‘Rapid growth story’ for behind-the-meter distributed storage

Johnson Controls is a major player in the growing field of behind-the-meter distributed energy storage. The company has 38 large commercial and industrial battery storage projects installed across five continents, eight countries and 14 US states.

We spoke with John Schaaf (pictured), vice-president and general manager of the firm’s Distributed Energy Storage business, about some recent projects, the challenges involved and the growth of distributed storage.

“We have two divisions or business units,” says Schaaf. “One deals with buildings. We started the building control industry with the invention of the room thermostat so we have deep expertise, combined with deep expertise in batteries. We’re the largest battery manufacturer in the world ” we make 152 million car batteries per year.”

Q: Tell us about some of Johnson Controls’ recent distributed storage projects.

A: At our headquarters in Cork, Ireland, we’ve commissioned an integrated storage system. It’s a very sophisticated integration where we’ve got advanced building controls that operate the building from a control standpoint, all the HVAC, lighting, security, everything is tied in. With the intelligent integration of the storage system we’re able to use things like the thermal mass of the building and energy consuming devices, which allows us to put in a smaller battery. It’s a showcase for us for intelligent control systems and how they interact.

At Clemson University in Charleston, South Carolina we integrated a battery system with building controls. We believe that is an efficient way to minimize the cost associated with the integration of a battery. We spend a lot of time making sure it’s a seamless integration and that the building control system can operate the battery. This minimizes the cost of integration and commissioning. For ongoing O&M we use the same tools we use for the building system.

The data we’re getting puts us between a 5 and 10 percent smaller battery than we would otherwise be putting in. We’re able to use not only the energy-consuming systems in a building, like heating, air conditioning and control systems, but we’re also able to use the thermal mass of the building. We can pre-cool the building and do what would otherwise be demand response functions. We’re able to forecast what the building needs will be because the control system has data on how the building is performing, and it anticipates upcoming weather conditions and building trends in occupancy or scheduling, so it prepositions and anticipates environmental needs.

In Isle Royale, Michigan we built a microgrid system to manage the island there, to take the system off diesel generators and to use solar + storage. That system is up and running with 1 MWh of storage at that site. And we were also recently awarded a project on Kwajalein Island in the Marshall Islands, with the US army ” also a solar + storage system and built around microgrid capability as well. All of these are behind-the-meter ” that’s what separates us from our competition, from other companies building storage systems or microgrids. We have orders for 66 MWh we’ve installed or are in the process of manufacturing. It’s a rapid growth story for us ” just in the last six months we’ve grown 250 per cent. We see this as validation that our business model is working.

When you look at batteries, costs have declined about 50 per cent in the last two years. And, at the same time that battery cost has been dropping, performance has increased significantly in terms of energy density. This trend overall is most favourable for uptake in the market, especially behind the meter, for projects somewhat smaller than utility scale. You may hear stories about overcapacity in the market and costs dropping, then the next day there will be a bit of a bump in price ” we see that as just a fluctuation. We’re seeing more and more uptake even outside areas where you would normally see subsidies to offset that cost.

Q. Johnson Controls manufactures both lithium-ion and lead-acid batteries. Has the firm looked into other battery types, and which battery technologies are expected to dominate as the world moves toward a low-carbon future?

A. Both battery chemistries are used in stationary storage, as well as automotive applications. The vast majority of the more than 150 million lead acid batteries made by Johnson Controls each year are used in cars. Johnson Controls also makes lithium-ion batteries for use in hybrid electric vehicles.

Johnson Controls’à‚ lithium-ion batteries have been deployed in stationary storage applications in the US and in Europe. Lithium-ion batteries are the most common type used today in energy storage due to their relatively high energy density, charge/discharge rates and falling prices. Given the continued investment in lithium-ion technology, production efficiency and manufacturing capacity, it will likely be the leading battery type used in stationary storage installations for the foreseeable future.

There are, however, many emerging battery chemistries that could eventually provide economics or functionality that compete with lithium-ion once fully developed. Johnson Controls tracks and evaluates them on an ongoing basis. Flow batteries are currently used in some long duration applications. Magnesium-, sulphur- and iron-based batteries are just a few of the other chemistries under development which have not seen mass adoption yet. à‚ It will likely take years before any of them make significant inroads against lithium-ion’s leading market position.à‚ 

Q: In which area of decentralized energy will the addition of storage accelerate growth the most?

