When compared to the utility-scale and residential markets, the installed capacity of energy storage in the community, commercial and industrial (CCI) market is woefully underdeveloped, especially judged against its potential.
According to Wood Mackenzie’s “US Energy Storage Monitor” report, the grid-scale segment deployed 6,848 MWh of storage in Q3 2023, the residential segment installed 381.4 MWh and the CCI market managed 92.9 MWh. That “last place” standing will continue for CCI, as the other two markets are predicted to outpace it beyond 2027. Energy Storage Battery Types
![The commercial energy storage market may be small, but it's slowly growing](http://cdnus.globalso.com/sunya-ess/a-510.jpg)
But last place still gets paid, and contractors installing batteries in the CCI segment said they’re as busy as ever, especially in pro-storage states like California and Massachusetts. Through a combination of education and policymaking, commercial storage adoption could proliferate more quickly across the country.
Just like with solar, California leads the country in storage installations. And that will only grow now within the NEM 3.0 era, which basically requires storage to be installed alongside solar for either technology to make financial sense for the customer.
Elite Electric, a non-residential solar and storage contractor in California, is working on several solar projects within the state, and each has storage paired. Carl Dawson, Elite president and CEO, said the standalone storage ITC has been a huge help in getting more CCI customers interested in storage, but NEM 3.0 has been the deciding factor.
“We’re retrofitting existing PV systems to add more energy storage so they can change their interconnection agreements and get a better benefit out of the solar they already have,” he said. “The No. 1 reason you would add energy storage to a deal is … [solar-only] may have an ROI of five years, and then you go back and even though it costs more to add a battery, that takes the ROI from five years to three-and-a-half years. This is more common now with NEM 3.0.”
Without meaningful compensation for solar generation, CCI customers in California realize their savings through auxiliary services performed by the battery — like demand shaving. Using battery power when their demand peaks keeps customers in lower demand tariff brackets, and cuts down on at least one fixed charge by the utility.
Utilities are also acknowledging the benefits of energy storage for their own grid resiliency.
“Throughout the United States with different ISOs (independent system operators), they’re having a really hard time with reliability,” said Billy Gamboa, senior director of energy storage and EV charging for CCI project developer DSD Renewables. “They’re getting more concerned about the reliability of the grid because of the way that electric load and demand is growing, plus the increased adoption of EVs both on the consumer side and commercial side.”
States and utilities are encouraging CCI storage applications — whether it’s Massachusetts offering revenue-stack programs that DSD helps customers navigate, or Southern California Edison (SCE) working with Elite Electric to augment its expanding grid.
“[Companies have] manufacturing facilities with massive loads in an area where Edison can’t get to for five years, so we’re designing and building pilot programs,” Dawson said. “We’re working with Edison on building these big systems so that when they do get their infrastructure out there, we can help them with that section of the grid by exporting power when they need power.”
The Northeast is big on offering additional revenue streams through VPPs and greenhouse-gas emissions reduction programs for battery owners, and DSD finds that extra compensation is often the initial reason why CCI entities look into storage.
“One project, we have a 1-MWh battery slated, and that’s going to mint like $75,000 in revenue from those programs each year. That’s phenomenal, in addition to whatever savings we get them with the battery behind the meter. And you have the tax credits for the initial cost of the systems,” Gamboa said. “You take that all together, and it’s a very compelling economic argument to go solar and storage.”
The two opposing coasts have largely found success in CCI storage adoption thanks to one important fact — the right policies were put in place.
“You have to have policy regulation. If you have policymakers [and] lawmakers who understand the benefit [of storage] and how to work that into the law, you can have that kind of support,” Gamboa said.
More states are proposing energy storage targets, but their small quotas leave much to be desired. Michigan recently signed off on a 100% renewable energy goal by 2040 and carved out an energy storage requirement — but only 2.5 GW by 2030. Through New York’s Climate Act signed in 2019, the state has required 3 GW of storage by 2030, and Gov. Kathy Hochul suggested bumping that to 6 GW, but no official action has been taken.
New York utilities National Grid and Con Edison have compensation programs for electricity customers that limit their pull on the grid, but only in summer months. These “demand response solutions” and “smart usage rewards” don’t explicitly suggest using energy storage, but a battery’s software controls help make it happen. These limited, seasonal financial benefits do encourage CCI entities to explore energy storage options, but there are still roadblocks.
“Why isn’t more storage being adopted? Sometimes it could be the complexity of the project; maybe they aren’t seeing the economic benefit. Maybe the cost of interconnecting will gobble up a lot of your budget and might cancel out the battery component,” Gamboa said. “There is a ton of regulation on the fire safety and hazardous materials of batteries, especially lithium products, that needs to be taken seriously. Sometimes it’s a timing thing — lead times are ridiculously long.”
Another obstacle within the CCI market is the historical dependence on generators. Generator giant Generac knows that fossil fuel-burning generators still have their place but acknowledges that batteries perform better in certain situations. Generac released its own commercial-sized lithium ESS in early 2023.
“We see generators still being a core part of the C&I space, and storage and generators complementing each other,” said Hari Sivadas, VP of industrial battery storage solutions at Generac. “Storage responds much faster than a generator when a blackout or brownout is detected, resulting in a rapid transition from grid power to backup power when needed, without disrupting site operations. It is not practical to size current lithium ion-based energy storage for long-duration resilience. The goal is to limit the use of the generator, but with that gen-asset in the mix, one can choose to not overbuild behind-the-meter storage.”
Generac also believes that battery makers need to better explain the technology’s value to both installers and end-customers.
“CCI is a complex marketplace. Each site is different,” Sivadas said. “There is still limited awareness of storage both as a technology and the value it brings within the contractor, installer and engineering community supporting CCI projects. As OEMs, we need to continually build this awareness with training, project sizing/modeling support, etc., to make storage further mainstream.”
The commercial market isn’t ignoring energy storage, but it will take the efforts of policymakers, contractors and manufacturers to push battery adoption further. Modeling successes in California and the Northeast is a good first step to building out more CCI storage.
Kelly Pickerel has over a decade of experience reporting on the U.S. solar industry and is currently editor in chief of Solar Power World.
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