Peak Shaving and Money Saving

How Energy Storage Can Reduce Operating and Capital Expenses

Emilie Stone
Aug 22, 2017 · 4 min read

For the better part of a decade, forward-thinkers in the energy industry have been discussing the notion of peak shaving. Peak shaving does exactly as the name implies — removing peak energy consumption from the grid over a period of time. There are a number of reasons for an energy consumer to avoid these peaks, but the common thread amongst them all is cost avoidance. As demand on our grid increases and our infrastructure ages, both consumers and utilities are deploying peak shaving as an important component of power strategy.

Active and Passive Peak Shaving

Using secondary power supplies, customers can stay below a pre-determined threshold level while still fulfilling their power needs.

A less compromising but more capital-intensive method of peak shaving is to allow energy load to fluctuate as it will, but also provide a secondary power source to hold draw from the grid steady. Historically, this strategy was not necessary, as there were no immediate financial repercussions for an individual customer participating in a peak surge. Utilities would do their best to anticipate surges and adjust rates accordingly, amortizing the premium across all subscribers. Should a utility be forced to purchase additional infrastructure, such as installing a new gas turbine, that investment would also be passed on to subscribers. However, a combination of “mart meters” and increased awareness has given utilities an additional lever to pull, namely passing on the rate premium they experience when buying power on the open market to the subscribers that are using that power. This has led some customers to take matters into their own hands by installing on-site energy storage like batteries, ice cooling and generators.

Desired load can be achieved by using stored power during peak demand periods

Using secondary power supplies, customers can stay below a pre-determined threshold level while still fulfilling their power needs. Replenishment of the depleted energy is performed when grid demand is lower, such as at night or during high solar production. The avoidance of peak charges now creates a reasonable payback should individual customers purchase this equipment.

Utility-Scale Peak-Shaving

Grid demand can be met with solar until 6 pm, at which time a peak will occur

When considering solar energy supply versus demand over a 24-hour period, the grid operators can struggle to absorb the steep increase and magnitude of load as solar generation tapers off and subscribers just home from a day at work increase demand.

Batteries can be deployed en masse and flexibly as energy storage devices.

Inserting batteries into a grid plagued by this supply-demand mismatch provides a short-term boost in power supply at the behest of the utility. The batteries can then charge overnight when demand and cost is low. Similar schemes are also beneficial for capital-expenditure delay or avoidance. The Arizona Public Service is working to install batteries for a remote, slow-growing population that does not and may never warrant a full power plant. In both of these examples, the utility is using energy storage to maintain control over supply and thus over pricing and profitability.

Peak Peak Shaving

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Emilie Stone

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Engineer-turned-executive working everyday towards sustainable technology