By John Mosher
Medical imaging facilities use a lot of energy, and managing those costs can be a constant challenge. When looking for new energy management strategies you may find yourself disappointed by a lack of ability to seriously affect expenses, but there are some concrete steps you can take to make a real dent in your expenses. To get there, you need to understand a few critical pieces of the puzzle, which can then guide you on where and how to take action.
The first concept to understand is that energy charges generally come in two forms. Most consumers are familiar with “consumption charges” that are based on the amount of energy used and are billed in kilowatt-hours (kWh). Kilowatt-hours measure how much energy a customer uses over a period of time, in essence capturing how much total energy is consumed. Less well known are “demand charges” that are based on a consumer’s peak load and billed in kilowatts (kW). Measuring kilowatts creates a single snapshot of a customer’s usage and is the way utilities determine a customer’s peak energy use. Demand charges are calculated by looking at the customer’s highest energy usage for a single 15 minute window each month. Utilities use demand charges to better manage the extra expense required to meet peak loads on the grid. In some utility territories, these charges can be up to 70% of a customer’s bill.
Rates can also vary based on geography. Different states have different utilities, or municipal light departments, and within those utilities there are different territories and rate structures. Commercial customers, like medical imaging facilities, are designated a specific tariff by each utility, which sets the rate you will pay for energy.
Utilities are concerned about customers that have “spiky” energy loads; ie, energy usage patterns that are typical of medical imaging facilities as machines ramp up and down. Utilities don’t like this because demand peaks mean they need to buy additional, expensive power from the wholesale market.
Because demand charges are based on a single 15 minute peak each month, if you reduce that peak you can dramatically lower your demand charges. One of the easiest ways to reduce your peak demand is to install an energy storage system. Storage systems, usually in the form of a battery, allow consumers to store energy during lower demand periods and then use that stored energy during peak demand periods to lower their associated charges.
Commercial energy storage systems have also rapidly declined in price. According to a study by the Clean Energy Group and the National Renewable Energy Laboratory (NREL), installing an energy storage system makes economic sense for customers who are paying more than $15/kW in demand charges.1 Based on this threshold, NREL determined that energy storage systems would make economic sense (2-5 year payback) for 5 million commercial customers in the US.
In another study, NREL looked at two specific case studies for commercial facilities to determine the potential value of an energy storage system.2 The first project was in Los Angeles, CA and looked at a storage system paired with photovoltaic (PV) solar energy, and a second project in Knoxville TN that only had a battery system. Based on the potential performance of a lithium ion battery system, both projects had a positive NPV; $31,874 for the Los Angeles project and $60,731 for the project in Knoxville.
Energy storage systems can become even more profitable when paired with a solar energy system. The specifics for each project will vary according to state and local incentives, the utility tariff, and the owner of the project. But there are multiple potential incentives that create very compelling economics for commercial customers. For example, there are Federal incentives that can be applied to storage such as the Investment Tax Credit. Many states are also developing storage specific incentives, such as California’s Self Generation Incentive Program which has rapidly accelerated the use of energy storage paired with solar throughout the state.
If you are experiencing higher demand charges (or need help determining if you are) and you feel you might be a good candidate for an energy storage system, you can reach out to a variety of experts who can help you figure out if storage makes sense. A reputable energy company should provide a basic assessment free of charge. That assessment should indicate the potential for savings. In depth analysis is often done for a fee or a shared savings model. By understanding your charges, you are taking the first step to lowering your bill.
- McLaren J, Mullendore S. Identifying Potential Markets for Behind the Meter Energy Storage. National Renewable Energy Laboratory. https://www.nrel.gov/docs/fy17osti/68963.pdf. Published August 2017. Accessed February 13, 2018.
- DiOrio N, Dobos A, Janzou S. Economic Analysis Case Studies of Battery Energy Storage with SAM. National Renewable Energy Laboratory. https://www.nrel.gov/docs/fy16osti/64987.pdf. Published November 2015. Accessed February 13, 2018.
John Mosher is the vice president of energy solutions at Solect Energy in Hopkinton, MA. He can be reached at firstname.lastname@example.org.