In case you missed it, click here to read the first installment of our Energy Storage series exploring why your organization should consider energy storage.
The business case for an energy storage system varies based on the specific circumstances and objectives of a commercial facility. Here are key factors to consider when building the case for why your organization should invest in one.
1. Cost savings:
Energy storage systems help businesses reduce their energy costs in multiple ways. By optimizing energy usage and avoiding peak demand charges, you may be able to realize significant cost savings on your electricity bills. Also, energy storage allows you to integrate on-site renewable energy sources such as solar panels, which can further reduce your reliance on grid electricity and lower energy costs.
2. Return on investment:
Evaluating the financial return on investment is a critical component of the business case. Calculate the payback period by considering the upfront costs of installing and maintaining the energy storage system, including equipment, installation, and ongoing operational expenses, against the expected cost savings over the system’s lifespan.
3. Demand response programs:
Participating in demand response programs can provide additional revenue streams for businesses. By leveraging the energy storage system to reduce electricity consumption during peak demand periods, businesses can earn financial incentives from utilities or grid operators. These programs help businesses monetize their contributions to grid stability, and support load management efforts such as conservation during a heat wave.
4. Backup power and resilience:
You can strengthen the business case for an energy storage system by considering the value of uninterrupted operations during power outages. For businesses that rely on continuous power supply, such as data centers or critical manufacturing processes, having backup power capabilities prevent costly downtime, protect sensitive equipment, and avoid potential financial losses.
5. Renewable energy integration:
If your facility already has or plans to install renewable energy sources like solar panels or wind turbines, energy storage will enhance the value and effectiveness of these investments. By storing excess renewable energy and deploying it when renewable generation is low, your business can increase its self-consumption of clean energy and reduce reliance on fossil fuels. This can potentially qualify you for additional incentives or renewable energy certificates.
6. Grid services and ancillary markets:
In some regions, energy storage systems can participate in ancillary service markets and provide valuable grid support. This includes services like frequency regulation, voltage control, and grid stabilization. By participating in these markets, you may be able to generate additional revenue streams by offering valuable services to grid operators.
7. Sustainability and environmental impact:
The adoption of energy storage systems aligns with sustainability goals and demonstrates a commitment to reducing greenhouse gas emissions. Businesses can include a system in telling the story of your corporate social responsibility, use it to meet regulatory requirements, or to appeal to environmentally conscious customers.
8. Future flexibility and scalability:
Consider the potential for future energy needs and expansion when evaluating your business case. Energy storage systems provide flexibility in adapting to changing energy landscapes, evolving energy policies, and increasing energy demands. Assess the scalability of your system and its ability to accommodate future growth or changes in energy consumption patterns.
9. Incentives and financing options:
Investigate available financial incentives, grants, tax credits, or financing options that can offset your upfront costs of installing an energy storage system. Many jurisdictions offer incentives to promote the adoption of energy storage technologies, which can improve the overall business case.
It’s important to conduct a comprehensive analysis of your specific energy requirements, cost structures, potential revenue streams, and operational benefits of the commercial facility, to develop a robust business case for an energy storage system. Consulting with energy experts, system integrators, or financial advisors can provide valuable insights and assist in the evaluation process.
In our next post, we’ll be talking about pre-packaged energy storage systems vs. custom tailored solutions. In the meantime, feel free to REACH OUT to Edison Energy as your storage experts, and learn more about how we can help you tackle your energy storage needs.
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