Commercial and industrial storage has been the fastest-growing part of the storage sector, and companies are taking notice.
Two major energy storage companies launched new systems aimed at the C&I market in July. Sonnen, the stalwart German residential storage company that recently expanded into North America, announced its SonnenBatterie pro, which will reach customers in North America and Germany by the end of the year. Greensmith, a leading U.S. company known for its grid-scale storage and software, kicked off its Omni4 product aimed at C&I customers that is available now in North America.
These aren’t startups creating a new business model for commercial applications; they’re industry veterans adapting their workflow from other storage sectors to the commercial arena. By entering that market, they’re signing up to compete with incumbents like Stem, Green Charge Networks and Tesla.
The moves reflect a strategic calculus that the U.S. commercial market has grown to the point where it can support more competition. This sector is still pretty small -- 36 megawatts in 2015 -- but it expanded fourteenfold between 2013 and 2015. Most of the action in commercial storage today is in demand-charge management. Businesses receive a charge based on their monthly peak demand, so if they can draw on stored energy at times of peak load, they can lower that operating expense.
A new report from GTM Research found the viability of commercial storage for demand-charge management today would depend on areas with a demand charge of $15 per kilowatt per month. That’s the case in seven U.S. states currently, but if storage prices continue to fall as expected, there will be favorable economics in 19 states by 2021, according to the report. That’s not including other revenue streams the storage might provide, like backup power for critical services in case of outages.
In markets like California, where almost all the new commercial deployments have been, demand charges can generate up to half a company’s monthly electric bill, said SonnenBatterie Director of Marketing Michelle Mapel in an email.
“The SonnenBatterie technology has been proven in the residential market, and now we are extending our experience into the commercial market to meet increasing demand from our installation partner network,” she said. “The commercial market for energy storage is growing as businesses look for alternatives to further reduce their electric bills.”
Sonnen’s 10,000-cycle modular battery system starts at $37,154 for the 18-kilowatt/24-kilowatt-hour model and scales up to a 90-kilowatt/240-kilowatt-hour system. It includes Sonnen’s smart business peak shaving software, which Mapel said helps companies save on their electric bills “without changing the way they do business.” The system can also handle demand response, self-consumption and time-of-use programming, which Mapel noted has been requested more and more by the installation partners in response to changes in the utility rate landscape.
These are similar to Sonnen’s existing line of residential storage, but scaled up a bit to make sense for larger customers. In so doing, Sonnen can leverage the installer partnerships that they’ve already built for residential applications, and use them to tap a larger market. The U.S. residential energy storage sector only had about 6 megawatts deployed between 2013 and 2015.
“Even though it is going to grow fast, the residential market will still be the smallest of the three segments,” said Ravi Manghani, director of energy storage at GTM Research. “For them to enter the commercial space, it offers them the opportunity to grow, in terms of kilowatts and megawatts of deployments, much faster in an absolute sense.”
Conversely, Greensmith’s expertise has been in integrating large utility-scale storage projects. Now it is scaling down to offer products for the bigger end of the commercial spectrum. Its Omni4 comes in four sizes: 100 kilowatts, 250 kilowatts, 500 kilowatts and 1 megawatt. The Omni4 can island itself to function as a minigrid, participate in wholesale markets and aggregate with other units to bid into resource adequacy procurements, said David Miller, director of business development at Greensmith.
The larger battery deployments were custom-designed for each customer, but Greensmith kept hearing from customers who wanted a cheaper, prepackaged offering that could be quickly installed.
The company won't use a direct sales force to market the new product, Miller said. Instead, it will work with its partners like solar installers, independent power producers and energy service companies to connect with potential customers.
"If you are a company that already has a bunch of retail relationships because you’re already managing customers' bills for them or selling them another energy service, then you can much more easily go through the customers and segment and determine more quickly who is an appropriate candidate and who is not," Miller said.
As new entrants into the preconfigured commercial storage market, Sonnen and Greensmith will have to find a way to differentiate themselves from the incumbents. They can try to do that with the technical abilities of their products, but they can also focus on subsectors of the market or geographical regions that are currently undersupplied.
“We tend to clump the entire C&I space as if it's a single market, but it's not,” Manghani said. “You have small commercial customers that have very different demand patterns and energy needs versus the Apples and the Googles of the world, which have a completely different order of magnitude of energy demand, as well as their overall physical footprint.”