Demand charge management tips for the commercial, industrial segment

Simpliphi commercial solar storage installation

Storage solutions must be customized to align with the specific power or energy demands of a commercial or industrial customer.

It’s no secret that commercial energy users in every industry are seeking to reduce energy costs today and achieve long-term cost predictability for the future as utilities implement increasingly unfavorable rate structures. Energy storage provides a powerful, multifaceted solution to lock in rates and achieve power security.

Savings opportunities

Energy storage can provide a significant ROI when it comes to utility bill savings:

Demand charges: Demand charges are often calculated based on the highest 15-minute average electrical use recorded in one month which are then applied to all 12 months. As a result, demand charges make up a significant percentage of all commercial and industrial utility bills — typically between 30 and 70 percent. In the U.S., 25 percent of commercial customers (roughly five million businesses) pay demand charge rates of more than $15/kWh and these demand charges continue to rise. Energy storage enables commercial and industrial customers to discharge their batteries and use battery-stored energy rather than grid power to avoid peak demand spikes.

Time of use rates: Time of use rates are calculated at a specific time of day when the utility charges a premium rate to reduce high demand on the grid. Energy storage offsets utility rates by reducing grid power usage during peak hours and shifting usage from peak to non-peak hours.

Large-scale battery banks have both sufficient available power and energy storage to cover and “smooth out” consumption demands and protect utility customers from unfavorable rate structures.

How performance factors into the equation

Beyond initial utility savings, the performance profile of both the batteries and all-in-one solutions matters when it comes to maximizing the performance and economic return associated with a commercial energy storage system. As we’ve discussed in earlier posts, pay close attention to warrantied cycles (battery expected life), max charge/discharge or the battery’s available power, as well as usable capacity and efficiency.

Just as PV array size decisions are important for generating the optimal amount of power and ROI for a project, so too must storage solutions be customized to align with the specific power or energy demands of a commercial or industrial customer.

Consider how storage addresses peak demand charges.  These charges are based upon power consumption, so it is important to have a skilled professional build a profile of power demands exceeding the line in which the demand charge is met.

For instance, a professional might determine that the highest 15 minute interval rate that a warehouse uses is 100 kW. The installer can then reduce this rate with the strategic addition of solar and storage to help smooth out the load profile that the utility sees and thus reduce costly demand charges.

There are high voltage energy storage systems available that allow you to customize exactly the voltage, peak power, capacity and system size you need for every building, location and use-case in your portfolio. This approach can provide significant cost savings over out-of-the box solutions, requiring you to buy only the storage you need and allowing you to add on additional storage incrementally down the road.

This post and the entire 12 Days of Storage was contributed by SimpliPhi.

— Solar Builder magazine

Temperature considerations in battery selection

remote site simpliphi battery installation

As is true with solar projects, the range of environments in which energy storage is being applied has grown and diversified significantly. This diversification in deployments means a deeper understanding of the temperature-related performance and safety issues tied to battery selection and storage system design.

For solar installers, understanding which battery chemistries and energy storage solutions offer the most environmental flexibility in terms of project suitability is an important advantage in the ability to successfully deploy more storage in more locations in the United States and around the world.

Market shifts

Driven by both typical indoor space constraints (in both residential and commercial properties) as well as the frequent desire to co-locate storage and solar, more customers are seeking outdoor storage solutions.

In addition, the popularity of solar+storage and microgrid solutions is growing exponentially in industries such as agriculture, the military, medical care and disaster-related resiliency and recovery. Within these sectors, whether it be farms in Central California, military bases in the Middle East, or hurricane zones in the Caribbean and Florida, outdoor installations in hot climates are the rule, not the exception.

Temperature considerations by chemistry

Lead Acid

Lead acid batteries often have a fairly narrow temperature window and cannot function or offer long life cycles in cold or hot weather. For example, in equatorial climates lead acid batteries require replacement approximately every five years. These batteries also tend to have a storage capacity rated at 75℉ and the rated usable capacity can vary greatly when operating beyond this ideal temperature window.

Remember: Battery warranties often require operating within certain temperature parameters

Lithium-ion with cobalt

Lithium-ion batteries that contain cobalt — including NMC, LMO, NCA and LCO — require that the ambient temperature surrounding the batteries fall within a narrow window to protect the battery’s performance and warranty, with an upper limit of ~75℉. Maintaining this temperature requires expensive thermal monitoring and cooling equipment. Not only do the ancillary equipment costs negatively impact installation economics, these systems also introduce points of failure, including the risk of thermal runaway that can lead to overheating and fires.

