Duke Energy, the giant U.S. utility that’s been moving into renewables and distributed energy through its unregulated business arms, has just made a move into the behind-the-meter energy storage business with startup Green Charge Networks.
Under a partnership announced Tuesday, Duke Energy Renewables -- a group that includes California solar installer REC Solar and energy management company Phoenix Energy Technologies -- will work with Green Charge to install batteries at commercial, industrial and government sites. The partners will initially target Hawaii and Southern California for solar firming and demand-charge management business cases, respectively.
“Duke’s strategy is to serve customers in the distributed energy space. It’s not about solar; it’s about solving their energy problems,” Al Bucknam, CEO and president of REC Solar, said in an interview this week. That means that it will be looking for solar-storage opportunities with Green Charge, as well as standalone storage.
In Hawaii, a state that’s just replaced its net metering regulations with new rules that offer less money for solar put back onto the grid, “pairing PV with storage allows that PV to achieve greater economic benefits,” he said. Hawaii’s changing regulations have helped boost the state’s share of behind-the-meter systems in the past year. REC Solar has about 31 megawatts of solar systems in the state, Bucknam said, out of the company’s total countrywide portfolio of about 200 megawatts.
As for California, the country’s leader in behind-the-meter storage deployments, “demand charges can be as much as half of a commercial customers’ energy bill,” he said. “PV by itself can help with demand charges, but it’s an imperfect match. Using Green Charge Networks' capabilities can really expand solar’s value.”
Santa Clara, Calif.-based Green Charge has about 13 megawatt-hours of battery systems installed at commercial and government sites across California, making it one of the leading providers of behind-the-meter storage alongside contenders such as Stem and Tesla Energy. Like those competitors, Green Charge is working with multiple solar partners, including SunEdison, on solar-storage projects in California.
Green Charge CEO Vic Shao said the startup’s batteries can typically shave 10 percent to 15 percent off of a customers’ demand charges, by injecting stored power to reduce buildings’ peaks in energy use. Adding solar PV to that profile can boost those savings into the 20-percent-and-up range, he said, depending on how the solar system’s production lines up with the customer demand profile.
That’s a reliable revenue stream to build the “repeatable business” that Duke, which owns a majority stake in REC solar, is looking for.
“Part of the value that Duke has brought to REC is being able to offer financing solutions,” said Bucknam. Green Charge also has financing partners that allow it to offer no-money-down battery installations, with savings shared between the startup and its customers.
“When we find a customer that wants to do a no-money-down approach, we can both bring our pieces to the table,” he said. Duke’s new storage offerings will include installation, warranty, and ongoing operations and maintenance costs, thus eliminating risk for the customer.
Other behind-the-meter storage players have their own financing solutions, adding up to hundreds of millions of dollars. California has been the major market for these offerings, driven by the state’s Self-Generation Incentive Program (SGIP), which can cover up to 60 percent of the cost of qualifying systems.
SGIP incentives are definitely driving the market today, but Shao noted that falling lithium-ion battery prices and balance-of-system costs could more than make up for those incentives over the coming years. “I would say that the decline in equipment pricing is happening fairly rapidly, so that in a few years it’s not going to matter as much,” he said.
That trend, in turn, could make behind-the-meter storage cost-competitive in more states over the coming years, according to a recent Moody’s Investors Service report, by helping to reduce energy market volatility and the costs of providing capacity.
Greentech Media will be covering these and other energy storage topics at our Energy Storage Summit conference this week in San Francisco. Stay tuned for more from the conference.