By Deborah Smith
April 24, 2023
NAREIM Dialogues, Spring 2023: It's time to power up
As the energy industry transitions to renewable sources, the real estate sector can participate in the growing battery energy storage sector through several interesting plays.
Battery energy storage is a critical component in the world's move towards renewable energy supply. With this shifting focus, the real estate industry could find yet another market opportunity - one that sits at the intersection of real estate and infrastructure.
Before we get into growth in battery energy storage, it is worth understanding how electricity supply and delivery are changing. For the past century, most electricity was produced in large, fossil fuel power plants that operated 24/7. Energy supply from wind, solar and other renewable sources was irregular, intermittent and hard to predict, which limited their economic usefulness. Supply could only reliably meet demand with fossil-based generation.
But in a world that is increasingly electrified (including a surge in electric vehicles that need charging) and focused on renewable energy, change has become necessary. Enter battery energy storage. Large-scale battery systems, together with sophisticated software required for coordination and control, connect to the electricity grid; they charge batteries when supply is plentiful and discharge electricity when demand is high.
Storage owner/operators, operating in organized markets as a merchant, can use a buy low, sell high strategy. Or they can hedge the price and guarantee the supply of electricity for specific facilities, including as emergency backup.