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By November 25, 2019 No Comments

Convergent Delivers Biggest Customer-Sited Battery in North America — Again

The storage developer brings online two new systems in Ontario, chopping peak charges for Shell petrochemical facilities.

By Julian Spector

Much of Canada's petrochemicals industry is clustered in Sarnia, Ontario's

Much of Canada’s petrochemicals industry is clustered in Sarnia, Ontario’s “Chemical Valley.”

Convergent Energy + Power built the largest customer-sited energy storage system in North America in 2018. And now, it’s repeated that feat.

The New York-based developer and asset owner confirmed Monday that it has activated another 10-megawatt/20-megawatt-hour battery system at a different industrial facility in Ontario, Canada. The system will save money for a Shell oil refinery and chemicals plant in Sarnia. Convergent also finished a 1-megawatt/1-megawatt-hour battery for a Shell lubricants factory in Brockville.

The sizing means Convergent did not set another record for largest behind-the-meter storage in North America, but it’s tied itself for first place. The previous entry also serves a large petrochemical facility in Sarnia, part of Ontario’s “Chemical Valley,” but that customer never revealed its identity.

Shell New Energies partnered with Convergent in a joint venture earlier this year to explore the burgeoning Ontario storage market, making the fossil fuel major both the customer and the financial backer for the projects.

 

Ontario’s unique storage market

Ontario imposes a Global Adjustment charge on large industrial electricity customers, which hits them for their usage during five system peaks each year (measured as single-hour peaks on different days). Whereas commercial storage in the U.S. historically tackled demand charges for smaller commercial customers with smaller batteries, the Ontario program makes large batteries potentially worthwhile for much larger facilities.

“Ontario is definitely the most lucrative of marketplaces for behind-the-meter battery storage in North America,” said CEO Johannes Rittershausen.

When not predicting and discharging for peaks, Shell’s batteries will deliver ancillary services, energy arbitrage savings and power quality. The contract is “100 percent performance-based,” meaning Convergent only makes money if it saves the customer money, according to SVP of Business Development Toby Tiktinsky.

Helping customers mitigate the Global Adjustment fee is easier said than done. It requires savvy peak-prediction software, with high stakes for missing a peak.

Convergent doesn’t promise perfection; the company shoots for a running average of four out of five annual peaks over the life of a project, Tiktinsky said. So far, though, the Convergent batteries in Ontario have hit all the peaks they encountered. Doing so requires discharging 25 to 40 times per year for potential peak hours, he noted.

The other challenge is navigating the regulatory hurdles to get a battery installed. With four batteries up and running in the province, Convergent has learned what to expect as far as interconnection costs and permitting requirements, Tiktinsky said.

“We’ve now gone through the interconnection process with many different utilities in Ontario,” he said. “We’ve learned the ropes.”

Assuming Shell likes what it sees from its new batteries, its joint venture with Convergent would offer the same service to other industrial customers that Shell already supplies with petrochemical products. Some 1,800 industrial customers in the province are on the rate that could benefit from battery demand management, Rittershausen said. The size of future batteries would depend on the peak demand of those facilities.

Ontario storage now accounts for about a quarter of Convergent’s portfolio, Rittershausen said. And that portfolio is poised to grow.

Following Energy Capital Partners’ acquisition, “the focus of the business has not changed, but the ease of executing on it and our ability to be ambitious has changed,” Rittershausen said.