Why Building-as-a-Battery Solutions Work

One effective way for building owners to minimize energy costs is by transforming their buildings into energy batteries. While this concept isn't new, the growing focus on using electrification to support decarbonization presents a unique opportunity. Utilities are investing heavily in fortifying their grids, and aligning your building’s energy strategy with this trend can yield significant benefits. But how?

The more adaptable your building’s energy needs, the less you will pay for energy.

Why hasn’t this concept gained more traction across North America? In my experience, there are several reasons:

1. Historically, the return on investment for building owners hasn’t justified the required investments.
2. Energy management often remains "out of sight, out of mind" for building owners focused on other priorities.
3. Behind-the-meter technologies often require customization, limiting scalability.
4. Despite improvements in democratizing customer data, optimization for end-users remains a challenge.
5. Incentives and monetization opportunities are inconsistent at best.

These factors are further complicated by the varying policies, rates, and regulatory frameworks across different states, provinces, and electrical system operator areas. However, with utilities increasingly investing in capital to decarbonize their grids, a prime opportunity exists to improve the pro forma for building-as-a-battery solutions.

Understanding Your Electricity Costs

Your distribution electricity rate is tied to the ability of a rate-regulated utility to earn a rate of return, typically around 9% of the equity portion of the total capital deployed in the grid. This rate also includes the pass-through costs of operating and maintaining the grid. Historically, these charges were relatively low compared to the actual cost of the commodity.

But, as utilities strive to decarbonize the grid by electrifying everything, new challenges emerge. Ensuring that electricity flows properly and safely at the grid’s edge requires a substantial deployment of new capital. The critical question is: where should that capital be deployed?

If the fortification is entirely rate-based, we could see a two to threefold increase in capital assets in the grid, resulting in a corresponding increase in the cost of delivered electricity to homes and businesses.

The alternative is for utilities to enable grid fortification on the customer’s side of the fence. By sharing the capital cost of infrastructure improvements, the overall economic impact on the ratepayer can be significantly reduced.

Making the Business Case

By enabling your building to function as an energy battery, you can mitigate rising energy costs more effectively than buildings that do not adopt this model.

Utilities can choose the model that best aligns with their customers’ ability to fund the infrastructure needed to decarbonize their grids. However, building owners can take control of their energy destiny by implementing solutions with a solid return on investment.

Steps for Building Owners to Consider

1. Analyze Your Energy Usage: Gather detailed data on your building’s energy consumption and compare it to benchmarks.
2. Reduce Energy Load: Optimize energy use through capital investments or operational tactics.
3. Incorporate Local or Onsite Renewables: Assess renewable energy sources to reduce dependency on the grid.
4. Seek Cost-Effective Partnerships: Explore partnerships that provide load or supply capacity for your remaining energy needs.
5. Implement Curtailment and Monetization Strategies: Ensure your building can operate in "eco mode" and respond to system operator and local utility curtailment calls, while also monetizing energy through third parties.
6. Achieve Autonomy: Aim for a building that conserves, stores, and sells energy without constant management.

The building of the future actively saves you money on energy. Don't miss out!

A Mindset Shift

Energy consumers need to replace the "out of sight, out of mind" mentality with one of knowledge and empowerment. Here’s my favorite analogy: I remember being an early user of Waze to avoid traffic. At first, it felt like a cheat code as only a few cars were rerouted around traffic jams. But as more people adopted Waze, those routes became busier. Today, those who don’t use similar tools often find themselves stuck in traffic. While it may not offer a huge advantage anymore, can you afford not to use it?

If your building functions as a battery, you can capitalize on cost differences to operate your building more efficiently than competitors. This advantage can manifest in various ways, including higher building value, reduced business costs, or simply more money in your pocket. But within the next five years, adopting these strategies won’t be optional—it will be essential. So why wait?

The Opportunity Ahead

As the Innovations Lead for Dexterra , where they acquired my building controls company, I see the tremendous potential of converting buildings into enhanced value assets. Building Controls companies can be a great place to better understand the art of the possible.

As a driver of advice and digital implementation with utilities through BHC Canada , none of this works well without access to data. Unlock its potential.

Market conditions may be scattered and inconsistent, but the benefits for building owners are too significant to ignore. The time to act is now.

To learn more about you can assess your situation and ensure you're maximizing opportunities, book a meeting with me.

Frank Carnevale is President & CEO of BHC Canada , Innovations Lead at Dexterra and Member of Board of Governors at Ontario Tech University

Opinions are my own.