C&I battery storage: all you need to know

By Gareth Dauley 

Talk to Australians about stationary energy storage and they’ll tell you about the Hornsdale Power Reserve, for a long time the largest lithium-ion battery system in the world. Talk to Germans and they will point to the residential battery that is helping their household to run off solar power.  

But there’s plenty of energy storage options between Hornsdale’s 194 MWh and the 20 kWh or so you get with a residential battery. And right now, one of the most interesting is the kind of batteries being used by commercial and industrial (C&I) customers.  

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The C&I segment includes businesses that range from retail centres to manufacturing companies. These companies tend to have energy storage requirements that run from a few hundred kilowatt-hours to a few tens of megawatt-hours.  

Their battery installations are typically behind the meter, with investment usually made off balance sheet or through traditional loans rather than complex financial deals. But what makes these projects really interesting is the range of ways that C&I companies can benefit from batteries.  

In the UK, for example, there are easily a dozen potential C&I battery use cases. They mostly fall into one of four categories.

In the UK, for example, there are easily a dozen potential C&I battery use cases. They mostly fall into one of four categories: avoiding electricity network charges, benefiting from tariff differences, delivering value-added grid services or enhancing on-premise energy use. 

Here’s what you need to know about each one. 

How C&I firms can use batteries to reduce electricity charges 

Electricity bills can be a major headache for certain C&I businesses, from manufacturers to data centre owners. And the expense is not just related to energy consumption, but also charges that apply at times of high electricity demand.

In the UK, for instance, the electricity bills of heavy energy users can go up dramatically when demand is stressing the grid. This happens during three winterly half-hours a year, known as the Triads, and more widely in what are called red-band periods.

Large electricity users also have to pay for capacity market supplier charges, based on users’ energy demand during peak periods. All told, these charges can massively inflate a company’s annual electricity bills.

However, they can also largely be avoided by installing a battery system that can supply power to the business during peak demand periods. The potential savings are potentially significant, but C&I companies should seek expert advice on this topic since regulations are subject to change.

How C&I companies can use batteries to benefit from tariff differences

Even without peak demand charges, C&I companies can use battery storage to benefit from daily fluctuations in energy pricing. The simplest way to do this is to charge a battery using low-cost electricity at night and then use that energy to offset higher-cost daytime consumption.

Large C&I operations might even want to resell some of that low-cost electricity on energy markets when the price goes up. To do this, the company needs to have a licence to operate in wholesale markets.

But if a business is already producing electricity from wind or solar assets then it may already have the paperwork in place, making it easy to unlock new revenue streams not only to support the business, but also help the asset pay for itself.

In Britain, there may be even further opportunities for energy trading through the Trans European Replacement Reserves Exchange, a cross-border electricity balancing market that the UK is due to access in 2021.

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Large C&I operations might even want to resell some of that low-cost electricity on energy markets when the price goes up.

How C&I asset owners can use batteries to deliver value-added grid services

As many grids lose firm generating capacity with the closure of coal plants, grid operators are keen to buy services that will help keep the electricity supply stable.

In the UK, for example, there is a capacity market that pays large energy users to stay flexible in the face of spikes in electricity demand, for instance by reining in consumption.

C&I companies can play in this market by switching to battery power and cutting the need for grid supplies whenever there is a surge in demand.

The same goes for demand side response programmes, which are growing in popularity as grid operators struggle to match consumption on the electricity network to the intermittent supplies coming from wind and solar plants.

Finally, C&I companies can use batteries to sell other services beyond energy. Batteries can provide a range of ancillary services, from frequency response to voltage control, creating potentially lucrative income streams for asset owners.

How C&I businesses can use batteries for on-premise applications

As part of moves to reduce energy bills and reduce carbon emissions, C&I organisations are increasingly looking to install solar systems or wind turbines that can help power their operations.

Achieving full energy self-sufficiency is impossible with wind or solar alone because of their intermittency. But adding battery storage to the system can help companies achieve almost 100% energy self-consumption and zero carbon emissions.

Even without renewables self-consumption to help reduce the cost of energy, batteries can deliver added resilience by supplying backup power in the event of a blackout.

Most businesses that need uninterrupted power, such as hospitals and data centres, already have backup diesel generators, but these are costly to run and maintain. A battery can serve in reducing the cost and assisting backup while also being used for other applications, as described above.

A battery can serve in reducing the cost and assisting backup while also being used for other applications

Finally, battery storage is likely to become even more attractive to C&I businesses with the growing electrification of the energy system.

One example: as vehicles go electric, company car parks will increasingly need to provide charging stations—and the cheapest way to run them is using off-peak electricity stored in a battery. Plus, the battery saves the business from having to upgrade its grid connection, which is usually a costly affair.

These applications are not exhaustive but should serve to show how battery storage can help improve C&I cashflow and finances on a number of fronts.

If you think your business might benefit just one or two of these applications, then it is worth speaking to specialists because further value streams may well be available.

At Pacific Green Energy Storage, we are experts in the modelling of battery return-on-investment scenarios and can optimise your system to provide the maximum benefit. And we can offer asset finance to facilitate the acquisition of storage assets.