Energy Storage: What’s the latest update?

Many businesses today are turning to solar energy to power their facilities. Renewable energy is clean and good for the environment, but what happens when the sun isn’t shining? One solution is pairing your renewable energy asset with a battery energy storage system (BESS). Energy storage is a versatile tool that can meet your energy needs when your solar asset is underperforming due to weather conditions, during power outages or during periods of high system demand by using stored energy your system has already produced.

Last October we posted an article outlining the basics of energy storage in PJM. A properly designed and sited BESS can help reduce your demand-based charges in PJM, such as capacity and transmission, by controlling your Peak Load Contribution (PLC). Energy storage also provides resiliency during power outages. All the basics of energy storage including sizing and siting discussed in our previous article, hold true today.

Today, there are several global factors that are impacting the value of energy storage in PJM. Applications for pairing solar with storage are now presenting a unique value proposition for customers who want to invest in a solar system, but also need resiliency or who are facing distinct distribution demand charges.

Global Update: Battery Pricing

The dominate battery chemistry is still Lithium Ion (Li Ion) and within this chemistry there are several types of Li Ion batteries. The two dominant types of Li Ion batteries in the stationary storage market are Nickel Manganese Cobalt (NMC) and Lithium Phosphate (LFP). These batteries are used across the world in various industries, including electric vehicles and a wide array of consumer electronics. Understanding that the market is split into several types of Li Ion batteries is key to understanding the global market and the impact it may have on pricing.

Below is diagram of a Li Ion battery. The types of Li Ion batteries are defined by the chemical makeup of the cathode, or positive terminal. The anode material is the negative terminal where oxidation takes place. To prevent electrical short circuits, a separator is placed between the cathode and the anode.

Due to global trends toward electrification in the transportation sector, the automobile industry heavily influences battery pricing in the market. This is due to similarities in the building blocks or larger systems known as battery packs or modules. Generally, NMC’s strengths include higher energy density which makes them preferred for transportation applications. NMC also shines at longer duration, but lower cycles, and therefore is paired well with four- to six-hour stationary applications.

Lithium Phosphate (LFP) Li Ion batteries, on the other hand, have lower energy density, but shine in higher cycle life in one- to two-hour applications, such as peak load reduction and “Frequency Regulation” in PJM.

“Frequency Regulation”, an ancillary service, is a tool used by PJM to keep the grid’s frequency balanced at 60 Hertz. Traditional generation, BESS and demand response programs participate in PJM’s Market Regulation. Learn more about this ancillary service by visiting PJM’s Learning Center.

Innovations in Nickel Manganese Cobalt (NMC) batteries have made it the technology of choice for electric vehicle manufacturers in the immediate future. Lithium Phosphate Li Ion (LFP) battery manufacturers are seeing less demand from electric vehicle manufacturers and are turning their attention toward the stationary storage market. This is good news for the BESS market, as these LFP cells are being offered at reduced prices compared to NMC cells.

Overall, both NMC and LFP are trending down, but in the near term, LFP is leading. As we see an upward trend in peak capacity and transmission cost, LFP-based systems will present a great value proposition for businesses as they continue to come down in cost.

U.S. Market Update: Fire Standard NFPA 855

On September 11, 2019 the National Fire Protection Agency (NFPA) issued NFPA 855 or “Standard for the Installation of  Stationary  Energy  Storage  Systems”.  This standard  is now required for siting most commercial stationary storage systems in the U.S. and specifies the amount of energy (kWh) that can be contained in a single container, as well as clearance requirements for siting storage systems. For example, without local approval, no storage systems may be installed closer than 100 feet from any public right of way.

As discussed in our October 2018 article, there are several siting requirements to consider. NFPA 855 is an important new siting requirement that is now at the top of that list. Exceptions to this clearance rule can be made by local authorities, however, additional Underwriters Laboratories (UL) 9540A testing is required to be considered for an exception. The good news is that original equipment manufacturers (OEMs) producing batteries are paying attention to these new requirements and are responding by proactively getting their systems approved to be eligible for these exceptions. When looking into storage, we highly recommend requiring the proposed system meet the NFPA 855 standards.

Application Update: Solar Plus Storage

As the cost of energy storage comes down, pairing storage with a solar project makes economic sense. Further defined, solar plus storage means that the storage system will be charged by the solar array during the day and will be discharged at another time. Customers find value and peace of mind knowing they have stored energy for periods of two-to-four hours, carrying them through outages or other events, when they cannot rely on solar alone. Additionally, savings could be generated for those customers on specific tariffs that bill for monthly distribution demand charges by clipping load peaking after the sun goes down.

Unfortunately, solar plus storage does not work in every case; it is highly dependent on the customer’s load and preference. However, if the battery is charged more than 75% of the time by renewable, generated power, the battery will be eligible for the same Investment Tax Credit (ITC) that the solar is eligible for. Since this is an emerging value proposition, if you are considering a solar project, ask your AEP Energy sales representative how storage would pair with your system, as it is very site and load dependent.

Interested in Learning More?

AEP OnSite Partners, along with AEP Energy, is uniquely suited to own, operate and dispatch BESS to maximize the benefit to our customers. If you are interested in learning more about how a BESS can benefit your organization, reach out to Peter Protopappas, Director, Business Development for AEP OnSite Partners, at or contact your AEP Energy sales representative to find out if an opportunity is right for your organization.

AEP Energy does not guarantee the accuracy, timeliness, suitability, completeness, freedom from error, or value of any information herein. The information presented is provided “as is”, “as available”, and for informational purposes only, speaks only to events or circumstances on or before the date it is presented, and should not be construed as advice, a recommendation, or a guarantee of future results. AEP Energy disclaims any and all liabilities and warranties related hereto, including any obligation to update or correct the information herein. Summaries and website links included herein (collectively, “Links”) are not under AEP Energy’s control and are provided for reference only and not for commercial purposes. AEP Energy does not endorse or approve of the Links or related information and does not provide any warranty of any kind or nature related thereto. Forward-looking statements contained herein are based on forecasted or outlook information (including assumptions and estimations) but any such statements may be influenced by innumerable factors that could cause actual outcomes and results to be materially different from those anticipated. As such, these statements are subject to risks, uncertainties, fluctuating market conditions, and other factors that may cause actual results to differ materially from expectations and should not be relied upon. Whether or how the customer utilizes any such information is entirely its responsibility (for which it assumes the entire risk).


Up Next

Best Practices in Energy Management: Four Mistakes People Make (and How to Avoid Them)


In this edition of Customer Insights, we’ll discuss some of the most common mistakes organizations make managing their energy spend, and how you can learn to elevate your energy management performance. Four Areas Energy Users Make Mistakes Usage and spend tracking Energy supply contact management Oversimplying Employing piecemeal approaches Usage and Spend Tracking When it …