How advances in ESS software create new revenue opportunities for solar + storage

rise of the machine learning graphic

The current generation of energy storage software is far more capable of gathering and analyzing data from more disparate sources, at speeds that have been reduced from hours per cycle to milliseconds. The extended tentacles of artificial intelligence-enhanced storage software now can manage myriad distributed energy resources (DER), while considering real-time decisions about potential energy market arbitrage with independent system operators (ISOs) across the country.

Indeed, successfully deploying storage software today means optimally stacking more services while avoiding a net cannibalization of component revenues. Or the software can be used to understand when cannibalization will occur, so that revenue expectations are reasonable, says Matthew Sachs, the COO and co-founder of Peak Power.

The proliferation of potential revenue streams makes today’s storage computing a task for artificial intelligence, armed with algorithms to fit any revenue situation. “For example, in ISONE, front of the meter, we can operate up to 10 different revenue streams at any one time,” says Christy Martell, the SVP of sales for Stem.

At times, the cannibalization of potential revenues is a battle between systems in front of the meter with systems behind the meter. “We are seeing a lot of inquiries around how to model traditional value streams for behind-the-meter assets, while layering on and leveraging traditionally front-of-the-meter revenue streams. This will be the next big hurdle for storage software,” says Chris Sefel, manager of enterprise sales at Energy Toolbase.

However, the revenue optimization task is not all that storage software is being asked to do these days.

“With our acquisition of AlsoEnergy, which has its own PV asset monitoring platform, we now can digest O&M data on our Athena storage software platform, and provide in-depth analytics on how the PV is operating, so we can predict failure rates within storage revenue forecasting,” says Zach Einterz, the director of product marketing for Stem. “More data fuels more machine learning.”

Regulatory openings for multi-asset VPPs

Regulation has helped create the demand for storage software that is able to embrace more of these variables. Among other key capabilities, storage software now can readily optimize the activity of virtual power plants (VPPs), networks of decentralized small- and medium-scale power generating units, along with flexible power consumers and storage systems.

“We have some storage projects where the VPP revenue is the primary value stream, while in other projects, it may only add 10 percent of the total project revenue,” says Einterz. “Going forward, we expect grid services revenues will be growing in importance.”

FERC’s Order No. 2222 focuses on removing barriers to the participation of DER aggregations in all regional organized wholesale electric markets. It “empowers new technologies to come online and participate in wholesale markets on a level playing field to further enhance competition, encourage innovation and drive down costs for consumers.”

“Most of the development of storage software now is around the maturing of the energy markets,” says Sachs. “With the advent of FERC 2222, there is a relatively new change in market rules that allows batteries, buildings and EVs to participate in the grid, so now we have the emergence of multi-asset VPPs.”

Other storage software companies agree. “We are seeing a lot of requests for parallel system integration of other assets, be it for EVs, building automation and Internet of Things interconnection, for energy efficiency programs or for cogeneration of various types. Storage is at the center of optimizing a lot of these other assets,” says Sefel.

The aggregation of DER storage is not merely an economy of scale advantage for energy arbitrageurs. “The VPP is the idea of aggregating smaller DER to meet ISO market rules for wholesale market participation that include a generator size threshold, in order to compete against large generators,” says Sachs.

Going local for risk / reward assessment

Conditions on the grid and in the weather forecast and other factors that affect the grid are vastly different across the country. Thus, storage software that can tap into local conditions is best suited to maximize savings and revenues. “The trend now is to use software to optimize performance using localized utility rate structures and weather information,” says Sachs.

Similarly, part of the local opportunity for storage arises at specific weak spots on the grid. For example, Energy Toolbase is deploying its Acumen EMS controls software across five water facility storage projects in Southern California, totaling 3.7 MWh of capacity, that is being developed by Ventura Energy to provide support to California’s grid. The project will also enable participation in the wholesale energy market through a program facilitated by Leap, a provider of energy market access for DERs.

This is the first, but not the last portfolio of grid-interactive projects for Energy Toolbase. “We intend to replicate this model and enable many more ETB-controlled energy storage systems to participate in the wholesale energy markets,” Sefel says.

Multi-objective performance calculations

Calculating energy storage performance is no longer as simple as it may once have seemed. Resiliency, for example, is a factor that has become a mainstream concern in the software calculation of multi-objective storage systems. “Adding resiliency capability to energy storage optimization has costs that can affect the use of batteries, EVs, hot water tanks, solar, wind, and other factors,” Sachs says.

Environmental impact is another storage performance factor gaining more ground in software control parameters. “The environmental impact of energy use sometimes goes hand in hand with optimizing financial savings and revenues. So, we are now working on algorithms that adapt to client energy-use planning, which could pursue various outcomes ranging from net-zero at any cost, to an ROI of X followed by the minimization of environmental impact, or to a stance of ‘forget the environment and make me as much money as possible,’” Sachs says.

Collateral economic impacts also are becoming more manageable with more capable software. “Storage software needs to be able to consider cash flows that are not related to solar but are additional costs in a proposal; for example, there may be a need for roof improvements,” Sefel says.

Keeping rate options straight

The Tower of Babel model of U.S. energy rates in different jurisdictions makes the use of storage software an absolute necessity for project planners operating in more than one location. “Our database of 90,000 different rates is global, including 23 countries, the bulk of which are in the United States,” notes Energy Toolbase’s Sefel.

Similarly, Stem’s Athena energy software platform operates in 75 utility jurisdictions, including 200 cities, and has amassed 20 million hours of run time, notes Martell. The software is used to manage 1.8 GWh of storage capacity, as well as to monitor 32.4 GW of solar.

Explaining options for storage adopters is as complex as rates are diverse. “The biggest challenge in storage software is how to take big complex problems and drill the solution down into a form simple enough for anyone to understand, so you can sell it to the owner,” says Sefel. “This is an ongoing process for our team, and we constantly make changes to simplify.”

Broadening services away from mere provision of software and into boutique consulting is also part of the new storage software game, according to Sefel: “We are trying to be present throughout the entire project process. Our account management team helps a subscriber from the analysis of a project, to technical drawing work to installation and commissioning. Then the account manager stays on for the life of the subscription.”

Charles W. Thurston is a contributor to Solar Builder.

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