The federal government operates a vast network of office buildings, and they could soon become a massive new client for energy storage.
The General Services Administration, which oversees 10,000 workspaces for more than 1 million federal employees, announced at a White House summit in June that it would investigate the potential for storage on its buildings. That request for information will go out by mid-September and could lead to projects starting next year, GSA Chief Sustainability Officer Kevin Kampschroer said in an interview last week.
The RFI will give storage providers plenty of leeway to pitch the kinds of projects they think would work best. The initial announcement referenced storage devices as a replacement for the diesel backup generators that keep essential services operating in the event of blackouts, but that’s just one possible use. The most cost-effective storage could combine multiple functions and value streams, like providing backup but also storing rooftop solar generation or selling grid services.
“We don’t pretend to be the world’s experts in energy storage, and so we’re reaching out to the industry and saying it’s wide open,” Kampschroer said. “We’ll make it very practical, too: Here [are] a few buildings. Why don’t we use that as a test case, and you make some proposals that are grounded in the reality that we provide you with?”
Storage companies will have at least a month to respond to the request, at which point the GSA will sift through the proposals and choose how to proceed. This will likely begin with small-scale pilot programs, but if a company can provide a clear enough business case, they could jump straight to deployment, Kampschroer said.
This holds more potential for the energy storage industry than the typical new-customer acquisition due to the sheer size of the GSA portfolio. There were 33 U.S. non-residential storage deployments in the first quarter of 2016, according to GTM Research. If one-third of 1 percent of the GSA’s portfolio deployed storage in a three-month period, they could match that market segment’s performance.
Beyond that, the GSA’s approach will set the guidelines for how the rest of the government approaches storage for its own uses. The GSA is conferring with other government bodies, like the White House Council on Environmental Quality and the military. Kampschroer wants to design the RFI so that those other groups can use the findings for their own procurements.
The transition won't happen all at once, though, even if the economic case is clear. For one thing, the GSA leases about 8,500 of the offices it manages, so they wouldn’t have direct control over upgrades to those facilities. If they adopt some amount of storage as a standard, future contracts would give preference to buildings that have that capacity, but it will take time for the existing contracts to turn over.
For buildings the government already owns, there’s a sunk-costs problem: if the government recently bought a diesel generator, for instance, and it’s in perfectly good condition, then they probably can’t justify throwing it out to replace it with an equally capable, albeit cleaner, battery system. “It’s much more likely that we’d do a stepwise replacement rather than wholesale replacement,” Kampschroer said.
Storage technology is expensive, and few states have regulatory frameworks that reward it for the services it can provide. A large-scale government procurement could go a long way toward bringing down costs through economies of scale. That depends on the readiness of existing technologies to save the government money.
"We’ve got a lot of waste in buildings currently," Kampschroer said. "If you could start whittling away at that waste through effective storage solutions, we’d be considerably better off."
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