OBF for BESS

Battery energy storage systems (BESS) are distributed and rechargeable solutions that allow renewable energy to be stored for later use. With these systems, the stored energy can be redirected back to the grid to smooth out high demand periods through actions such as load shifting and load shaving. Peak shaving is achieved by extracting energy from the storage packages during peak demand hours, instead of purchasing or generating expensive electricity. Load shifting means moving excess renewable energy—that would otherwise be wasted—into the battery storage systems. As a result, utilities save energy through reduced demand charges, avoided outage costs, and the reduced need to build expensive natural gas-powered peaker plants to supply power during peak demand hours. Using electric storage for resilient emergency backup power is less polluting than diesel generators and can provide mutual benefits to the grid and ratepayers by lowering energy costs and facilitating energy demand management.

Declining lithium-ion battery costs have spurred interest in BESS because lower prices make battery storage technology more accessible to utilities and their customers. Still, these systems are a large investment for most households and businesses. On-bill financing helps more customers clear this investment hurdle and allows BESS to deploy more rapidly.

Providing Benefits to Customers and the Grid

BESS produces significant benefits for customers and their homes and businesses, including:

• Storing energy from the grid or a rooftop solar system
• Providing energy during peaking events when energy prices are high
• Helping customers more quickly recover the costs of their rooftop solar system
• Supplying emergency power during power outages
• Helping utilities and states reach their carbon reduction goals

Distributed battery energy storage systems also provide valuable grid services to utilities and co-ops, such as:

• Serving as dispatchable reserves of power that can be sent to the grid
• Providing load balancing abilities to help smooth out the daily load curve
• Lowering utilities’ demand charges through peak shaving capabilities
• Deferring major grid infrastructure investments
• Integrating renewable energy sources with the grid system
• Keeping polluting peaker plants offline during high energy demand periods

On-Bill Financing

Battery storage systems’ market penetration is currently limited due to their high costs. While BESS can cost hundreds to thousands of dollars per kilowatt-hour, these costs need to be differentiated between residential and commercial applications. Bigger systems are more expensive but can provide large benefits to the grid, as the ability to store renewable energy is increased. Without incentives or equitable financing programs, BESS will remain mostly available to a small portion of Americans unless there are significant improvements in costs.

Most utilities require customers to pay upfront for their energy systems, effectively limiting participation to those with enough available cash. On-bill financing programs can help homes, businesses and utilities align the costs of BESS systems with the resiliency and ancillary benefits it provides to utilities. By financing these systems over time (e.g., 10 or 15 years) through on-bill programs, BESS become more accessible to both business and residential customers.

Holy Cross Energy, a Colorado co-op, offers the Power+ on-bill financing program to help its members finance BESS systems through their utility bills.