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Convergent Energy + Power is partnering with Royal Dutch Shell PLC to equip industrial plants in Ontario with battery storage in order to cut the peak-hour usage as companies pursue efforts to shave their electricity bills.

The two companies have formed a joint venture to market the battery system to industrial customers, starting with 21 megawatt hour of storage at Shell plants in Sarnia and Brockville. The international oil and gas giant established Shell New Energies three years ago to invest in low-carbon technologies aimed to reducing greenhouse gas emissions.

Convergent is already the largest operator of storage system in Ontario and the partnership with Shell New Energies will give it added opportunity as industrial customers increasingly invest in their own generation or demand-reduction technologies to eliminate the high cost of power at peak hours from the grid, Convergent chief executive Johannes Rittershausen said on Thursday.

The Ontario venture aims to save industrial customers money by shaving their electricity usage during the five peak hours of the provincial power consumption each year. The consumption in those five peak hours determines how much the industrial users pay in the following year on the “global adjustment” part of their bill, which covers the difference between depressed wholesale prices in Ontario’s oversupplied market and the much-higher contract prices that have been guaranteed to most power generators.

“The GA structure creates an opportunity to reduce usage during peak periods to reduce your electricity costs," Mr. Rittershausen said.

“There is quite a bit of opportunity” in Ontario for electricity storage units at industrial facilities, he said. “We’re just scratching the surface." As much as 70 per cent of an industrial customer’s power bill comes from the global adjustment portion, and Convergent says it can cut those GA costs by up to 40 per cent on average.

Battery and other storage technologies have fallen dramatically in price to the point where they are competitive with generation options, especially for plants that are only needed during peak hours, typically late on summer afternoons when demand can be 60 per cent higher than it is in the early morning. At the same time, companies are marrying storage systems with solar or wind-generation projects to provide a steady supply of power at commercially competitive rates.

Independent electricity consultant Tom Adams said the global adjustment structure is the result of years of political interference in the electricity market by politicians of all parties. He warned the industrial sector is investing in new generation and conservative to avoid high costs in a system that is already oversupplied. “Anyone who invests in a solution that relies on the GA pricing structure is putting themselves at some risk that changes in it could lead to stranded investment,” Mr. Adams said.

However, Mr. Rittershausen said the industrial users clamoured for the opportunity to reduce their exposure to the global adjustment as rising electricity bills were effecting their ability to compete and maintain jobs in the province. Even in a more market-based system, customers would have an incentive to use less electricity at peak hours when wholesale prices are highest, he said.

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