At the start of 2020, climate change, natural disasters and public policy were the biggest concerns when it came to grid resilience. Fast forward just a few months, and grid reliability is taking center stage, as the world contends with the COVID-19 crisis. Maintaining reliable power for healthcare, work, education and safety needs has become mission-critical as businesses and individuals adjust to a “new normal.”
Solar developers have an important role to play in this pandemic. By offering the right combination of technologies – such as solar complemented by storage – developers can provide solutions that deliver great value in terms of business continuity and preventing losses from outages. And at a time when budgets are tight and businesses are looking to cut costs amid rising utility rates, these types of deployments can deliver higher returns on investment and more cost savings over time.
Reliability in question
During the past decade, we’ve seen an uptick in man-made and natural disasters, many fueled by the effects of climate change. Hurricanes battering the Atlantic and Gulf Coasts have left millions powerless for days in their wake. Superstorm Sandy – the deadliest, most destructive hurricane of 2012 – left nearly 1.5 million residents of New York without power for 10 days or more.
In the drought-stricken Western U.S., PG&E, California’s largest utility, preemptively cut services to more than 920,000 homes and businesses to reduce the risk of wildfire in 2019, impacting more than 2 million people. The utility took such drastic action after its downed transmission lines were suspected of igniting the 2018 Camp Fire and potentially other wildfires across Northern California.
While these examples may be extreme, planned and unplanned power-related disruptions have become all too common. And they’re causing harm: shutdowns force businesses and individuals to contend with lost productivity and wages, and potentially put safety and health at risk.
As we adapt to life under COVID-19, power disruptions could grow more severe. As Peggy Noonan recently commented in the Wall Street Journal:
“There are a million warnings out there on a million serious things. We add one: Everything works—and will continue to work—as long as we have electricity. It’s what keeps the lights on, the oxygen flowing, the information going. Everything is the grid, the grid, the grid.”
More reliance on a less stable grid means that businesses now must seek solutions to minimize power disruptions. Diesel-fueled generators, long a backup power solution, do not instantaneously switch on when the power goes out. While they’re firing up, critical systems can fail or go offline temporarily, resulting in operational disruptions and creating safety hazards. Additionally, the heavy emissions they generate run counter to many companies’ environmental goals, contributing to climate change that fuels natural disasters.
For these and other reasons, companies are seeking innovative alternatives using renewable resources to support resilience. But solar- or wind-only strategies do not solve the full scope of the problem. The sun may not be shining, or wind blowing, when businesses need backup power. A combination of technologies – one that adds on-demand energy storage to the solution – is required.
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Storage must get smarter
Energy storage is gaining popularity, with rapid advancements in battery technology and falling battery prices. Wood Mackenzie predicts that energy storage deployments will grow thirteen fold over the next several years, creating a 158 gigawatt-hour market by 2024 with investments totaling $71 billion.
But a simple, or “dumb,” battery is no longer enough, particularly if you are interested in improving your organization’s resilience. Intelligent storage, leveraging artificial intelligence (AI), is required to give organizations control over how and when they use renewable-generated power.
Smart storage enables new strategies for resilience, allowing businesses to operate as self-sufficient microgrids should power fail in the wake of a disaster or during planned outages.
As the world faces the coronavirus pandemic, systems that combine solar and storage help hospitals, pharmacies and other essential businesses to continue serving individuals sheltering in place or suffering from COVID-19.
Advanced storage solutions are also vital in ensuring access to basic necessities and manufacturing operations. The grocery stores and distribution facilities that safeguard our food supply cannot afford to let food spoil because of power outages to refrigerators or freezers.
Similarly, many manufacturing facilities have pivoted to produce much-needed face masks, ventilators, and medication in the midst of COVID-19. Even a short power blip can cause manufacturers’ equipment to perform a complete reboot, taking hours to return to service. During this time, the manufacturer could lose a batch that is in process while putting employees at risk, damaging equipment and slowing product delivery.
Bonus: Year-round value and new revenue streams
While pairing intelligent storage with solar may sound pricey as a backup power solution, this combination delivers value year-round. For example, intelligent energy storage considers factors such as rate structures, solar production forecasts, price signals and market participation rules to optimize battery dispatch and maximize solar generation.
Intelligent storage and solar, operating in grid-connected mode, can deliver savings on monthly electric bills. Further enhancing project economics is a 26% investment tax credit (ITC) for solar + storage systems. These factors are particularly important since businesses will be tasked with quickly lowering operating costs to meet new budget cut requirements addressing the economic impact of COVID-19.
Advanced storage also enables greater revenue generating opportunities. Solar + storage can provide valuable grid services for utility demand response programs and wholesale energy markets, delivering a greater return on investment and new cash flows in the process.
Given the challenges from costly natural and manmade disasters to a new normal being created by the coronavirus pandemic, now is the time to seek out innovative ways to prevent power outages from disrupting business operations and putting at risk our nation’s health and safety. Solar, combined with intelligent storage, offers an ideal way to improve resilience when the grid is increasingly unreliable, while also protecting the environment, saving money and building new revenue streams in the process.
Mark Triplett is chief operating officer at Stem Inc., where he is responsible for energy storage system deployments, supply chain, network operations and utility programs.
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