The Promises and Limits of Rooftop Battery Storage

Renewable energy is a growing priority for cities and states in the US as our nation’s leaders lay out plans and roll out incentives to move away from its dependence on fossil fuels. Aside from solar and wind, battery storage is an important part of the transition. While maybe not as talked about as solar and wind, it’s an industry that has been on a major growth spurt lately. The technology promises major energy savings, a crucial backup source, and even a potential revenue stream. The number of operators in the space is increasing, but there are notable limitations to adding the technology to a building that property owners should know about. Before looking into adding it to your building, it’s a good idea to understand just how much can be gained from the tech and what the potential risks are with this important and growing energy source.

There are lots of variations of battery storage, but at its heart, it captures electricity, stores it as another form of energy, whether that’s chemical, thermal, or mechanical, and then releases it to be used as needed. The dominant type of battery used in energy storage is lithium-ion, the same kind of battery used in phones and electric vehicles. Batteries capture energy from either the electrical grid or solar panels, which are often coupled with battery storage systems. The stored energy can then be used to power a building during peak load times, which puts less burden on the area’s energy grid during peak usage times.

Why we’re seeing and hearing about batteries in buildings more often because a growing number of cities, states, and the federal government are pushing for more energy storage to help achieve renewable energy targets over the coming decades. It’s a technology that has exploded in growth over the last few years and is expected to grow at an even faster pace going forward. In the US, the number of large-scale battery storage systems in operation increased by 28 percent in 2019, according to a report from the U.S. Energy Information Administration. A major driver of the increased adoption of battery storage has been the steep decrease in costs. The same report found that energy storage costs declined 72 percent between 2015 and 2019. 

Cities and states are increasingly looking at battery storage as a green alternative to their energy grid, which often has fossil fuel-burning “peaker” plants that kick in during high-demand times. As of last year, nine states have set goals for energy storage. Maine, one of the latest to set a target, is looking to nail down 400 MW of storage by 2030, while Massachusetts is working toward a 1,000 MW goal by 2025 through utility plans and programs offering incentives. At the national level, clean energy tax credits got a major boost when the Inflation Reduction Act was passed last year, extending and expanding the number of investment tax credits associated with battery storage projects. 

In New York, Governor Hochul has committed to developing 6,000 MW of energy storage by 2030, the most aggressive storage goal in the country. It’s supposed to make the grid more stable and reduce electricity costs. “If New York is to meet its nation-leading climate goals, we will need more clean energy flowing to our buildings, our transportation, and our homes, and a critical part of that is ensuring we have the necessary storage capacity in place,” said Julie Tighe, President of the New York League of Conservation Voters. So far, the state has 1,200 MW under contract and has spent more than $300 million to incentivize new development. 

So what’s the incentive for building owners to install battery storage? Battery storage can serve as an important backup method in case of a power failure, can lower electricity costs, and can help organizations meet their own sustainability goals, something that has become a top priority for many companies. This has become especially important given the competitive labor market and how important a company’s ESG priorities are to job candidates. While there’s growing support from the government for companies looking to add rooftop storage and proven benefits to doing so, there are notable drawbacks as well. Like a lot of energy-efficient technologies, rooftop storage isn’t cheap to implement. The average cost to install retail, non-residential battery storage projects in 2002 in New York was $567 per kW, according to the state’s Department of Public Service. Aside from the cost, battery storage systems are complicated and require constant monitoring and often routine maintenance. There has also been a concern in some places about the potential risk of putting several tons of batteries on top of a building where people live or work. 

A residential building owner in Brooklyn drew the ire of many of his tenants recently when he sought to install a battery storage substation atop the seven-story building. The local community board joined building tenants in opposing the move, citing a spate of recent incidents where lithium-ion batteries in e-bikes exploded and led to fires and injuries. The owner and the battery storage operator they are working with, Microgrid, defended the plan, saying the risk of fire was extremely low. They also pointed out that whether people liked it or not, the state’s ambitious goals around energy storage need to be met. “We don’t see a path for installing the amount of energy storage in NYC that’s required without it being part of residential buildings and part of residential districts,” said Microgrid Chief Operating Officer Timothy Dumbleton. “We don’t see how you meet the state’s goals without that happening.”

The ongoing situation illustrates how important the public perception of rooftop battery storage is to building users and the community. In places where leaders are trying to get battery storage systems installed, there are often very few options to choose from. In New York City, for example, much of the building stock has an aging infrastructure that may not be able to support battery storage, while there are almost no options for ground-floor storage due to the city’s exceedingly tight real estate market. State leaders are aiming for 70 percent of all electricity in New York to be generated from renewable energy by 2030. A major obstacle to this plan is the fact that power from other renewable sources like wind and solar can’t be generated when and where it’s needed most. Batteries, on the other hand, get around the problem since they can store energy for when demand is high. 

Not all building owners are wary of the technology. Related Companies partner with Enel X to install a 4.8-megawatt battery storage system atop a retail shopping center it owns in Brooklyn. At one residential building in a suburb of Salt Lake City, every apartment within the 600-unit complex comes with a unique amenity: a battery. The ecoLinx batteries, by the German company Sonnen, are about the size of a water heater and are charged by the building’s rooftop solar panels. Altogether, the batteries provide 12.6 MW of backup power that is managed by the local utility company. The all-electric development, Soleil Lofts, opened in 2019 and was billed by the developer, the Wasatch Group, as a first-of-its-kind virtual power plant. The $34 million battery storage system was underwritten with around $3.3 million in grants from local utility Rocky Mountain Power and sells energy it stores back to the utility for use during times of peak energy use. “The solar industry should find inspiration in this extraordinary project, as it provides a blueprint for the future of grid-optimized battery storage,” said Sonnen Chairman & CEO Blake Richetta of the residential development.

With a number of renewable energy commitments to meet, cities and states are getting serious about technologies like battery storage on commercial and residential buildings. A lot of funding is being deployed to implement these expensive systems, as well as a variety of incentives for property owners. The public perception of battery storage is still a hurdle for some cities, where both residents and landlords are wary of the perceived risks of these systems atop buildings where they live or work. But while there are certainly some issues to be worked out, the falling prices of lithium-ion batteries are proving to be a huge driver of adoption, as well as a growing number of building owners that are welcoming battery storage in and atop their properties.

Image - Design