How Batteries Reduce The Cost Of Microgrids

Relay Substation

We ran into this nice post on microgrid knowledge that piqued our curiosity. We were wondering what it would take to truly drive adoption of a new age of grid infrastructure. Today the predominate way of approaching grid modernization is adding IoT like capabilities to as much of the grid as possible, adding new solar and wind farms where possible to fill energy demand and shifting to natural gas as opposed to coal.

For the most part grid modernization is approached from an angle of “support the grids needs first”. There are a number of drawbacks to this approach, ranging from challenges with rising costs to the homeowner all the way to creating more failure points within the grid.

Costs rise due to rate basing that tends to happen when utilities purchase new equipment. Effectively adding a “tax” of sorts to your bill for the new infrastructure they billed out. The price for this is controlled by the Public Utility Commission which tends to keep this number from getting out of hand. However, it is one of the main reasons your utility bill rises every single year.

Then there are added failure points – solar and wind aren’t a guaranteed 24/7 energy producer and the complexity in routing power efficiently throughout the grid becomes extremely tough. In turn driving up costs for adopting renewables. Analysts believe – as shown in the post linked above that energy storage is the key to driving the cost of adding renewables into the grid.

Utilizing energy storage as a medium to build in resilience and grid flexibility could theoretically reduce the cost of electricity at any given time. In many markets in the US electricity is traded on the wholesale market kind of like the stock market. The cost to store energy in batteries at the grid scale can at times be as cheap as $0.12/kWh meaning at high demand hours when electricity is more expensive than $0.12/kWh homeowners would be passed on savings as they can utilize the cheaper power from the batteries.

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