As Renewable Energy Gains Traction, Seeing a Bright Future for On-Site Energy Storage

The lobby of Park Place, a 2.1 million-square-foot (195,100 sq m) mixed-use complex in Irvine, California, developed by LBA Realty. The system is expected to reduce the site’s energy costs by more than $90,000 in the first year of operation.

Commercial property owners are rethinking their skepticism toward energy storage systems, with battery prices dropping and third parties offering new financing models.

“Everybody is recognizing that it is a necessary component of the overall [sustainability] picture,” says Sara Neff, the senior vice president of sustainability at Kilroy Realty Corporation, the California-based real estate company.

The first quarter of 2017 was “the biggest quarter in history for the U.S. energy storage market,” according to a tracking report from the Energy Storage Association. Led by large-scale utility installations, primarily in California, the megawatt (MW) hours of storage deployments doubled in 2016, compared with the previous year, according to the association’s data.

This year’s list of big announcements includes Tesla’s deal to build what is described as “the largest lithium-ion battery storage project in the world” in South Australia. The Tesla batteries will be able to store 100 MW of power, which is enough to supply more than 30,000 homes, the company says.

Several different trends are converging to make battery storage more attractive. Battery pack costs have dropped from about $1,000 per kilowatt-hour in 2010 to $230 per kilowatt-hour in 2016, according to a report released in June by McKinsey & Co. At the same time, energy rates continue to soar, and many states—including California, New York, Massachusetts, and Hawaii—are turning to incentives to help push companies to find ways to manage their consumption.

“We’re starting to see incentives drive more demand and bigger deals,” says Billy Grayson, executive director of ULI’s Center for Sustainability and Economic Performance. “Now, companies…

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