What Siemens and Walmart know about ESCOs
Commercial building operators looking for energy service providers to help them cut their power usage, save money on their utility bills and reach sustainability goals, have a widening range of options.
Longtime providers of energy-efficient building technologies, such as Siemens, Schneider Electric and Ameresco, still dominate the energy-services market.
But a newer crop of companies offer energy storage and grid related services that potentially can cut energy costs even more. Batteries and other devices help limit the amount of electricity the building must buy from the local utility and with energy management systems, can shift the building’s power usage footprint at different times of day to obtain financial rewards from the grid operator.
U.S. energy service companies (ESCOs) are on track to generate about $7.6 billion in revenue this year, up 15 percent from 2016, according to a recent report by Navigant.
ESCOs develop, design, build and finance projects that save energy and reduce energy costs at customer facilities. Most of them do this through an energy performance contract they sign with the customer, which the project to generate actual energy cost savings in order for the provider to get paid.
The customer usually does not pay up front, but instead pays for the equipment and services through the contract payments which, together with their utility bills, should be less than what they were paying their utility before.
In a recent example, Siemens worked with Gulf Power to install energy and water conservation upgrades at 58 facilities at Naval Air Station Whiting Field in Milton, Florida, under a $10 million energy savings contract with the government. The 13-month project included more than 10,000 LED light fixtures, high-efficiency HVAC equipment upgrades, low-flow water fixtures, transformer replacements and building control systems upgrades that together are estimated to save the air station $500,000 a year.
What does a commercial property owner do after they’ve upgraded the equipment in their buildings, but they still want more savings?
Enter energy storage providers such as Advanced Microgrid Solutions (AMS) and Green Charge.
Walmart signed a contract with AMS earlier this year to design, install and operate advanced energy storage systems at Walmart stores to boost efficiency, guarantee energy savings and provide grid support to the local utility, at no upfront cost to Walmart. AMS will install 40 megawatt-hours of batteries at 27 Walmart stores in southern California. The batteries will provide extra power to the stores, when it is needed to avoid using too much utility power and incurring extra charges.
AMS also has a contract with Walmart’s local utility, Southern California Edison, that agrees to provide immediate reductions in power usage on the grid at times when demand for electricity is high, such as in late afternoon and early evening, but when supplies are tight. AMS can offer SoCal Edison power reductions from Walmart and its other customers, such as Irvine Co., that host similar battery arrays at other times, to solve different grid issues, which increases the revenues that AMS and its customers can obtain by automatically switching on the batteries to decrease their use of power from the grid.
“The energy services company today has to be able to manage very complex distributed energy resources [and] their interaction with each other, in order to create the financial benefit to the end-use customer,” AMS Chief Executive Susan Kennedy said. In addition to managing multiple distributed energy resources to create energy savings for the customer, the new goal is to create grid products that the customer can use to monetize their on-site batteries, she added.