How to build the business case for onsite battery storage systems

Image: Wattstor. Pictured: A direct current (DC) coupled solar and battery system at a UK-based warehouse

The International Energy Agency (IEA) recently warned that if the world is to meet its 2030 climate targets, then the global energy storage capacity will need to increase sixfold, with battery storage accounting for 90% of this growth.

Last year, the deployment of battery storage in the global power sector surged by more than 130% year-on-year.

In the UK, the pipeline of battery projects grew by two-thirds in capacity during the same time, with operational battery storage capacity currently totalling 4.4 gigawatts (GW), according to an analysis published by RenewableUK earlier this month.

The strategic utilisation of battery storage can provide businesses with broader electricity accessibility and facilitate increased utilisation of renewable energy, thereby assisting them in achieving their net-zero objectives more effectively.

However, there are several challenges that make it difficult for businesses to efficiently integrate battery storage with clean energy systems. These include technical hurdles, economic considerations and the continuously evolving regulatory and policy framework.

edie recently partnered with Wattstor to host a webinar exploring the ways businesses can efficiently merge battery storage with renewable energy to reduce costs and carbon emissions, featuring  Stephan Marty, chief executive of Wattstor, and Rachael Wheeler, sustainability head at Big Yellow Self Storage (BYSS).

The webinar is now available to watch on-demand for free, having originally aired on 30 April 2024. This article also summarises the discussion.

Wattstor’s Marty emphasised that co-locating technologies can maximise benefits.

He said: “Don’t look at battery by itself or the solar itself, but rather look at them together and holistically for the site,” emphasising the importance of the design phase for businesses seeking techno-economic modelling of their sites.

This kind of modelling involves determining the optimal size and capacity of solar and battery storage systems, as well as other technologies required onsite, to construct the most compelling business case for achieving a favourable return on investment.

Bang for the buck: Optimising battery storage

“Battery storage optimisation is how you make money with the system and that happens in three parts,” Marty explained.

These parts cover boosting reliance on solar power and storing surplus energy in batteries for future usage, strategically managing energy consumption to evade steep grid charges, and leveraging the wholesale electricity market to extract maximum value from solar energy.

Last year, approximately three-quarters of the world’s newly added renewable energy capacity was attributed to solar power. At the same time, corporate funding for the solar sector surged by 42% year-on-year.

Marty highlighted that with the increasing deployment of solar panels on rooftops and ground sources, on exceptionally sunny days, there is a surplus of solar energy generated simultaneously. Instead of solely consuming this surplus, it’s often exported to the grid, resulting in a decrease in electricity prices.

In some cases, this reduction can even lead to zero or negative prices, a phenomenon known as ‘solar cannibalism’.

He said: “During this time, businesses won’t get a lot of value by selling their solar as everyone else will be doing the same at that time.

“However, the good news is that if businesses look at it holistically and design their battery storage accordingly, then they can take advantage of this phenomenon by not putting their solar on the grid when the price of it is low but rather using it later on.”

Marty explained that businesses seeking to capitalise on the flexibility and profitability of solar energy within the wholesale electricity market can collaborate with their electricity suppliers. However, he cautioned that some suppliers may not see this as a priority.

In October of last year, UK’s energy regulator Ofgem approved a policy modification, dubbed as ‘P415’, which will enable businesses to partner with third parties, known as Virtual Lead Parties (VLPs), to trade flexibility into wholesale electricity markets without risking businesses or affecting their operations. This can further enhance the business case for battery storage systems.

Building the business case: Board conversations

Big Yellow Self Storage, a nationwide storage service provider with an annual energy consumption of 13,000 megawatt-hours (MWh) is deploying on-site battery storage systems, in collaboration with Wattstor, to use its renewably-sourced energy more efficiently.

BYSS’s Wheeler said: “When we were expanding our rooftop solar which would max out our consumption, we decided that battery storage was the right choice.

“Though the battery technology wasn’t there when we first started our solar journey, we feel like it is on its way there and will only get better in the future. So, we are future-proofing our sites.”

While combining and refining battery storage with clean energy systems presents multiple benefits for businesses, the complex technology can present hurdles for sustainability professionals as they communicate the business rationale to the board.

Wheeler emphasised the importance of utilising language focused on price risks when engaging with the board. Additionally, she underscored the value of cross-department collaboration to formulate a technical blueprint for integrating technology into current sites. This approach ensures that even when simplifying the message, technical accuracy is maintained.

Wheeler said: “It was an iterative process. I went back to the board multiple times with further information on the questions they had asked. I was then able to work with Wattstor to adapt the design for the store that we are building at the moment.

“This gave the board assurance that Wattstor know what they are doing but it also provided a deeper understanding of what we are trying to achieve and how it will operate.”

Marty echoed her statements, stating that “simplicity is critical”. He highlighted that another way to communicate the effectiveness of the battery storage systems is through comparing the power purchase agreements (PPA) rates as it builds the finance case, and ultimately the business case for the deployment of the technology.

CLICK HERE TO WATCH THE WEBINAR IN FULL, ON-DEMAND

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