Constellation, based in Baltimore and long known as a seller of electricity, natural gas and other fuels, is owned by Chicago-based Exelon Corp. Constellation’s Distributed Energy Group and has 300 distributed generation projects completed or under development, including 200 MW of behind-the-meter solar projects for commercial customers. A combination of cogeneration, fuel cells, and energy storage make up the distributed generation projects.
Constellation began offering solar installations in 2007 according to Ben Chadwick, director of commercial development for the company’s Distributed Energy Group. Constellation typically owns the installed solar systems and sells the output under power purchase agreements with its commercial and industrial customers. Constellation is agnostic when it comes to the technologies it recommends, and will choose the appropriate technology for each installation, Chadwick says.
Now Constellation is offering battery storage products as well, because of perceived customer demand, he explains. “Capital is holding back energy infrastructure improvements,” says Chadwick, and because facility managers are experienced in managing an operating budget, they are usually not adept at selling capital projects to the company’s executives.
“We come in as turnkey asset builders and project providers” and deliver the required capital, he says.
As for energy storage, the company typically focuses on standalone projects 1 MW or higher, and systems 200 kW and up for aggregate projects, as part of a 2-MW portfolio. “Economics dictate storage for larger customers, and we are focused on this size customer,” he adds, noting that the economics for smaller installations are more challenging.
California and the territories covered by the Pennsylvania/New Jersey/Maryland (PJM) independent system operator are the markets Constellation is concentrating on because of the incentives available in both areas.
California has an aggressive incentive program in the Self-Generation Incentive Program (SGIP). It provides rebates for qualifying distributed energy systems installed on the customer’s side of the utility meter and includes advanced energy storage systems as well as wind turbines, waste heat to power technologies, microturbines, gas turbines, and fuel cells. Solar projects receive rebates through a separate program.
The three investor-owned California utilities have extremely high demand charges and coupled with rebates the savings are great enough they can pencil out a viable project, Chadwick says.
In PG&E’s territory for example, Chadwick explains there are different voltage levels and tariff classes, so a 1-MW demand charge can vary, but, on average, large customers can pay around $200,000 per megawatt of demand.
PJM’s incentives come in the form of revenue created through the ancillary services market, specifically frequency regulation, Chadwick explains. To balance the grid at 60 Hz, the PJM fine-tunes the grid every second. The grid operator pays generators and energy storage owners to increase or back off their supply and demand in response to an automated signal.
“Storage devices can do this instantaneously and are paid a premium for their services,” he says.
Chadwick says his group is talking to customers about energy storage, but as of June had not announced any contract signings. He says his group will install energy storage independently of solar, if the customer chooses not to install the latter.
Chadwick says the Distributed Energy Group is looking for all opportunities to improve a customer’s energy efficiency. In fact, he says, California’s SGIP requires that a customer’s site must improve its energy efficiency to reduce power usage first before qualifying for a solar or energy storage rebate.