A: For us, we’ve seen it in two areas: one is solar + storage, and this is largely a result of the price point of solar, and then the declining cost of storage. The two together are pretty impressive. We’ve done 38 projects and I’m guessing not quite half are solar + storage.

We have seen one or two projects also where we would combine storage with cogeneration, and the reason you’d see that would be driven by specific market conditions where you might have a local utility or government regulation that would incentivize industrial customers to reduce peak load ” more as a peak shaving opportunity at utility operator level. This is prevalent in areas in Europe and in places like Canada, Ontario specifically. It’s a global adjustment.

Region by region, what you would see really depends on the market design. For us, as we’re mostly focused in North America but also outside, solar + storage is very viable and competitive with areas where there are high demand charges: $15/kW and above, then you’re in the range for a competitive offering.

Q: How have you decided which world regions or national markets to move into or expand your offering in?

A: Through two lenses. The first is where we think there’s market uptake based on a lot of analysis done by Bloomberg, Navigant, Lux etc. When we look at storage, behind-the-meter in particular, most data will point to the US first, primarily based on California where they were incentive-based with a 1.3 GWh mandate over an eight-year period to get critical mass going. Closely following that would be Europe and China ” Europe is going through its own process of market design that will take some time before it rolls out ” then areas like Australia and others. We looked at that data first to find out what the broader market is indicating, primarily based on government regulations and incentives.

Secondarily we looked at our own installed base, our go-to-market strategy if you will. Our customers have been large institutional customers: hospitals, universities, military bases ” the larger and more complex a building system is, the more likely we are to be there. We looked at other indicators like the cost of energy, primarily demand charges. We looked at peak shaving and load shifting and where storage would fit there, many times combined with solar.

The last area we looked at, another market driver, was increased focus on resiliency. People want to be more resilient and to have islanding capability, but they wouldn’t have the economics just to go completely off-grid or to harden a facility or asset based on either weather or cyber concerns. But if we could help them get most of the way there with an economic value proposition, they could close that gap by funding it themselves.

Q: Is resiliency a larger concern in the US than in other countries?

A: We see that indicator coming out a bit more for two reasons. One is that we’ve had a number of extreme weather events, which made it very clear that the grid was not hardened and critical systems were not adequately protected for places like long term care facilities and nursing homes. There are concerns around weather, but also around cybersecurity.

Now we have a shift in politics here a bit with the current administration vs the last administration, shifting from a focus on renewables and decarbonization. The new administration hasn’t focused on that but uses words more around resiliency. Many of our customers who installed renewables, solar in particular, and wanted to increase resiliency were able to build on investments that they had already made. They already had diesel generators, smart controls, PV funded under some programme, and adding storage gets them even closer to building out a complete microgrid. Sometimes this is driven because there’s not a grid there to serve, as in many parts of the developing world.

Q: What are the challenges involved in realizing decentralized projects? à‚ 

A: With microgrids in far-away places you find that you tend to build a bit more redundancy into the system. You might stage backup parts, or you might put an additional supply of battery modules close by since they can’t call a service truck to come and immediately do repairs. Many island applications also have unique environmental conditions such as salt air. Heating and air conditioning systems have special coated fins to deal with corrosion. You might also select different materials such as stainless steel, where we may not need to do that with more of a mainland application.

One interesting example was a project in Salinas, Puerto Rico on the southern end of the island. That was a very hot climate, very humid. These are interesting things you just don’t think about, like sizing an air conditioning system not only for warmer temperatures but for an increase in humidity. All of the battery systems have performed well within these temperature ranges so there have been no issues or effects on performance. The coldest climates have been the Isle Royale upper peninsula and the systems currently being installed in Ontario at Wilfred Laurier University. There’s no data available on these yet because they’re currently being installed, but we haven’t seen anything out of the ordinary other than normal safety precautions in ice and snow, which are more related to the construction aspect than performance.

Q: What do you see for the future?

A: We think behind-the-meter distributed energy storage will be a major play in the overall space where most of the focus seems to be on utility-based systems. Edge-of-grid technology is going to become more and more prominent because that’s where the load centres are ” in large complicated buildings. à‚ 


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