In the last 30 years, the energy industry has gone through major market shifts on a macro level. Today, with low-cost natural gas and renewable energy requiring no ongoing fuel expenditures, electricity commodity pricing is at an all time low. The cost of electricity is made up of several components and the low electricity commodity MWh pricing is only one component.
Today we are going to speak about capacity pricing. Capacity pricing is the cost for electric utilities, generators, and system operators to constantly supply energy—allowing you to turn on a switch and have instant access to power. The electric distribution and transmission systems that deliver electricity have a finite quantity of wires & substations delivering electricity to various "loads".
When power plants are "down", or the demand in an area is significant, it creates congestion on the distribution and transmission lines. The cost of congestion is embedded into what we pay for our electricity. Therefore, the price of capacity varies drastically depending on the time of day that you are looking to accept delivery of electricity. Being able to control when to accept—and when not to accept—delivery of your electricity puts consumers in a unique situation.
Savvy large, mid-sized, and small commercial, industrial, and corporate electricity ratepayers understand that demand, capacity, and transmission costs can make up 70% of their energy expenditures. This cost is expected to increase in the future as our electricity infrastructure systems are 100 years old and require major upgrades.
Technological advances with smart energy controls, energy storage systems and solar, wind or fuel cell systems enable large energy buyers to reduce capacity and transmission costs by up to 40%. The concept suggests that when wholesale energy capacity prices and transmission congestion are at an all time high, you shift loads to be powered off your solar energy and energy storage system. During the night, or at other times when capacity and congestion are at an all time low, you are able to charge up your energy storage system.
Energy storage systems and peak load shifting can be very complex to implement and operate on an ongoing basis. The process requires energy markets with a deep knowledge of wholesale power pricing to properly schedule the charging & discharging of your energy storage system. Systems like the one that we are describing can also come with a high capital expenditure.
YSG Solar offers power and capacity purchase agreements. These agreements allow YSG to construct and operate the solar + energy storage system on your industrial facility. After the system is installed YSG will provide you with a fixed price for electricity + capacity—a price that will be at a discount compared to your current utility provider.
Example of Solar + Energy Storage System with Peak Load and Transmission Load Savings
Location: Hauppauge, NY (Long Island)
Utility: PSEG Territory
Facility Type: Meat Processor
Output Voltage: 480V/60HZ
The facility has large freezers with a total demand that is 750 KW. The installation of a solar + energy storage project, with a capacity of 2500 kWhs, discharging at 500 KW/hr, for a five hour maximum duration.
This example provides peak load and transmission load savings that exceed $80,000/year.
Below, you’ll find details of utilities & system operators that YSG works with, as well as a list of states with active energy storage policies.
Utilities We Work With
PSEG New Jersey
PSEG Long Island
Orange & Rockland
& many more
System Operators We Work With
States With Active Energy Storage Policies
You could start saving money right away by offsetting your electric bill with solar plus energy storage. Contact YSG Solar today to learn more about solar power, energy storage, and how it all works. We take care of the entire process from start to finish, so you can see savings on your utility bill as soon as possible. Send us an email, or call at 212.389.9215 to hear more.