Royal Industrial Solutions, a CED company, is a Stem distribution partner and full line electrical and automation distributor, serving the industrial end-user, OEM, and contractor markets in Southern California. Together, Stem and Royal Industrial Solutions provide solutions and equipment for behind-the-meter energy storage projects serving commercial & industrial (C&I) businesses.
Steven Fife, the Energy Solutions Group Manager of Royal Industrial Solutions, discussed Royal’s decision to partner with Stem, the evolving energy needs of large C&I and manufacturing customers, and how his team helps provide power quality and industrial controls with Stem’s smart energy services.
Tell us about Royal Industrial, your Energy Solutions Group, and the markets you serve.
Royal Industrial Solution is a turnkey electrical distributor in Southern California within a network of industrial electrical solution businesses owned by CED, one of the largest electrical distribution suppliers in the country.
My team, the Energy Solutions Group, is one of those solution businesses. Within Royal, we have Automation, Power, and Network Solution Groups, so our Energy Solutions Group is a natural complement to the other groups. I like to think of the Energy Solutions Group as a sustainability consulting group for our customers and that means not only helping our customers minimize utility expenses and waste but also eliminating downtime. On the energy and operational efficiency front, we work with our customers on everything from compressed air and refrigeration automation to lighting and hydraulic systems.
Within the industrial market space, Royal serves Aerospace, Food & Beverage, Life Sciences, Oil & Gas, and Water & Wastewater companies. However, our expertise in automation and power brings us into other areas like Agriculture and Mining.
As we approach summer, the needs of C&I customers are changing to meet EV charging requirements, prepare for power outages, and incorporate long term resilience strategies. How have current events and demand for power quality shaped the top energy concerns of your customers today?
With our customers today, we are seeing a noticeable increased interest centered around power quality and grid reliability. The biggest concern now in California is power outages.
As Southern California experiences higher temperatures, stronger winds, and bigger wildfires, our customers are facing public safety power shut offs (PSPS) with little or no warning from the utilities. More recently, the drought is now impacting hydro generation as water levels drop to historic lows putting our customers at risk from grid power shortages and outages.
Power quality is always an issue for industrial customers as it directly impacts process and manufacturing operations. A couple seconds of voltage sag from grid power is enough to knock our customers completely offline and the costs can be significant. A single unexpected outage can cost some of our thousands of dollars for every minute they are down. Add the ever-increasing cost of electricity on top of those issues, and it’s not surprising why we have seen customers move to states with lower energy costs.
It’s our job to advise on the solutions that will eliminate downtime and provide customers with backup power and resilience. And with solutions like energy storage that can correct voltage sags or grid overloads that lead to power outages, we can help our customers maximize power quality, unlock savings as well as meet resilience and sustainability goals.
Why did you choose to partner with Stem to provide smart energy storage solutions with your offerings to C&I customers?
Royal has collaborated on previous energy storage projects with Stem under various channel partnerships. Stem’s resilience, microgrid, and solar plus storage solutions that address power quality issues were what stood out to us.
Three of the major concerns we hear from customers when we discuss sustainability are power quality issues, power outages, and rising utility costs. We can address power quality issues, such as voltage sags with capacitor banks, grid outages with generators, and rising utility costs with efficiency projects. But a smart energy storage system that simultaneously addresses all three issues is a game changer for Royal and our customers.
The bonus with Stem’s Athena® smart energy storage software is that it uses advanced artificial intelligence (AI) to learn how our customers are using power. The last thing our customers need is another system to worry about. Stem operates automatically in the background without any human interaction.
How does energy storage align with or complement your other solutions?
We provide complex automation and power solutions to our C&I customers and have seen them rapidly adopting Industry 4.0, embracing IoT, and incorporating smart machines into their manufacturing processes. In some case we are already helping customer move towards AI- controlled manufacturing and our efficiency projects frequently involve advance controls for monitoring and reporting. Stem’s AI-driven energy storage solutions that proactively help our customers avoid downtime and keep those smart machines running is a natural complement to our other solutions.
What are some of the best practices you see your large commercial customers deploying to cut facility energy costs?
Beyond energy efficiency projects, the main way large customers are cutting facility energy costs is by monitoring their energy usage. It’s like the saying: if you don’t monitor it, you can’t manage it. They want visibility into what makes up the utility bill, so we see customers with large utility expenses monitoring every major system operating on a dashboard. The data is collected, analyzed, stored, and used continuously to improve energy efficiency and reduce operating costs.
This was a differentiator for us in choosing Stem’s Athena® which optimizes the operation of batteries by automatically switching between battery power, onsite generation, and grid power. In the event of an issue, customers can isolate the problem instead of suffering from a full-on outage.
A close second is customers urgently diversifying their energy portfolio with renewable sources. Our customers have some of the highest energy costs in the country, and at the same time, our grid reliability is deteriorating. Large customers are always seeking ways to be less dependent on the electrical grid, and most of them would run their plant completely off-grid if they could. Interest in microgrid solutions has increased the past few years.
How is California unique in its energy capacity and power quality issues?
First, we have notoriously high energy costs; not only high kWh costs but also high kW demand charges, which can account for as much as 50% of our customers’ electric bills. Second, parts of California’s grid are aging, and switching from continuous to intermittent sources is bound to create issues. Our customers are experiencing those issues firsthand with voltage sags and power outages. Third, we have the most ambitious energy goals of any state in the country: California’s Net Zero initiative aims to reach a 100% renewable grid by 2045.
No other state comes close to that level of reliance on renewables. The California Energy Commission (CEC) recently released a report estimating that California will need to build 6 gigawatts (GW) of renewable sources and storage every year for the next 25 years to meet the requirement. (For comparison, we now add about 1 GW of renewables to the grid annually.)
All of that means we’re seeing C&I customers having a hard time managing variable utility expenses to the point that some are seeking to relocate their manufacturing operations and facilities to other states that offer 50-90% lower electricity costs than Southern California. It’s no secret that these are real issues in an already competitive market, and if we don’t take an active part in mitigating these issues, then we’ll see more and more businesses leave. It’s our job to advise on sustainability solutions that can keep our customers stay here and thrive.