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Shortly after announcing a $4.5 million infusion of cash from TIAA-CREF and Good Energies, energy storage company Ice Energy announced today that it has closed a total $24 million in third-round funding.

The company makes a unique product in the energy storage sector, using ice to reduce energy required by AC systems. Ice Energy says it can reduce energy demand by AC systems by up to 95 percent, and its Ice Bear units can shift 32 kilowatt-hours of peak time energy use to off-peak hours.

How it works: The Ice Bear system (pictured) freezes 450 gallons of water at night, when electricity is usually cheaper, so the cost to power the unit’s freezing process is low. During peak cooling hours (daytime), it uses the stored ice to cool refrigerant for the AC system, replacing the energy-gobbling compressor in the AC unit.

The system has gotten the attention of Target, which is working with SunPower and Ice Energy to build a pilot project that will combine solar power with ice energy to reduce peak-time energy use.

Ice Energy initially started out marketing its product to big-box retailers like Target, says spokesman Marc Marton. But a few years ago it shifted its strategy to utilities, signing deals with Austin Energy, Toronto Hydro and several Southern California utilities that will install 50 megawatts’ worth of the storage systems.

Utilities can purchase the Ice Bear systems as an asset and place them in commercial and government buildings to reduce peak load.

“It’s a strategy that the utility can use rather than build another peak gas plant and go through all of the citing and permitting processes and expense to build and maintain it,” Marton said. “They can build this approach and essentially shift peak demand to off-peak.”

Energy storage — in particular, using it to reduce peak-time energy use — is a big issue in the renewable energy world, and yields an enticing promise for utilities and customers — customers can save money by using less of the pricey peak energy, and utilities lower the strain on the grid and save the expense of building more capacity to accommodate increasing peak demand. Ice Energy attacks the off-peak energy storage issue in a rather unique way, but there’s also been talk of creating grid-scale batteries that can store off-peak energy from renewable resources (say from wind, which is strongest at night). Some utilities are offering incentives for electric car owners to charge at night, and electric carmakers are working on energy storage uses for discarded electric car batteries.

The final amount raised by Ice Energy includes the $4.5 million from a new green building partnership formed by financial services firm TIAA-CREF and cleantech investment firm Good Energies.

Other investors in the company include Energy Capital Partners, Sail Ventures and Second Avenue Partners.

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