Lithium-iron phosphate

Lithium-iron phosphate (also known as lithium ferrous phosphate or LFP) batteries generate very little heat during cycling, have no risk of thermal runaway and therefore do not require ventilation or cooling. In fact, some LFP batteries are warrantied to operate safely in environments up to 140°F without any ancillary temperature monitoring or maintenance equipment. These batteries often do not see efficiency or rating fluctuations when operating at low or high temperatures.


When it comes to outdoor battery banks, it is not only essential that the batteries are able to perform safely in a wide temperature range, but also that the containers and cabinets are able to withstand a wide range of environments. In the United States, this means looking for solutions that offer an outdoor enclosure with a rating of NEMA 3R or higher.

This post and the entire 12 Days of Storage was contributed by SimpliPhi.

— Solar Builder magazine

AC vs. DC coupling: Which is best for your application and why?

AC or DC coupling

AC or DC coupling refers to the way in which solar panels are coupled with and interact with a battery system. A hotly debated topic among solar installers today is whether AC or DC coupling is the best approach for solar+storage installations and retrofits. The truth is there really is no right or wrong answer. Both approaches have their merits, and the optimal approach depends entirely upon the application.

What is AC coupling?

AC coupled systems require two inverters: a common grid-tied solar inverter and a battery-based inverter. This means that the energy used by the batteries may be inverted as many as three times before being used in the home — i.e., from DC (PV array) to AC (load center) through the solar inverter, then back to DC (batteries) through the battery-based inverter, and then back to AC again (home loads). See Diagram 1 below.

Simpliphi Single line diagram AC coupling

Diagram 1

Small losses occur through each inverter, resulting in a reduction in overall system efficiency. Therefore, while AC coupled systems may be easier to install, using battery storage to cover AC loads is likely to result in a marginal decrease in efficiency.

However, AC coupled systems can be much more convenient for retrofits in which customers want to add batteries to existing residential grid-tied solar systems. One only needs to purchase an additional battery-based inverter to connect the batteries.

Because of the ease of installation, AC coupling can be ideal for grid-tied residential battery backup systems as well as large commercial systems, especially for retrofits where solar panels have already been installed.

What is DC coupling?

DC coupled systems use a charge controller to directly charge batteries with solar generation and a battery-based inverter to power home loads (AC). See Diagram 2 below.

Simpliphi Single line diagram DC coupling

Diagram 2

As a result, DC coupled systems are slightly more efficient than AC coupled systems because the power is not inverted multiple times. However, they often require more labor to install because the charge controllers tend to require smaller strings from the PV array.

When it comes to solar+storage retrofits, DC coupled systems present more challenges because the existing grid-tied solar inverter must be entirely removed and replaced with a battery-based inverter. In most cases, the existing PV array wiring will also need to be reconfigured.

DC coupling is ideal for new on- and off-grid solar+storage system installations in both residential and small commercial applications, but not retrofits with existing solar panels.

Sum it up: Pros and cons of AC and DC coupling

AC coupling pros:

  • Get to keep grid-tied inverter
  • Easier installation, especially for retrofits

AC coupling cons:

  • Less efficient
  • Less system functionality

DC coupling pros

  • More efficient
  • More regulated charging

DC coupling cons:

  • Not ideal for retrofits
  • Longer installation time

There are many factors that determine whether AC or DC coupling is best suited to a given application, so it’s important to understand the particular conditions and constraints of each project. Be sure consult with the battery manufacturer and/or the inverter manufacturer(s) to help you design the best energy system that optimizes the cost and performance of all the equipment for your particular project.

This post and the entire 12 Days of Storage was contributed by SimpliPhi.

— Solar Builder magazine

Here’s a crash course in battery system sizing


battery size calculation

Get your calculator ready.

There are various ways to determine the size of a battery bank when designing a system. The most efficient way to size a battery bank is to determine the electrical loads and load requirements for both power and energy. Proper system design involves a number of factors and requires analysis and calculations on the loads, PV or other generation sources, as well as the battery performance profile being used in the system.

Depth of discharge

As discussed a few days ago on the Fourth Day of Storage, depth of discharge plays an important role when sizing batteries because battery banks must be calculated according to the actual amount of usable energy storage. Check your battery’s warranty for the most accurate statement of its depth of discharge. For example:

  • 80% DoD = 3.5 kWh x .8 = 2.8 kWh
  • 90% DoD = 3.5 kWh x .9 = 3.1 kWh
  • 100% DoD = 3.5 kWh x .1 = 3.5 kWh

Sizing based on loads

The most important step when sizing a battery system is to determine the required or desired amount of energy storage — most often using a measure of kWh-per-day. The minimum kWh-per-day value can be calculated based on the wattage and runtime of all potential loads to be supported by the system. From there, the battery size may be adjusted depending on whether the system is intended for daily cycling or backup power. The load profile and desired duration of backup power should also be considered.

