Backup Power

Storage is a new class of asset for America’s rural electric utilities. Utilities can benefit from BESS in a few key ways:

• Reduce peak demand charges

• Encourage demand response

• To support load shifting

• Promote a more resilient grid

• As a means to further integrate renewables

Cost benefits can be achieved by BESS through aggregations of virtual power plants and/or vehicle-to-grid or vehicle-to-building to meet peak energy needs. This approach is especially helpful to utilities when wholesale power is more expensive or when the grid is temporarily down. Batteries can be charged with electricity that would otherwise be wasted, which is a form of load shifting. At times of very high demand, utilities can draw down stored energy and avoid the need to purchase or generate electricity when it is most expensive.

With battery storage, expanding time-of-use (TOU) or dynamic rates can reduce wholesale power costs by minimizing the utility’s expensive peak demand charges. This can provide significant savings for both customers and utilities while improving resilience against storms and other emergencies.

Dispatchable Electricity

Distributed battery energy storage systems attached to buildings can provide valuable grid services to utilities and co-ops. When BESS are tied to the grid they can serve as dispatchable reserves of power that can be sent to the grid. Battery storage devices can absorb excess clean energy generated by solar panels during the mid-day hours when the sun is strongest. Distributed battery storage reduces the need for peaker natural gas power plants, which lower carbon emissions overall. This enhances resilience, reduces curtailment, and lowers emissions by better integrating renewable energy into the grid.

Saving Utilities and Customers Money

As a result of BESS, utilities can save energy through reduced demand charges, avoided outage costs, and the reduced need to purchase expensive power from the market, or from generation and transmission (G&T) co-ops, or build expensive natural gas-powered peaker plants. Extreme weather events have caused G&T’s demand charges to rise in parts of the country where demand was not historically expensive. Using electric storage for resilient emergency backup power can provide mutual benefits to the grid and ratepayers by lowering energy costs and facilitating energy demand management.  

Centralized utility-scale batteries can benefit the customer, utility, and the grid by building resilience in the distribution system, especially as the distance to a substation increases or a feeder is nearing capacity. In 2021, the New Hampshire Electric Cooperative completed a 2.45 MW storage facility, complemented with a 2 MW solar array. The project is designed to mitigate peak demand periods, with the co-op estimating that it will save members more than $2 million over the next decade.

BESS can also help utilities defer major grid investments as there is less need to build out transmission lines to move energy that is now generated locally through solar panels and storage locally with battery storage devices. With less power relying on transmission lines, BESS alleviates the crunch on the transmission side and boosts reliability.

Utilities can find funding for residential storage programs through federal opportunities like the Rural Energy Savings Program (RESP) which can allow for customers or members to use on-bill financing through the utility. This means participants can pay back their investment on their monthly power bill. This is another example of how on-bill financing projects like this are excellent tools for utilities and ratepayers to pursue beneficial electrification projects. These projects can be modest in size while still delivering a great benefit to participating households.

For utilities, BESS is like a Swiss army knife as it helps lower utilities’ demand charges by discharging cheap stored energy during the evening hours when the demand for electricity is greatest and the prices are highest. These grid actions are called peak shaving as the daily or monthly demand peak is shaved by using stored clean energy. Peak shaving capabilities help smooth out the daily load curve and keep polluting peaker plants offline during high energy demand periods as batteries dispatch stored clean energy into the grid. Both these actions help utilities reduce demand changes, lowering energy costs that can be passed on to members.

Large Mobile Storage

Each variation of storage can carry advantages to benefit the utility by adding flexibility and grid durability. Beyond stationary battery projects, utilities can consider supporting the electrification of fleet vehicles which can serve both the utility and customer. Electrifying school buses and using their batteries for vehicle-to-grid (V2G) is already catching the attention of electric cooperatives. 

Electric school buses from Thomas Built, Lion, and Bluebird, Green Power, IC bus, BYD and Micro Bird offer V2G capabilities to provide peak capacity and backup power for schools or community buildings as a resilience resource.

Federal funding is available to rural utilities for stationary storage and bi-directional charging infrastructure.
See Section 4: Funding of the Toolkit to find out more.