Behind-the-Meter Storage Competes with Generation in California: Pilot

June 28, 2014
In a one-of-a-kind pilot project, Stem is bidding behind-the-meter storage into the California ISO market, competing with generators to reduce utilities’ peak demand. The project shows how aggregated energy storage from multiple sites can participate in a wholesale market. Here’s how it works.

In a one-of-a-kind pilot, Stem, an advanced energy technology company, is participating in the California ISO market, providing aggregated, behind-the-meter storage in competition with generators.

Stem combines behind-the-meter storage and real-time data analytics to help commercial and industrial businesses manage energy use. In this pilot, the company aggregates these resources, dispatching power to the grid during peak hours, helping utilities shave their peak usage, said Tad Glauthier, Stem vice president.

The storage comes from Stem clients InterContinental San Francisco and InterContinental Mark Hopkins hotels, among others. They will receive financial incentives for opting into the grid optimization program.

Here’s how it works: Stem’s commercial and industrial customers use stored energy to meet their own needs. Stem aggregates what’s left over from these customers, and sells it into the California ISO market during peak energy usage. This is all due to a groundbreaking deal involving Stem, Pacific Gas & Electric, and the California ISO.

A major challenge to the energy storage industry is gaining access to the market, said Glauthier. This pilot solves that problem, he said.

“This pilot allowed us to get into the door and demonstrate these technologies are ready for prime time and for supporting the grid,” he said.

The pilot focuses on getting the most out of a limited asset–storage batteries–during peak hours to flatten utilities’ peak usage, he said.

The company’s software platform is designed to accurately forecast utilities’ peak usage. “It involves big data, and real-time cloud-based operations,” Glauthier said. “The reason those things are important: We want to make sure we’re only using the batteries when they’re needed. They can only hold so much energy.”

Normally, demand response companies deal only with Pacific Gas & Electric, which tells them when they want companies to reduce their demand.

“But what’s different about this pilot:  Pacific Gas and Electric is participating directly in the wholesale market so aggregators like Stem can bid demand reduction against generators who are bidding to provide energy.”

Generally, Stem’s aggregated storage resources can compete with generators on hot summer days, he added. In this case, it’s an hour-by-hour market, based on day- ahead purchase agreements. “We bid every day to participate in the market, and bid against generators,” he said.

The ISO sets the price at $56 per megawatt-hour. “When the price goes above that, we’re happy to bid,” said Glauthier.

He noted that the program provides dual benefits: First, the commercial and residential customers benefit from using stored energy–and gain the associated environmental perks and cost savings. Second, the utility uses the companies’ combined storage resources to avoid adding peak power plants, which often are dirty and expensive.

The pilot is the first, but hopefully not the last of its kind.

“We have not seen aggregated energy storage from multiple sites participate in markets,” Glauthier said. “To our knowledge, we’re the first to do it.”

About the Author

Lisa Cohn | Contributing Editor

I focus on the West Coast and Midwest. Email me at [email protected]

I’ve been writing about energy for more than 20 years, and my stories have appeared in EnergyBiz, SNL Financial, Mother Earth News, Natural Home Magazine, Horizon Air Magazine, Oregon Business, Open Spaces, the Portland Tribune, The Oregonian, Renewable Energy World, Windpower Monthly and other publications. I’m also a former stringer for the Platts/McGraw-Hill energy publications. I began my career covering energy and environment for The Cape Cod Times, where Elisa Wood also was a reporter. I’ve received numerous writing awards from national, regional and local organizations, including Pacific Northwest Writers Association, Willamette Writers, Associated Oregon Industries, and the Voice of Youth Advocates. I first became interested in energy as a student at Wesleyan University, Middletown, Connecticut, where I helped design and build a solar house.

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