10 ways battery systems can help you make (or save) money
The use of electric batteries dates back at least 200 years—and in that time, these devices have been put to a wide range of uses.
With the advent of stationary energy storage systems in the last decade, the range has only increased, to the extent that most battery assets so far have been installed without any need for government support—unlike the situation with solar and wind power.
In fact, there are now dozens of potential use cases for batteries and the fact that you can ‘stack’ multiple applications within a single battery system means there are many ways you can potentially make or save money with your asset. Here are 10 of the most common options.
Renewables integration
If you are an investor or developer of solar parks or wind farms, you can’t always guarantee that your assets will be producing energy when the grid needs it. To avoid losses from curtailment, one option is to store excess energy in a battery system and sell it when demand picks up.
This allows you to maximize your electricity sales and thus improve your return on investment in energy generation assets and grid connections.
Transmission and distribution infrastructure deferral
For grid operators, a common challenge is the need to upgrade parts of the electricity network to take care of rare peaks in demand. However, the cost of upgrades can easily be deferred if you can cover the peaks with energy stored in a battery system located near to the load.
Using batteries for transmission and distribution infrastructure deferral is increasingly common, with one of the first utility-scale battery systems in the UK, dating back to 2015, being used specifically for this purpose.
Demand charge avoidance
Peaks in demand are a headache for grid operators and also for large energy consumers, since this is when electricity is charged at a premium. Battery systems can help consumers to avoid these costs by allowing you to switch to stored energy when peak tariffs apply.
Demand charge avoidance is particularly popular in electricity markets such as that covered by the New York Independent System Operator, where peak energy use incurs significant penalties.
Microgrid energy storage
Microgrids are small grids that are designed to work in an islanded fashion, with no connection to other electricity networks. Where a substantial portion of microgrid electricity comes from variable renewable generation, it is important to have a source of backup power for when solar or wind drops.
This backup has historically been provided by diesel gensets or other thermal units, but batteries offer a cleaner and—over the long term—cheaper option.
Island grid optimization
Like microgrids, island grids frequently have no connections to other networks and require thermal units to provide round-the-clock energy. Furthermore, the cost of shipping fossil fuels to remote islands can drive up electricity costs significantly.
With batteries, however, islands can make much better use of available renewable energy resources, reducing system costs without compromising grid stability. Furthermore, batteries can be scaled in a more modular way than thermal units, optimizing the capital required to meet island energy needs.
Power enhancement in shipping
Marine vessels are overwhelmingly powered with bunker fuel and power accounts for a significant proportion of shipping costs, with demands on thermal units becoming particularly acute when ships are maneuvering. Increasingly, though, the sector is being tasked with cutting its carbon footprint.
Because of this, an emerging trend among vessel owners is to equip ships with battery systems that can provide auxiliary power when needed, helping to reduce fuel costs and emissions. The containerized format of large battery systems makes then ideal for stowing on vessels.
Energy arbitrage
Energy arbitrage involves purchasing electricity when power prices are low and then selling it when they are high. In markets where there is significant intraday variation in energy pricing, this can be a potentially important source of profits from battery storage systems.
It should be noted that in most markets the profits from energy arbitrage alone are still not sufficient to guarantee a reasonable return on investment for battery systems, although they can be an important component of a revenue stacking strategy. The gains will likely rise in decarbonized grids, however.
Peaker replacement
Similar to transmission and distribution infrastructure deferral, batteries can be used to help utilities avoid the need for peaking power at times of high energy demand. This helps to reduce costs in two ways. First, the utility avoids the fuel costs associated with the regular use of peaking plants.
Second, utilities are increasingly using battery systems to avoid the capital cost of having to add new peaker plants to the generation system. A recent study, for example, found that Long Island in New York could profit from replacing fossil-fueled peakers with batteries.
Frequency regulation
For grids to run smoothly, alternating current has to stick to a more or less fixed frequency—60 Hz in the Americas and 50 Hz in Europe and Asia. When electricity comes from thermal plants, the frequency is set by the rotating mass of turbines.
In grids where wind and solar are the dominant generation sources, however, frequency can be much harder to maintain. One of the most effective carbon-free solutions to the problem is to use batteries to regulate frequency with millisecond-long discharges.
Reserve energy
Grids rarely run at full capacity. Grid operators usually keep a few generators idling, in reserve, to take over if a thermal plant fails. Keeping plants running ‘just in case’ is expensive, though. It wastes fuel, creates emissions and requires additional capital and maintenance costs.
All of this cost can be avoided using batteries instead, since battery systems can be configured to kick in automatically whenever there is a loss of power to the grid—and can respond within milliseconds.
Which will you use?
This list is not exhaustive but offers a flavor of the many ways you can make or save money with batteries. To find out more, contact us now.