How Can Funders Advance Clean Energy with Battery Storage?

A Changing Climate Means A Changing Society. The Island Press Urban Resilience Project, Supported By The Kresge Foundation And The JPB Foundation, Is Committed To A Greener, Fairer Future.​ This Article Was Originally Published April 24, 2018 on Inside Philanthropy.

Foundations rarely have the chance to shape an energy technology market as it emerges. Today, battery storage presents just such an opportunity — and a new report by the Clean Energy Group shows funders how to seize it.

Batteries, of course, have been around since Thomas Edison began tinkering with ways to store energy back in 1879. And the familiar palm-sized cylinders have powered flashlights and toys for decades. But only recently have batteries achieved the high capacity and low cost needed to play a supporting role in our nation’s energy system.

The potential is enormous. Battery storage has been called the “holy grail” of clean energy, because it solves the problem of intermittent production faced by many renewable energy technologies. Batteries can store energy to be released on demand when the sun doesn’t shine and the wind doesn’t blow.

That is why the world’s leading technology consultant, McKinsey + Company, now says battery storage is the “next disruptive technology in the power sector.” U.S. battery installations were up 27 percent in 2017 — and that growth will likely more than double in 2018.

If widely adopted, battery storage could hasten the transition from fossil fuels to clean, renewable energy. It can reduce peak demand and cut energy costs. And battery storage holds the promise of making energy systems more resilient in the face of disaster: When the larger grid goes down, renewable systems with storage can create islands of reliable power.

But there are plenty of obstacles on the path to widespread adoption of battery storage, according to the Clean Energy Group (CEG), a Vermont-based nonprofit that promotes renewable energy. CEG’s new report, “Jump-Start: How Activists and Foundations Can Champion Battery Storage to Recharge the Clean Energy Transition,” shows how philanthropy can help overcome those obstacles.

For example, funders can remove barriers to access for low-income ratepayers. Usually, it is the affluent who are the earliest adopters of innovative technologies (think Tesla owners). So far, that’s true of battery storage as well: The economic benefits of storage are now realized primarily by corporations and other commercial interests.

That shortchanges low-income customers, who have much to gain from increased resilience and cost savings. For example, the poor are disproportionately affected by disasters, often living in vulnerable areas and lacking the savings and insurance needed to recover from disruptive weather events. So low-income people could see major benefits from battery storage technologies that can keep them in their homes with the lights on.

Battery storage can lower energy costs for owners and residents of affordable housing by avoiding utility demand charges — fees that utilities charge commercial customers based on their highest peak power use. Such fees can make up half of the electric bill for some apartment buildings. By drawing power from batteries, rather than the grid, building owners can reduce demand charges and pass the savings on to tenants.

And battery storage can reduce the need for “peaker plants,” notoriously polluting facilities that provide backup power at times of high demand. Peaker plants are disproportionately located in low-income neighborhoods, contributing to poor air quality and high levels of respiratory disease. Many of these plants could be replaced by renewables and battery storage.

The CEG report shows how foundations can help advocates push for battery storage as a means to create a cleaner, cheaper and more resilient community power system. For example, foundations can:

  • Underwrite a “resilient power” campaign in communities across the country, promoting battery storage in critical community facilities such as senior centers, housing, police and fire stations and health care facilities.
  • Fund research to determine which affordable housing and community facilities are paying high demand charges that can be reduced with battery storage. That information is not made public by utilities, and few low-income groups have the resources to conduct such analyses.
  • Support efforts to push for state and utility programs to subsidize the costs of storage in low-income communities.
  • Pool foundation investment portfolios and use the equity to provide loan guarantees that reduce financial risks in bringing storage projects to low-income communities.
  • Support campaigns to retire hundreds of dirty peaker plants across the country, replacing them with cheaper, cleaner renewable energy with battery storage.
  • Help advocates bring renewable power plus battery storage to public charging stations for electric vehicles.

According to CEG president Lewis Milford, the takeaway is this: “Battery storage is a technological breakthrough that can make our energy system fairer, cleaner and more resilient.” By making strategic investments today, funders can make sure that potential is realized.

Urban Resilience