Alarm bells should be going off for traditional utilities after the popular electric vehicle maker announced it would offer battery models for $3,000 or $3,500 that can store enough electricity to power a home or business for a few hours. Here’s why: In many cases, a commercial customer pays a significant fee, called a demand charge, based on the amount of electricity the customer draws from the grid during that customer’s time of peak usage. Buy a Tesla Powerwall, or any of the variants available in the market, to switch to battery power during the peak usage hours, and considerably reduce, or even eliminate, demand charges.
Demand charges can represent up to 80 percent of an average commercial customer’s monthly bill. Consider California, a leader in progressive energy storage legislation. Demand charges for commercial customers in the state run in the billions of dollars. If just 10 percent of commercial customers in California install battery storage and use the technology to cut their demand charges by one third, the state’s utilities could lose more than a billion dollars a year.
This article examines how the old power-and-light companies can continue to win customer loyalty by adapting the financial and operational skills honed over the years.