Open menu

Industry Insights

Electric dreams – achieving the solar energy storage sweet spot

Connected Energy’s CEO, Matthew Lumsden, looks at why battery energy storage with PV must not be overlooked for any business investing in renewable energy

20/01/2023

Energy bills account for 5-20% of operating costs for around half of UK businesses. No wonder investment in energy solutions such as solar PV is often seen as mission-critical, to get a grip on spiralling costs.

Looking at recent investments however, it appears that many businesses that adopted PV have put so much on site that they are now exporting a significant proportion of the generated energy. Not only that, but they’re not getting a particularly good rate for that export either.

There is a sweet spot where businesses cover the maximum amount of their load and export the minimum amount of surplus energy. However, where there is an imbalance between generation and load it is evident that battery energy storage systems (BESS) can be a key component of PV investment to help achieve optimal financial benefits.

In practice, the best way to monetise a PV system is to offset the site load, with as little export as possible. It’s about getting the best fit between the site load and the generation profile of the PV.

If businesses introduce a BESS, they gain the possibility of not exporting surplus generation, and using that energy at peak-cost times to avoid costly imports.

Balancing the books: riding out an energy crisis

Solar PV generation in the UK increased from 21TWh to 156TWh in 2020 and new enquiries show no sign of slowing. Recent research has shown that if industries such as warehousing and logistics installed PV on available roof space, then this sector alone could deliver the entire UK solar requirement for 2030 forecast by the National Grid, without using an inch of new land.

Large scale national companies are embracing the energy transition, including Tesco which has committed to adding panels to 187 sites covering 335,000m2, whilst Sainsbury’s is the UK’s largest operator of rooftop-mounted solar PV.  But in some instances, the secret to maximising the value of PV and unlocking savings can be through the co-location of BESS.

Talking to Tom Lloyd, Director of Sales at Ren Energy highlights how strong the demand for energy storage now is:

 

Since the energy crisis hit, our phones have not stopped ringing and our customers are increasingly aware of the benefits that including battery storage alongside PV can now bring.

For many we’ve spoken to historically, the level of investment didn’t stack up for whatever reason at that time. But now, with people’s bills quadrupling or more in a lot of instances, it’s put it the benefits from energy storage into sharp focus”.

Ren Energy is an independent energy consultancy who work alongside Connected Energy on solar and BESS installation projects. Tom tells me of a customer who owns a farm, for whom they had already completed one solar PV installation. This year his energy bills have gone from £15,000 a month to £45,000 a month, and the farmer has five acres available for more panels. This is where BESS could help optimise his PV use and reduce his operating costs.

 

Sign up to our newsletter

Sign up today for all of the latest news, updates and insights from Connected Energy.

Revenue to be made

“The driving force for PV has always been economic,” Tom says. “In the commercial space, it must make economic sense otherwise businesses just aren’t going to engage. Even those who look to utilise PV from an environmental agenda put cost at the centre of the objective.”

Most commercial sites have a half-hourly metered supply so at Connected Energy we model that data to see the shape of the load profile. Using analytics, it’s possible to model what solar panels will generate, what that will look like over a calendar year, and how BESS could be utilised to maximise savings.

Crucially, if we just model capturing the surplus energy generated from solar, we lose the chance to demonstrate what else a battery can do for businesses – storing surplus energy is just one benefit.

Alongside storing surplus solar power, modelling can show how BESS can help manage load profiles and reduce peak loads on site.

For example, if businesses require EV charging which might exceed the available capacity on site, it can be taken from BESS; if there is a significant load during a peak tariff period, it can be managed using low cost or locally generated supply; or if there is a good value night rate it’s possible to charge a battery with the cheaper rate and offset higher costs later in the day.

There is also revenue to be made from a BESS. The system can be charged and discharged to provide grid balancing services – a service for which National Grid will pay businesses.

The combination of applications is what will work to reduce energy bills.  Modelling has the advantage of illustrating the operating model to support long term investments.

Many commercial operations have a demand of around 250/300 kilowatts. Bearing in mind that businesses will want to build in futureproofing, modelling can reflect predicted changes such as electrifying heating, adding EV charging, or installing a heat source pump. The business load today may differ significantly from that of the future and intelligent modelling will help to size a battery for the future with the best financial outcome.

The University of Sheffield Advanced Manufacturing Research Centre (AMRC) has recently installed two BESS from Connected Energy on their own site – the most advanced low carbon smart building demonstrator – which also models how batteries can control energy costs and carbon emissions for manufacturers of all sizes, and in buildings of any age.

The battery storage units now installed at AMRC North West mean it will never have to increase its electricity capacity, even when more equipment is installed, and the site will always be able to operate within its green tariff by storing energy from the renewables on site.

