Distributed Energy Storage Poised to Support UPS Service Needs

In a previous blog, I highlighted how corporate commercial and industrial (C&I) energy, facilities, and sustainability managers have new choices to manage their energy management and sustainability needs, giving rise to the growth of Energy as a Service (EaaS) solutions. Within Guidehouse Insights' EaaS framework, distributed energy storage systems (DESS) is a key component of the load management and optimization solution given its unique ability to control load and support resiliency needs alongside onsite distributed generation like solar PV.

Are New Solutions Worth the Expense?

The value of onsite resiliency creates much debate within the industry. There is little choice but to deploy uninterruptible power supply (UPS) systems to provide continuous electrical service with high power quality to support resiliency needs for mission critical operations such as data centers, telecom operations, financial services centers, and hospitals. These mission critical UPS systems use complex, valve-regulated lead-acid battery systems. And given critical needs for continuous electrical service, these customers have been slow to adopt new or untested UPS systems using standalone lithium ion, even if these new solutions could improve the total cost of operation.

Due to the high costs associated with these systems, many C&I facilities without mission critical operations have been slow to deploy UPS systems to address electrical service outages. These non-mission critical facilities currently view electrical service outages—and the resulting financial impacts of the associated downtime—as an unmanageable cost of doing business. A recently released Guidehouse Insights report, Advanced Energy Storage for UPS Applications, focuses on the drivers, barriers, technology issues, and market forecasts for this new non-mission critical UPS service segment.

UPS and DESS Go Hand in Hand

In this report, Guidehouse Insights anticipates the emergence of a new UPS service option that will leverage DESS technology to provide resiliency support for certain non-mission critical C&I operations. Specifically, it’s expected that these DESS will be designed to provide demand charge reduction, enhanced demand response market participation, UPS service, and/or grid ancillary services to utilities and competitive markets where applicable. Further, DESS systems integrators and project developers are expected to leverage the energy storage financing innovation in the marketplace to provide UPS as a service without CAPEX to non-mission critical facilities to meet their unmet resiliency need.

In the near term, it will take some time for the regulatory frameworks to mature to allow DESS to efficiently provide ancillary services to the grid and add that project revenue stream. Further, ESS integrators and project developers will need to work on a cost-effective software/hardware technology for this new UPS service application. And while there are already systems integrators and project developers, like Sharp SmartStorage®, now pursing this segment, Guidehouse Insights will continue to watch how these factors come together to grow this DESS market segment.