot stage, Stem is aiming to draw on this experience to convince California utilities and energy regulators that distributed energy storage holds great opportunities for utilities, customers and distributed storage players alike such as SolarCity, Green Charge Networks, Sunverge and Coda Energy.

Tad Glauthier, Vice President of Customer Development at Stem, points out that the idea of the project is to prove, through the use of existing structures and the rules, that behind-the-meter distributed storage can be an asset to the electric system.

This project forms part of utility Pacific Gas & Electric’s Intermittent Renewable Management Pilot Phase 2 (IRM2), which allows participants to earn capacity and wholesale payments through CAISO’s Proxy Demand Resource (PDR) product, one of California’s demand response programs.

To join the program, all that is needed is the ability to pull together a minimum of 100 kilowatts of curtailment within a single CAISO-defined region, and bid that resource into day-ahead markets at a price that can beat the wholesale energy prices on that specific day.

Stem has raised about $25 million from investors and has about 6 megawatts of systems installed or being deployed this year, mostly in California. In October it launched a $5 million fund with Clean Fleet Investors that it expects to bankroll about 15 megawatts more of installations.

California-a major storage market

California is certainly proving to be a major market for bringing aggregated energy storage to the forefront. The state’s mandate to bring 1.3 gigawatts of energy storage to the grid by 2020 includes a significant set-aside for customer-site storage. [Engerati-California’s Energy Storage Mandate-Will Others Follow?]

This is sure to put pressure on utilities and regulators to find ways to participate in the growing market. The growth in solar photovoltaic installations in California will also demand a new approach to manage the challenges that rooftop solar power brings to the grid.  [Engerati-California Invests in its Clean Energy Future].

While Stem is currently the only participant in the IRM2 pilot that is using batteries, it is predicted that other energy storage companies will be keen to enter the grid services market.

GTM Research predicts that the US behind-the-meter energy storage market will surpass 720 megawatts by 2020. Drivers include rising demand charges, grid reliability issues and the growth of distributed renewable energy.

This article was written by smart energy platform Engerati, the sister site to