‘Huge benefit’ to using batteries in Ontario’s industrial peak reduction opportunity

SunGrid deploying commercial energy storage systems using Powin Energy's battery storage racks at a site earlier this year. Image: SunGrid

Reducing peak demand for commercial and industrial (C&I) electric utility customers in Ontario remains a big opportunity for using battery energy storage to reduce costs and decarbonise, three partner companies working on a 2MWh project have said.

Energy-Storage.news spoke with battery storage technology provider Powin Energy, engineering and project management company Sungrid and their customer Kruger Inc, which is also developing the project through its Kruger Energy subsidiary.

The battery storage is being deployed at Kruger’s packaging factory in Brampton, which makes containers for food, beverages, chemicals, textiles and numerous other products and sectors. Kruger Energy’s manager for energy storage Cyrus Etemadi told Energy-Storage.news: “During the current coronavirus crisis our Brampton facility is running at 110%, 24 hours a day, seven days a week, so energy storage is a huge benefit”.

The Canadian province’s Global Adjustment Charge (GAC) policy, implemented and operated by the Independent Electricity System Operator (IESO) that runs the grid, remains one of the key ways that grid infrastructure and clean energy initiatives are paid for. Over the past few years, this site has reported on numerous projects of varying size, as well as tens of millions of dollars of investments. Powin Energy itself said it has worked on more than 100MWh of such projects and has a pipeline of around 80MWh more. 

The latest project for Kruger is therefore fairly small in the grand scheme of things but is Kruger’s first pilot with energy storage and the customer/developer hosted a large Request for Proposals (RFP) for interested vendors, Etemadi said, “covering the major players with expertise on this technology”.

“SunGrid and Powin Energy were extensively researched, with particular attention paid to the safety of battery storage. In the end their lithium iron phosphate cell composition really stood out – unparalleled, long life, non-toxic, landfill safe and no cobalt usage,” Cyrus Etemadi at Kruger Energy told Energy-Storage.news

'Not the easiest methodology to grasp'

Basically, large users of electricity in Ontario can enrol in a programme called the Industrial Conservation Initiative (ICI) to manage their GAC costs, which are calculated based on the percentage they contribute to the province’s top five hours of peak demand over a 12-month period. In April, an Ontario college contracted Alectra Energy Solutions to install a 5.4MWh energy storage system (ESS) made by Wärtsilä to save money on its Global Adjustment Charges. 

Other notable recently completed projects in the province include an 8.9MW / 18MWh system completed last May by Fortune 100 tech company Honeywell, while Shell's industrial customers in Ontario are being offered battery storage systems through a partnership with developer Convergent Energy + Power. Earlier this year, private equity investor Blackstone Energy Partners bought up Toronto-headquartered NRStor C&I, a former subsidiary of Canadian energy storage developer NRStor.

“Within Ontario large load users pay roughly 70% of their bill based on each user’s peak demand at an undetermined set of five hours,” Jeremy Goertz, managing director at SunGrid Solutions, told Energy-Storage.news.

“These costs are associated with non-running hours of peak servicing grid assets and are apportioned based on the previous year’s five provincial peak hours. A user’s prorata usage is used to calculate the proportional share - for the upcoming year - of the non-peak costs,” Goertz said.

“It’s not the easiest methodology to grasp, but once understood this presents an opportunity for users to install behind-the-meter generators including batteries to lower the grid usage during peak events. Timing these peaks has drawn focus from some very smart software providers and, unlike emission-based generators that typically just run for 8-10 hours on the days of peaks, for batteries there is a tactical ability to target a set number of hours by charging when off grid and discharging when on peak”.

Danny Lu, senior VP of Powin Energy, was interviewed for a feature article in the latest edition of our journal PV Tech Power, out now. That article focuses on the strategies and technologies Powin Energy and another provider of lithium-ion battery storage systems, Sungrow, use in creating their products.

“It’s actually a very low cycle use case but it offers big savings to the customer if you time it right and you hit the right states at the right times,” Lu said about the opportunity that Ontario’s GAC presents, in that interview.

A recent Powin Energy press release about the Kruger packaging facility project said that reducing peak demand versus the GAC can result in an “extremely attractive payback” on customers’ investment in batteries, while the savings that the ICI programme offers allows them and the IESO to defer the need for investments in new electricity infrastructure.

Volume 23 of PV Tech Power includes the feature article “Building battery storage systems to meet changing market requirements,” based on interviews with Danny Lu, VP at Powin Energy and Dr Zhuang Cai, R&D director at Sungrow. You can download the whole journal free of charge from the PV Tech Store (subscription details required)

Stay up to date with the latest news, analysis and opinions. Sign up here to the Energy-Storage.news Newsletter.