Energy Transition

Why Fortune 500s are buying into energy storage

John Carrington
Chief Executive Officer, Stem
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Energy Transition

To many, energy storage for our homes or business electricity use seems a thing of the future. We don’t see it in our garages, we don’t hear about in the news. Until recently, most of world didn’t even realize energy storage existed. Fortune 500 companies, however, have been adopting energy storage for their buildings in rapid succession.

From multinational banking and financial services company Wells Fargo and grocery chains like Safeway and Whole Foods to hotel giants like Marriott International, data shows that at least 6% of Fortune 500 organizations have already made the decision to adopt intelligent energy storage solutions, and another 25% or more are actively considering this option.

To understand why these companies are considering this technology, let’s examine how intelligent energy storage systems help lower utility bills and gain a greater understanding of their energy use.

Savings without sacrifice

Businesses are uniquely held accountable for not only the amount of electricity used each month (measured in kilowatt-hours), but also the peak rate at which this power is consumed (measured in kilowatts). These measurements are captured by utilities in 15-minute increments, with the highest peak corresponding to a monthly fee known as a demand charge. For businesses with extreme spikes in electricity use throughout the day, like hotels and manufacturers, demand charges can account for more than 50% of a monthly electricity bill. For others, whose energy use may be less volatile, storage can still be worthwhile. Retailers’ energy expenditures, for example, can represent a large portion of operational expenditures and materially impact shareholder return. What’s more, demand charges are on the rise, even as energy rates drop. The largest utility in the US, Pacific Gas & Electric, has increased demand charges by 30% over the past three years alone.

Without enabling technologies like energy storage, the only way for companies to lower demand charges is to fundamentally change the way they run their business. They can increase their thermostat temperatures, reorganize their manufacturing processes, or make other compromises to bring down this peak charge. For most, this is a compromise they are unwilling or unable to make given guest comfort, fulfillment requirements or labour to implement. With energy storage, however, peaks can be automatically lowered through the seamless application of stored power.

By coupling reliable batteries with second-by-second usage data and predictive analytics, intelligent energy storage systems can “learn” a business’ energy use patterns and proactively address short-term spikes in demand.

Portfolio visibility

Fortune 500 organizations might have hundreds of locations across the country, which can impair visibility into energy usage across a building portfolio. How can executives effectively target energy hogs or model best practices without the data to understand what works, and what doesn’t?

In a situation like this, the importance of smart, remote-access software cannot be overstated. Advanced energy storage solutions arm energy managers with the real-time information and data-rich reports they need to easily identify buildings on either side of the performance bell curve and develop a better-informed energy plan. Blackstone Group-owned Extended Stay America, for example, has installed intelligent storage at 68 hotel sites across California.

Tapping new revenue streams

Utilities are increasingly looking at customer-sited storage systems as flexible grid assets, and as cleaner alternatives to backup diesel generators. Businesses’ storage resources can also serve as a complement to more traditional utility programs, such as demand response, to further improve grid resiliency. It’s no surprise, then, that a number of major utilities are now building programs to reward customers for their on-demand support. This means that, for the first time, companies will be able to turn their energy loads into a new source of revenue.

Intelligent energy storage is not a dream of the future; it is a strategic business decision for some of the world’s largest companies. With compelling benefits for both businesses and utilities, storage can economically and sustainably serve as a bridge between these parties to simultaneously reduce energy costs and alleviate stress on the grid. Whether implemented by a Fortune 500 or the local business around the corner, it’s clear that energy storage is well positioned to have a profound impact on the way energy is consumed and generated in the years to come.


About Stem

Stem, a leading a leading provider of intelligent energy storage, combines big data, predictive analytics and energy storage to simultaneously reduce electricity costs for businesses and in aggregate, deliver services to the grid. Stem’s software learns a customer’s unique energy profile to maximize savings and displays real-time and predicted energy use alongside actionable recommendations. When aggregated, Stem’s customer-sited storage network offers flexible, cost-competitive capacity to the grid. Headquartered in Millbrae, California, Stem is funded by a consortium of leading investors including Angeleno Group, Iberdrola (Inversiones Financieras Perseo), GE Ventures, Constellation New Energy, Mitsui and Total Energy Ventures.

Full details on all of the Technology Pioneers 2015 can be found here 

Author: John Carrington, CEO, Stema World Economic Forum’s Technology Pioneer.

Image: Electric power transmission lines are seen in Neuhof, near Hamburg July 13, 2012. REUTERS/Morris Mac Matzen

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