Making Customer Battery Storage Work for a Cleaner, Less Expensive Grid

The briefing examines how commercial electricity rate designs, specifically noncoincident demand charges, incentivize customers to flatten their load profiles using battery storage. While this reduces individual bills, it often conflicts with the needs of grids with high renewable penetration, where flexible demand is required to match variable generation. The author suggests transitioning to peak-coincident demand charges, time-of-use rates, or real-time pricing to better align customer behavior with system-wide costs and grid stability.

• Falling battery costs have made storage economically viable for millions of U.S. commercial customers to manage demand charges. Estimates on the threshold for economic viability vary: NREL and Clean Energy Group identify over five million customers with charges above $15/kW, GTM Research suggests a threshold of $11/kW by 2021 across 19 states, and McKinsey suggests it could be as low as $9/kW.
• Most current demand charges are noncoincident, meaning they are based on a customer's maximum monthly power draw regardless of when the broader grid experiences peak costs. This encourages customers to flatten their load profiles, which can be detrimental in regions with high solar penetration because it may lead customers to reduce midday demand exactly when low-cost solar energy is most available.
• To better support high-renewable grids, the document recommends replacing noncoincident charges with time-varying rates. Options include peak-coincident demand charges, which target times of highest marginal system costs; time-of-use rates, based on predetermined schedules; and real-time pricing, which varies hourly based on actual conditions.
• The value of battery storage is maximized when customers can 'stack' multiple services. Beyond energy cost reduction, utilities can provide incentives for grid support services such as regulation, contingency reserves, and fast frequency response, as seen in the proposed demand-response portfolio from Hawaiian Electric Companies.

APA

RMI (2018). Making Customer Battery Storage Work for a Cleaner, Less Expensive Grid. https://rmi.org/resources/making-customer-battery-storage-work-cleaner-less-expensive-grid/

Chicago

RMI. Making Customer Battery Storage Work for a Cleaner, Less Expensive Grid. 2018. https://rmi.org/resources/making-customer-battery-storage-work-cleaner-less-expensive-grid/.

Wikipedia

{{cite report |author=RMI |title=Making Customer Battery Storage Work for a Cleaner, Less Expensive Grid |date=4 January 2018 |url=https://rmi.org/resources/making-customer-battery-storage-work-cleaner-less-expensive-grid/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2018making, author = {{RMI}}, title = {{Making Customer Battery Storage Work for a Cleaner, Less Expensive Grid}}, institution = {RMI}, year = {2018}, month = jan, url = {https://rmi.org/resources/making-customer-battery-storage-work-cleaner-less-expensive-grid/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }