How Free Batteries Help NYC Small Businesses Save on Electric Bills

Paul D'Avino, owner of Cafe Mars. Photographer: Emma Rose Milligan/Bloomberg Photo by Emma Rose Milligan /Photographer: Emma Rose Milligan

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(Bloomberg) — At Café Mars in Brooklyn, an all-electric kitchen means better air quality for the chefs whipping up short-rib ravioli and tofu cannolis, fewer carbon emissions — and a $4,000 electric bill. 

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“Our electricity bill is insane. And that’s a tough thing,” said Paul D’Avino, the Italian restaurant’s owner and co-chef. 

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So this summer, the 45-seat eatery is using six free plug-in batteries provided by David Energy, a startup power supplier. 

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The batteries allow the energy provider to buy and store energy when demand is low at night, and then discharge it during the day to avoid peak pricing, saving businesses like Café Mars 3% to 5% on their monthly bill.

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“We are funding the battery up front and then we are extracting the value out of that battery in the power market,” said James McGinniss, David Energy’s chief executive officer. “And that value generated is enough to give our customers a discount, pay back the capital expenditures on the battery and leave some margin leftover for David Energy.”

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As electricity prices soar and battery costs fall, a growing number of power providers and smart home companies including Tesla Inc., Sunrun Inc. and Base Power Inc. are setting up these kinds of networks to tap into customers’ EV or standalone batteries when supplies are tight, profiting from swinging electricity prices. Experts say the practice can bolster the grid without adding new transmission capacity. 

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“This all becomes enabled because batteries have gotten much cheaper through time,” said Allison Weis, global head of storage at Wood Mackenzie. 

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Electricity prices rose 6.1% in New York City last year, squeezing small businesses with notoriously tight margins. Unlike residential customers, businesses like Café Mars pay hefty demand charges — which make up nearly half of  the restaurant’s bill — based on the highest amount of electricity used at a single moment each month, in addition to being charged for the total amount of energy they consume. The restaurant’s power bill is one of its biggest expenses.

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Even small gaps between the grid’s power and what consumers are drawing can send prices through the roof, said Yury Dvorkin, a grid researcher at Johns Hopkins University. “The cost of a battery is nothing compared to how much money you can make on the price arbitrage,” he added. 

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The battery networks, known as virtual power plants, are often set up so that the broker can sell power back to the grid when prices are high. But many of these installations face a lengthy permitting process from the New York City Fire Department. 

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To get around this, David Energy provides customers with plug-in batteries and doesn’t sell any power back to the grid. Instead, it stores power in its customers’ batteries when prices are low, and passes a portion of the savings to them. The company uses software that predicts when energy demand will peak and can automatically switch a business from grid power to the batteries, allowing customers to skirt the highest prices.