“Any business with renewables on site could hugely benefit from a battery storage solution,” said Ben Smith, Low Carbon Smart Building Specialist at AMRC North West.

“It will allow us to maximise the energy generated from our renewables. For others like those in construction and manufacturing, two of the most energy intense industries, it will show what steps can be made with a BESS on the ground”.

With operational machinery and production lines using the Industrial Internet of Things (IIoT) the AMRC site will be a manufacturing energy ‘show home’. It will show businesses how they can achieve what, at present, might seem impossible – to manage and reduce energy bills, whilst increasing energy consumption and security.

The entire system is a great example of how an intelligent approach to energy can reduce business costs. By using AI and data modelling, the BESS can be automatically programmed to provide energy to the site at peak production times using excess renewables, or at times when tariffs are higher.

Consumption or export: a hierarchy of needs

The energy crisis has also accelerated a move towards self-sufficiency, or self-consumption, for businesses. We know that there are going to be significant incentives put in place to reduce grid peaks at busy times, so many companies are interested in flattening their load profile with batteries, so they don’t have to pay those high costs.

If a business operates on both a grid connection and PV array, then solar power is an asset that needs to be used first, to best effect. For example, in a warehouse or a logistics hub with available roof space, capitalising on that roof space will be necessary to combat the increasing volatility in energy prices. With rooftop PV, we can look at a model of a distributed system where energy is managed more at a local level.

This is really about futureproofing; about the energy system of the future where a roof becomes a generator, and you maximise the value of your generator by using storage. In turn, this provides you with resilience via self-consumption alongside reduced energy costs.

Resilience isn’t the only benefit of storage over export. In an example of using the BESS in a cost-efficient hierarchy, consider a business which has on site solar and offers EV charging on site. The BESS will whenever possible charge from surplus solar generation but when this is not available it will aim to charge from the grid during lower cost periods.  When plugged in and charging from the EV charger, the vehicle will take the charge load from the battery using either renewable or lower cost electricity as priorities. If the electricity storage in the BESS is neither greener nor cheaper, then the load will be drawn directly from the grid.  There may also be a financial or technical requirement to manage the site peak load in which case the BESS can contribute to provide load management.

The AMRC site takes the potential of BESS one step further, to automatically coordinate meteorological data with BESS data so that it is prepared in advance to maximise revenue opportunities around weather conditions. This is where battery data management with PV array really starts to show off in terms of measurable environmental and financial value.

The green machine: environmental payback and the case for second life

Payback isn’t all financial of course, even if that must be the first reference point for business owners. Many adopters of solar energy and BESS will be focused on environmental credentials, whether that’s ensuring a sustainable supply chain, relying less on energy from fossil fuels, meeting ESG commitments or reacting to internal pressure from stakeholders and staff.

Tom from Ren Energy clarifies that in many instances the environmental imperative is as important, if not more so than the cost imperative

I think it would be unfair to say that all the businesses that come to us are solely thinking: how do I save myself money? A lot are thinking ‘how do I do something tangible that will show our client base that we are doing something about the environment?’

Tom Lloyd, Director of Sales at Ren Energy

A financial model for battery energy storage

At the AMRC site, the choice of BESS from Connected Energy was particularly important from the ESG perspective, because the company’s systems are made entirely from second life vehicle batteries, each using 24 second life Renault Kangoo batteries.

Second life storage units provide a positive carbon benefit of 450tCO2e for every 1MWh installed compared with a first life energy storage. Ben reiterates the significance of this from an ESG perspective:

“Every single KPI that a business would mark itself against would be better by using end of life batteries”.

Creating a business case at times like this to invest in new infrastructure can still be challenging.

At Connected Energy, we have recently introduced a new Battery Storage as a Service model which will mitigate capital costs and wraps up all operating costs as a monthly payment.

There are no ‘ties’ with energy companies with this arrangement, which means that grid services revenue is paid directly, should such an arrangement be in place. On occasions when the value of grid services is especially high, this could be used to pay more of the monthly fee, a bit like mortgage over-payment.

It seems apparent that BESS with renewable energy will become the hallmark of energy best practice for businesses. Battery storage in a commercial setting may be the only way to navigate industry though this turbulent economic and energy crisis.

This full article appeared in New Energy World on 18 January 2023, you can read more here.

[1] https://www.icaew.com/insights/viewpoints-on-the-news/2022/dec-2022/why-businesses-need-to-plan-ahead-on-energy

Let's connect!

Get in touch with our team to discuss whether battery energy storage can work for your business, and how we can offer a free feasibility study.