I. "Rent-to-sell" model
Energy storage project developers lease energy storage systems to users for reducing peak and demand electricity costs and providing backup power. The lease period can be set flexibly according to the target user or product application, and the user pays monthly rent, covering equipment usage, operation and maintenance costs, software costs, installation costs, taxes, etc. The developer of the energy storage project uses third-party funds to purchase the energy storage system, and the stable cash flow generated by the operating lease serves as the developer's financing base.
The monthly lease fee delivered against the user is mostly a fixed amount. The lease fee is accounted for on the basis of the project investment cost, and the difference between the lease fee and the customer's electricity bill savings largely determines whether the customer is interested in leasing the energy storage equipment. In Stem's energy storage leases with customers, for example, sometimes the customer saves twice as much as the lease payment to Stem, and sometimes three or four times as much, depending on the customer's actual load shedding each month. According to Stem's estimates, it is difficult to attract customers to install unless the amount of electricity savings is more than twice the amount they deliver to Stem.
"Rent-to-own" is currently the most widely used investment and operating model in distributed energy storage. Stem, GreenCharge Networks, Entega, etc. in the United States use this model to provide energy storage services to customers.
Second, the shared savings revenue model
This model refers to the strategy of sharing energy storage revenue between energy storage project developers and owners. This model has similarities and differences with the leasing model. For example, both models require the user to pay the owner of the energy storage asset a certain percentage or a certain amount of the savings revenue. Usually the lease fee is measured based on the developer's fixed investment cost and is mostly a fixed amount, while the shared revenue model is usually based on a percentage of the revenue, which varies depending on the amount of monthly electricity savings. The shared savings revenue model is less common among household customers and is mainly dominated by commercial and industrial customers.
In addition to this, the shared revenue model, when applied alone, generally has a long contract term of 10 years or more. Meanwhile, the shared revenue model is often used in combination with the virtual power plant model and the community energy storage model. The lease model, on the other hand, shows a trend of short-term contract periods, such as Younicos initially offers a minimum lease contract period of 2 to 4 years, but monthly lease forms are acceptable from 2019 onwards. The user only pays the rent, as well as the deployment and dismantling costs, but there are no other additional costs or risks.
III. Virtual Power Plant Model
A utility or third-party company brings together energy storage systems owned by residential, commercial, and industrial customers and connected to the smart grid through a central control room to analyze, control, and optimize the operation of the storage system and participate in grid services for application revenue. The "virtual power plant" model is the product of the pursuit of multiple applications of energy storage. After unified scheduling and management of distributed energy storage systems can not only participate in the power market through frequency regulation, standby capacity and other applications to obtain revenue, but also for transmission and distribution systems can play a voltage support, delay transmission and distribution expansion and upgrade, demand response and other aspects of the application value. According to GTM Research, the annual revenue of global virtual power plants will increase from $1.5 billion in 2016 to $5.3 billion in 2023, while the U.S. will account for $3.7 billion of the total in 2023. At present, the international market in the United Kingdom Moixa, the United States Stem, Germany Sonnen company, etc. are using the model to develop energy storage project revenue channels for users, the Chinese domestic market represented by the State Grid and South China Network Corporation also began to layout the virtual power plant business by building a project access platform.
In the virtual power plant model, the software (some call it "cloud platform" or "central control room") that can aggregate the energy storage system for analysis and optimization control is very critical. The software needs to get data from the building load on a regular time cycle (Stem's AI software Athena reads every second), price information from the market, and hourly weather information. For each building, each market, and each electricity rate, the software needs to manage the information in real time. When the utility asks to implement demand response, the software is able to find optimization points to help customers save more money.
Fourth, the community energy storage model
A typical example of the community energy storage model is the Sonnen Community program launched by SonnenBatterrie in Germany in 2015. Under the program, its members/users deposit PV power into battery storage, and the stored power is used for self-consumption, power trading among community users, and the provision of grid services. Electricity users pay a fixed fee (less than the cost of electricity purchased from the grid). Potential hotspot regions for this model are Germany, the United States and Australia. Australia has already started experimenting with this model in the WhiteGum Valley project since late 2016. In the same period, the US has also started to promote this type of model in some communities.
In addition to aggregating multiple points of storage in a region for trading, another approach to community storage models is to connect many PV-installed electricity producers and consumers to a large, independent central battery system for trading electricity. 2016 saw the launch of a community trial of a similar model in Alkimos Beach, Perth, Australia, with 100 rooftop PVs connected to 1.1 MW?h lithium-ion batteries. In 2015, the MVV Strombank project began demonstrating a community energy storage model using a large battery storage system.
In 2015, the MVV Strombank project began demonstrating a community energy storage model, using a large battery storage system for community power trading.
V. Other derivative or hybrid models
In fact, there are many derivative or hybrid models of the above models in the energy storage market. The more common hybrid model is a mix of the operating lease model/shared savings revenue model and the virtual power plant model.
For example, the U.S. company Stem, Inc. aggregated its energy storage projects running the leasing model to build virtual power plants in June and August 2017, respectively, to participate in spot market transactions and respond to dispatch.
For the derivative model, it is more common to combine electricity sales and energy storage to provide energy services to customers. For example, the German company SENEC uses energy storage and intelligent management systems to provide customers with higher value-added energy services by developing a series of energy service packages, providing a model sample for other energy storage equipment suppliers or energy service providers internationally.
