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Why Kilroy is turning buildings into batteries

Real estate owners know that they have to offer something better than the competitor across the street, and at a lower price, in order to attract and keep occupants. Owners who trade on their sustainability smarts face this pressure when they manage and price energy for tenants.

For Kilroy Realty, a family-run real estate investment trust based in Los Angeles, a new deal with an energy storage startup could bring a new sustainable amenity to upscale commercial buildings.

Kilroy, a real estate investment trust that owns roughly 12 million square feet in major West Coast markets, has started a process to install five Tesla-made PowerPack batteries in each of five office buildings in Southern California. The batteries run on software that detects when power from the electric grid is especially scarce, and switches to power that was stored at some other time, thus avoiding drawing power at peak times, when it’s most expensive (and not always the cleanest.) Technology company Advanced Microgrid Solutions designed the algorithms and dashboards for building staff, and will manage the systems.

For the two partners, the deal takes on different dimensions. Advanced Microgrid, also headquartered in Los Angeles, treats the installations as a proof of concept. The arrangement is part of a larger agreement it struck in 2015 with Southern California Edison, the local utility, to automate up to 200 megawatt-hours of “demand response” services — industry-speak for dialing down power when everybody’s using it — throughout a key market called the Los Angeles basin. Delivering on that agreement means siting batteries at nodes where the electric grid faces heavy demand. The planned Kilroy sites, Advanced Microgrid stated, eventually will relieve 11 megawatt-hours of demand — at any time that power shift should prove necessary — over 10 years.

Customers are motivated by quantified savings. They are leaders in sustainability already.
Delivering on that agreement means siting batteries at nodes where the electric grid faces heavy demand. The planned Kilroy sites, Advanced Microgrid stated, eventually will relieve 11 megawatt-hours of demand — at any time that power shift should prove necessary — over 10 years.

For Kilroy, installing the batteries expands the real estate company’s quest to make its buildings more energy efficient. “It’s a tool in the arsenal,” said Sara Neff, Kilroy’s head of sustainability. When we caught up by phone, Neff gently placed the batteries in context. The batteries don’t necessarily tap renewable energy, she reminded us, and they don’t look to her like a “resilient” solution because they can’t run independently of the grid in a blackout.

But they can reduce costs, by enabling the building’s management system to sidestep grid power when it’s costliest. “The software is a learning-based algorithm on past usage, current electricity price, weather and what’s going to happen to the system in the future,” said Manal Yamout, vice president of policy at Advanced Microgrid. With these inputs, a building will be able to shift back and forth between grid power and battery power, saving grid burden and associated electric bills, she said.

An evolutionary approach to demand response
Advanced Microgrid usually buys, finances, operates and manages its batteries so that it can provide them as low-cost service to owners, Yamout noted. Terms of the Kilroy deal fall under a nondisclosure agreement, but she said it’s not very different from the kinds of agreements her firm usually makes with private owners.

The company has a $200 million credit facility with Macquarie Capital, which it inked last July, to finance batteries at what Yamout called a “low cost of capital.”

Read full article at GreenBiz