While the environmental benefits of behind-the-meter storage are well-known, one major challenge remains: the high upfront costs associated with these systems. However, various financial instruments have emerged to help address this challenge and make behind-the-meter storage more accessible to a wider range of customers.
1. Power Purchase Agreements
Power Purchase Agreements (PPAs) are long-term contracts between the system owner and the customer, allowing the customer to access the system’s stored energy at a predetermined rate. This arrangement eliminates the need for customers to invest in the upfront costs of the system, as they only pay for the electricity they consume.
Key takeaway: PPAs provide a cost-effective option for customers to access behind-the-meter storage without the need for significant upfront investments.
2. Energy Services Agreements
Similar to PPAs, Energy Services Agreements (ESAs) allow customers to access behind-the-meter storage without the need for upfront capital investment. However, instead of paying for the consumed energy, customers pay for the performance of the system. The system provider guarantees a certain level of energy savings or demand reduction, and the customer pays a predetermined fee based on the achieved results.
Key takeaway: ESAs enable customers to benefit from behind-the-meter storage without taking on the financial risks, as they only pay for the agreed-upon level of energy savings or demand reduction.
3. On-Bill Financing
On-Bill Financing (OBF) programs are offered by some utilities or third-party providers, allowing customers to finance behind-the-meter storage systems through their utility bills. Under this arrangement, the upfront costs of the system are repaid over an extended period, typically through a small monthly charge added to the customer’s utility bill.
Key takeaway: OBF programs provide a convenient way for customers to finance behind-the-meter storage systems, spreading the costs over time and making it more financially feasible.
4. Green Loans and Grants
Green loans and grants are financial instruments offered by various institutions or government programs to promote the adoption of sustainable technologies like behind-the-meter storage. These instruments provide low-interest loans or grants to help customers offset the upfront costs of their energy storage systems.
Key takeaway: Green loans and grants offer financial assistance, making behind-the-meter storage systems more affordable for customers while promoting the use of renewable energy technologies.
Conclusion
Behind-the-meter storage presents a promising solution for storing excess energy and improving grid resiliency. However, the high upfront costs associated with these systems have been a barrier to their widespread adoption. Fortunately, financial instruments such as Power Purchase Agreements, Energy Services Agreements, On-Bill Financing, and Green Loans and Grants are making behind-the-meter storage more accessible and financially feasible for customers.
By leveraging these financial instruments, customers can enjoy the benefits of behind-the-meter storage without the significant upfront investment. This not only accelerates the adoption of renewable energy sources but also reduces electricity costs, enhances grid stability, and contributes to a sustainable future.
Key takeaways:
- Power Purchase Agreements enable customers to access behind-the-meter storage without significant upfront costs.
- Energy Services Agreements allow customers to pay based on the achieved energy savings or demand reduction.
- On-Bill Financing programs spread the costs of behind-the-meter storage systems over time through utility bills.
- Green loans and grants provide financial assistance for the adoption of behind-the-meter storage systems.