IRVINE, CA—The Irvine Co. and Advanced Microgrid Solutions recently installed 16 Tesla PowerPack battery systems that weigh 4,000 pounds each at an office tower at 20 Pacifica here, completing the first installation in what will be a fleet of Irvine Co. Hybrid-Electric Buildings® that will be used for grid support by Southern California Edison. The first installation of Irvine Co.'s Hybrid-Electric system will reduce electricity operating expense and create a more stable, flexible electricity grid for buildings, the firm's VP of energy management Rich Bluth tells GlobeSt.com. We spoke exclusively with Bluth after the installation about how these buildings work, who benefits from them and where this phenomenon is headed.

GlobeSt.com: Please explain how hybrid-electric buildings work.

Bluth: Hybrid-Electric buildings operate with two sources of power, somewhat similar to a hybrid automobile (e.g., Prius, Volt). Both have a primary source of power (the electricity grid or an internal combustion engine) and a secondary source of power, a lithium-ion battery. The hybrid-electric building charges its battery system in times of low use—in our case, during off-peak nighttime hours—and then discharges the battery during times of peak energy use (e.g., summer afternoons), reducing the energy drawn from the electricity grid.

The hybrid-electric building can shift a portion of its energy consumption to off-peak hours, when energy supplies are in less demand and also less expensive. Typical commercial utility rates have a component to their billing that charges for peak demand. In California, this can account for as much as 40% of total electricity charges for a commercial building. Peak demand is typically based on the maximum 15-minute period of usage during a month's billing cycle. The economic value of the battery system is derived by reducing that demand. It is possible to "shave" a significant portion of the peak demand for a building, and generate an overall electricity cost savings of 10% or more, depending on the building's electricity use profile.

GlobeSt.com: Who benefits most from these buildings?

Bluth: The operation of a hybrid-electric building has two key benefits. The "load-shifting" that is facilitated by the battery systems reduces the building's electricity operating expense by lowering its peak demand. Also of importance is the benefit to the utility, which experiences less electricity demand on the grid during peak hours. This helps to avoid starting additional power plants to serve peak loads (and their associated greenhouse-gas emissions) and creates a more stable, flexible electricity grid.

GlobeSt.com: What was the impetus behind this development?

Bluth: This development was driven by a combination of factors that together accelerated the viability of creating a hybrid-electric building. These factors included the first-ever requirement from the California Public Utilities Commission for California investor-owned utilities to procure battery storage as a new energy resource for the grid and the unanticipated closure of San Onofre Nuclear Generating Station in South Orange County. The SONGS closure prompted our local utility, Southern California Edison, to solicit proposals for battery-storage projects in specific areas whose local electricity grid was impacted by the SONGS closure. This included portions of Irvine and Newport Beach.

Advanced MicroGrid Solutions came to the Irvine Co. in 2013 with the hybrid-electric building concept, in part due to our significant commercial real estate presence in the SONGS impacted area. AMS was successful in being awarded a contract in 2014 to deliver 50MW of storage in SCE territory, with the first phase of 10MW to be placed exclusively at Irvine Co. sites. AMS is using its Tesla battery systems at our locations to provide both a "virtual power plant" to SCE for their use in managing the electricity grid and also to provide peak demand reduction capability for our buildings.

GlobeSt.com: Where do you see this type of technology heading in the future?

Bluth: We believe that this technology will continue to spread into many areas of commercial real estate. It provides a direct economic benefit to a building by shifting a portion of its electricity load to off-peak hours and at the same time provides a societal benefit by lowering peak demand on the grid, increasing the utilization of our existing electricity generating resources. In the future, battery storage will be coupled with onsite solar photovoltaic systems. Building electricity usage will continue to evolve as electric-vehicle charging needs increase, creating opportunities to optimize hybrid-electric building usage around an even larger energy ecosystem to benefit the grid, the building and the end user.