There are a number of online resources available to calculate loads and determine the appropriate kWh-per-day value from utility billing information.

Consider this example:

  • 2.8 kWh at 80% DoD
  • Load calculations: 10 kWh per day
  • Customer requests: 1.5 days of backup power
  • 10 kWh x 1.5 days = 15 kWh of desired storage
  • 15 kWh/2.8 kWh (battery size) = 5.3 batteries

In this example, based on the actual usable amount of energy for 5.3 of the batteries selected, you may choose to size up to 6 batteries or round down to 5 batteries based on customer preference, either to create extra cushion for unforeseen electrical loads or to be cost conscious and design a more conservative system.

Sizing based on solar

Simpliphi Governor Brown off grid project

The battery bank at California Governor Jerry Brown’s off-grid residence.

When retrofitting an existing PV installation to add storage, battery bank size is most often computed based on the size of the solar array. It is important to consider peak sun hours, PV Watts data (realistic energy production based on location), and PV size (kW) as part of the calculation. In addition, it’s critical that the system cannot exceed the maximum continuous charge rate of the battery bank to prevent damage and ensure a long life. For example:

  • Battery for system: 3.5 kWh battery with maximum charge of 1.7 kW continuous
  • PV array size: 4 kW
  • Average PV daily production: 20 kWh per day
  • 4 kW (PV) / 1.7 kW (Max. battery charge) = 2.3 batteries

Round up the 2.3 battery units to determine that the minimum number of batteries would be three of the 3.5 kWh batteries.

Based on daily PV production: 20 kWh (PV per day) / 3.1 kWh (battery at 90% DoD) = 6.4 (3.5 kWh batteries)

From this calculation, you can round up to 7 or round down to 6 batteries based on customer preference (such as mode of operation).

Power Requirements

Every battery has a maximum charge and discharge capacity. Those rates must be adhered to for adequately charging the battery, like PV system size (charge rate) and the continuous load value to be supported by the battery (discharge rate).

Consider this example:

  • Battery for system: 3.5 kWh with a maximum continuous discharge of 1.7 kW
  • Home maximum continuous discharge: 6 kW
  • 6 kW (continuous load) / 1.7 kW (battery maximum discharge) = 3.5 batteries

When it comes to power requirements, you always round up to determine the minimum battery bank size. In this example, the system requires 4 of the 3.5 batteries.

For additional guidance, SimpliPhi Power offers a simple battery bank sizing estimator tool right here.

This post and the entire 12 Days of Storage was contributed by SimpliPhi.

— Solar Builder magazine

The value proposition of energy storage without solar

energy storage as a service

It’s no surprise that within the solar community energy storage is most often discussed in the context of solar+storage. But what about the potential for energy storage where there is no PV system?

Whether you’re talking about residential or C&I applications, the truth is that batteries can help optimize any power generation source including solar, wind, grid power, or fuel-based generators by storing reserves and lowering energy costs, creating energy security for home and business owners.

Solar installers know that in a solar+storage system, PV generation is used to charge the batteries during the day for use at night, periods of inclement weather or grid outages. Similarly, wind turbines can be used to charge batteries when the wind is blowing, day or night, for use when wind conditions are unfavorable.

Even in the case of traditional fossil fuel power generation, energy storage can be a game changer.

Storage as a service

Where utility rate structures are based on time of use (TOU), batteries can charge from the grid during off-peak hours and discharge during the highest rate periods — protecting home and business owners from paying more for energy used during those times. This type of grid-tied energy storage opens up opportunities for smarter and less costly energy consumption for residential and commercial customers alike. This is also true for those who rent or lease their property and cannot install solar energy on their roof.

Further, for those home and business owners who want energy security but cannot yet afford a solar or wind power system, the installation of only a few batteries can deliver the energy resiliency they need during an outage as a first step.

For those who rely on fuel-based generators, batteries can save money on fuel and extend the life of the generator by switching it’s role from a source of primary power to a battery charging tool. This allows the generator to be used more effectively at its full capacity to charge the batteries for shorter periods of time, which significantly reduces generator run-time and the associated noise and maintenance costs.

With so many different value propositions for batteries with or without renewable generation, energy storage deployments can provide an exciting new business growth opportunity for solar installers who are looking to diversify their expertise and provide additional benefits to their customers.

This post and the entire 12 Days of Storage was contributed by SimpliPhi.

— Solar Builder magazine