Solar Battery Storage Blog

Learn about the advantages of solar with battery energy storage

October 8, 2019

What Is Peak Shaving with Battery Storage?

For most businesses, energy consumption varies throughout the workday, with telltale peaks and valleys. To accommodate this fluctuating demand at the macro level, utility providers also vary their pricing throughout the day:

  • During times of high electricity demand, “peak” utility rates kick in
  • When energy demand goes down, “off-peak” pricing goes into effect

The only real constant is that you’re always spending money.

With on-site battery storage, however, it’s possible to manage rising energy costs using a technique known as “peak shaving.”

How Peak Shaving with Battery Storage Works

The basic concept behind peak shaving is very simple:

  • With on-site storage, you charge your batteries whenever electricity rates are at their lowest (i.e. during off-peak hours or with your free solar energy)
  • You then discharge those same batteries to avoid paying peak prices during the most expensive times of the day

This strategy allows you to save money without disrupting your normal operations. All electrons are essentially the same. But with peak shaving, you’re only paying for the absolute cheapest ones.

In effect, on-site batteries help you level out the peaks and valleys in your energy spending to ensure you’re saving as much money as possible.

Better still, peak shaving with batteries isn’t something you must actively manage. With the right configuration, your energy storage system can intelligently regulate charging and discharging without any direct intervention from you. It can do this in real-time as your utility provider continuously shifts its pricing by the hour, day or season.

In other words, your utility bill savings accumulate automatically.

And in a state like California, those savings can quickly add up.

We already have some of the highest electricity rates in the country. And the 3 biggest investor-owned utilities continue to aggressively push for new time-of-use (ToU) pricing to cover their rising costs (and wildfire-related penalties).

Not that it matters, but California also leads the country in minimum wage increases as well. Although these salary hikes are good for society as a whole, they create another rising cost that you must now manage.

Peak shaving with battery storage frees up valuable resources to help you more easily cover such expenses.

Are There Alternatives to Peak Shaving WITHOUT Batteries?

There are many peak shaving strategies that don’t require on-site battery storage. Below are 3 of the most popular.

1. Change Your Hours of Operation

You can change your hours of operations based on what the utilities are charging for electricity:

  • During peak hours, this means scaling back production
  • During off-peak times, this means ramping up operations

Unfortunately, this approach isn’t really practical for most businesses – which is precisely why utilities can and do charge a premium for electricity at certain times of the day.

2. Become More Energy-Efficient

You can make your business more energy-efficient by:

  • Updating some of your older equipment
  • Installing insulation and newer HVAC systems
  • Replacing incandescent bulbs with LEDs

Because energy efficiency is a wise investment for any business, it’s best to think of this strategy as an “also” instead of as an “alternative.” 

Making your business more energy-efficient will help you save money no matter what. And with the added benefit of on-site battery storage, those savings will only grow larger.

3. Install Solar PV Panels

Installing solar photovoltaic (PV) panels is one of the best ways to reduce your reliance on the utility grid. You’re essentially generating your own electricity from free sunshine.

This approach is so popular, in fact, that utilities have had to shift their peak demand hours to reflect California’s rapidly changing energy landscape. 

The most expensive electricity prices used to be mid-day, with off-peak rates starting in the early evening. But with more customers sending excess solar energy into the grid than ever before, peak demand is no longer during the sunniest times of the day.

It’s now closer to 5 PM, when PV panels start powering off with the setting sun. 

As such, solar (on its own) is becoming less of a viable energy management strategy for the long-term. Even with a high-quality PV system that delivers abundant solar power, you’ll still get hit with demand charges throughout the day.

However, combining solar power plus on-site storage offers the best of all worlds.

Peak Shaving with Battery Storage AND Solar Power

Installing both solar PV capacity and on-site storage ensures that you enjoy the highest utility bill savings possible:

  • During the day, you charge your on-site batteries with solar energy from your PV panels. This approach essentially makes your stored power free. If necessary, any excess charging can happen from the grid during off-peak hours. So you’re still technically saving money.
  • When you need to power your business, you can use whatever electricity source is cheapest at that precise moment in time – whether it’s from your PV panels during the day or from the stored solar power (in your batteries) at night or during “peak” hours.

Note that the only time you need to draw electricity directly from the grid is when your panels aren’t working (at night) and your batteries are completely empty.

Again, this configuration isn’t something that must be actively managed. With the right set up, your solar + battery system can intelligently regulate energy spending to ensure you save the most money possible.

Discover How Peak Shaving Can Make Your Business More Profitable

As a concept, peak shaving is very straightforward. Using on-site storage to smooth out valleys and peaks allows you to avoid paying exorbitant rates for utility power. And adding on-site solar PV amplifies these benefits by reducing your grid electricity consumption across the board.

But if the goal is to maximize your savings, it is imperative that you set up your PV system and battery solution correctly. This not only means using high-quality components installed by experienced professionals. It also means applying and qualifying for generous incentives that can help cover the upfront cost of installing on-site solar and storage.

To learn more about our approach to solar power, on-site storage, green subsidies and affordable financing, schedule a free consultation with us today.

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