Overview of distributed energy storage for demand charge reduction

The paper presents a comprehensive overview of electrical and thermal energy storage technologies but will focus on mid-size energy storage technologies for demand charge avoidance in commercial and industrial applications. Utilities bill customers not only on energy use but peak power use since transmission costs are a function of power and not energy. Energy storage (ES) can deliver value to utility customers by leveling building demand and reducing demand charges. With increasing distributed energy generation and greater building demand variability, utilities have raised demand charges and are even including them in residential electricity bills. This article will present a comprehensive overview of electrical and thermal energy storage technologies but will focus on mid-size energy storage technologies for demand charge avoidance in commercial and industrial applications. Of the ES technologies surveyed, lithium ion batteries deliver the highest value for demand charge reduction especially with systems that have larger power to energy ratios. Current lithium ion ES systems have payback periods below 5 years when deployed in markets with high demand charges.