In energy terms, flexibility means having the ability to adapt to changes in the electricity system.
For example, during times of peak grid demand, businesses are using battery energy storage systems to reduce their demand on the grid.
This behind-the-meter flexibility enables businesses to avoid peak electricity charges, as well as mitigate against high non-commodity charges, which is especially important for businesses that are high energy consumers.
These non-commodity costs include transmission network use of system (TNUoS or Triads) charges, which are determined by measuring consumption during Triad periods; distribution use of system (DUoS) charges and capacity market service charges. Businesses can reduce these charges by switching from the grid supply to use power stored in on-site batteries at peak times.
In the UK, Battery energy storage systems also give businesses more flexibility to generate income by providing ancillary services to National Grid, such as DSR.
While prices are coming down, batteries are still relatively expensive and prices aren’t falling as fast as many vendors predicted. The main barrier to widespread adoption has been the difficulty in making a decent return on investment from investing in storage. Many investors believe it’s hard to make a business case for using batteries on their own when it depends purely on the revenue from the grid.
By taking a ‘hybrid’ approach and combining an advanced DSR platform technology with battery storage, additional use cases are created, offering a growing number of benefits for industrial energy users. These include the ability to deliver much higher revenue to customers, which significantly improves the return on investment case for battery storage.
There will be a steady growth in energy storage as it’s definitely needed, but it will be driven by fundamental economics and good business models – like the hybrid model with DSR. Today, it costs anywhere from £600k to £800k to install a megawatt battery, and you can’t get contract certainty from National Grid. Without DSR, batteries are a speculative investment with a multi-year payback time.
Many take the attitude that the technologies behind the smart grid aren’t really relevant to them. However, with National Grid and distribution network operators increasingly providing specifications for failure modes we are seeing more and more forward-thinking businesses take on board the benefits of implementing smart technology for on-site resilience, as well as enabling them to participate in grid balancing schemes through DSR.
Michael Phelan is a speaker at Electrify Europe in Vienna in June. Click here for more details.
This article is an extract from a longer feature that will appear in PEi magazine later this month. Subscribe here to be sure of receiving your issue.