A commercial real estate company in California is turning office buildings into power plants by adding energy storage.

In May, Black & Veatch completed the first stage of a construction job for Advanced Microgrid Solutions (AMS) in which battery storage systems were installed in 20 buildings in Irvine, Calif.

The buildings, all owned by The Irvine Co., are mostly along the I-405 corridor and include Park Plaza, Irvine Towers, MacArthur Court and Spectrum Center, in what Irvine Co. calls its Hybrid Electric Collection.

The hybridization of the Irvine buildings is part of a larger build-out that will eventually see the construction of 50 MW of energy storage facilities in Southern California buildings in conjunction with AMS. The 20 buildings have an aggregate capacity of 10 MW.

Adding a battery to supply backup power for a building is not a new idea, but the Tesla batteries that AMS and B&V installed for The Irvine Co. also provide demand response services in which the buildings can switch from grid power to battery power when electricity prices rise. The Irvine Co. estimates the batteries can reduce its energy expenses and operating costs by 10%.

What makes the batteries different—and designates the buildings as hybrid—is AMS’ grid integration and control software. AMS can control the batteries in all the buildings in concert, giving them the critical mass to appear on Southern California Edison’s system as a grid resource—the equivalent of a generating plant.

AMS’ software allows the batteries to charge when electricity is cheap in the middle of the day. Conversely, when demand spikes and SCE would normally turn on gas-fired peaking plants, it can send a signal that directs AMS to switch the buildings to battery power, reducing demand instead of adding supply.

The fleet of hybrid electric buildings can reduce peak demand by 25% and provide up to 10 MW of instantaneous load reduction for up to four hours to help SCE balance its grid without the emissions that would come from a peaking plant. Instead of paying for the batteries with cost savings, their function as a virtual power plant adds income.

The combination of cost savings and revenue generation is the basis of the business model driving companies like AMS and is creating construction opportunities where they hadn’t previously existed. “It is a win-win for the Irvine [realty] company and for Southern California Edison,” says Maryline Daviaud Lewett, director of business development at Black & Veatch. It gives the utility additional ways of managing their load, she says. “That is why they are very interested in this type of system.”

Unlike other clean energy innovations such as solar panels, there is more construction involved with an energy storage system. For one, batteries are heavy. Battery sizes range from 250 kW to more than 1.5 MW and even larger, says Craig McNulty, project manager for AMS installations at Black & Veatch. The most common size for a system has been 500 kW. “Almost 50% of our installations are 500 kW,” McNulty says. And while there is no standard capacity or size, he says the batteries usually weigh in at about 2 tons. McNulty compares those batteries to “a ridiculously heavy refrigerator.”

The size and weight of the batteries usually require them to be located in a specially constructed room on the ground floor close to the building’s electrical controls or outside in a specially constructed addition or an extension.

A battery system also requires an electrical infrastructure for connecting the system to the grid as well as some communications equipment. Costs for such a system vary, but they generally run about $1 million or more per installation, says McNulty.

The battery installations AMS is doing are “a unique kind of construction process,” says Yanni Kapranos, senior director of development at AMS. “Every host varies a bit.” The system’s use will determine things like the need to monitor other systems on the grid, such as how much solar power or wind power there is at any given moment.

“For instance, the utility could require a common disconnect or there could be agreements in place with a solar power or fuel cell company,” he says. “It can get pretty technical.”

Daviaud Lewett believes the energy storage market is still in “the very early stages” of development. B&V is also designing and building battery storage systems AMS is installing at large municipal agencies such as the Irvine Ranch Water District and Inland Empire Utility Association.

She also sees a lot of potential for big box companies like Walmart, Whole Foods and Walgreens that could use energy storage to better manage their energy needs. “There are a lot of RFPs coming up,” she says.