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SPOTLIGHT: ENERGY STORAGE

Intelligent Energy Storage: Where this

Transformative Technology is Today and

Where It’s Headed

Andrea Sanders
Marketing Manager
STEM
ver the past two years, more than 1,000 energy storage is possible in regions where utilities are compensating storage
systems have been installed in commercial properties, providers for services they provide to the grid, making the
Oprimarily in California, Hawaii and New York. Around 15% economics of energy storage even stronger. Because of the value
of Fortune 500 companies have activat- storage systems provide to the grid, prop-
ed energy storage, and 30% are actively erty owners can receive lease payments for
considering it. Analysts from GTM Research space occupied by the system that would
predict that over the next four years, storage otherwise go unused.
deployments in commercial and industrial By guaranteeing persistent cost savings
buildings will have increased 10 times over and increasing rental revenues, energy
2015 installations. storage systems improve NOI, and thus
Energy storage is undisputedly becoming property values.
an essential component of next-gen smart
buildings. What are the factors contributing 2) Storage Lowers Energy Costs and
to this greater interest? Future-Proofs Buildings Against Rising
Batteries have been around for decades, Rates
but thanks to a variety of influences—such Building owners understand the value of
as intelligent control platforms that squeeze improved building efficiency and reduced
more value from batteries; quickly descend- operating costs. Inefficient properties with
ing lithium-ion battery costs; and storage high electricity fees have a harder time
service offerings that provide immediate raising rent, take longer to re-lease, and
payback without any upfront cost—energy storage is now a are less desirable to investors. These factors can even increase
simple, cost-effective way to increase property value, lower oper- the building’s illiquidity risk premium and possibly reduce its
ating costs, and protect against future rate changes. exchange price.
The core benefit of energy storage is the flexibility to purchase Many property managers have implemented energy efficiency
and store electricity at times when costs are low, and then release initiatives and successfully lowered the energy portion of tenants’
that energy later when drawing from the grid is expensive. This utility bills, but still have trouble managing costly demand
unique capability is making energy storage an increasingly im- charges. Energy efficiency initiatives help lower electricity use,
portant asset for improved building performance. Here are three but do not directly address peak demand. This is a major problem
ways energy storage adds value today: for properties in states where demand costs are rising quickly.
In California, for example, demand costs have increased by an
1) Storage Increases Property Value average of 80% over the last decade, and now usually make
There are two ways that energy storage systems can improve up more than half of the electric bill. Not to mention other rate
property value. First, remember that any technology that can changes, such as shifting time-of-use periods or net-metering
guarantee persistent savings over time will improve property policies, both of which threaten solar profits unless a building has
value by increasing Net Operating Income (NOI). It’s essential to energy storage. By not protecting against demand charges and
choose a storage solution that provides a strong performance changing energy rates, property managers risk leaving owners
guarantee that not only eliminates risk, but also increases and tenants completely exposed to rising costs.
property value by guaranteeing verifiable savings for the Intelligent energy storage systems continuously learn and re-
duration of the agreement. spond to changes in a building’s energy profile or electricity rates.
The second way storage can increase property value is by This enables property managers to enhance performance year
increasing the amount of leasable space within the building. This after year while simultaneously protecting tenants and owners

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