Date: May 18, 2018
Author: Zohreh Mohammadi

Batteries: Complexity of the Business-Case for Grid-Connected Storage Solutions, and Why You Need an Aggregator Partner:

The recent and ever-growing demand for renewable energy is driving a movement to get more sustainable energy sources added to the Grid. Britain is already close to its 2020 target of generating 30% of its electricity from renewables (which now stands at 28%). Whilst the potential and buzz for renewable energy to power our Grid is certainly growing, there are still many challenges that need to be faced head-on. In this article, we break down the business case for Grid-Connected storage solutions, and what we need to see in order to move forward.

The Need for Grid-Connected Storage Solutions

Whilst it’s fair to say that Grid-Connected Storage Solutions are still in their infancy, KiWi Power is confident about the benefits & disadvantages of deploying these solutions at-scale. We know that storage solutions have been effective in smaller projects; nevertheless, investors and developers are still somewhat wary about deploying the technology on a scale as large as National Grid’s requirements.

So, what do we know about storage technology that makes it essential to the future of the Grid? We know that current grid systems (which are most reliant on fossil-fuel generation) are non-sustainable, and that there is increasing stress on grids from a fluctuating demand profile. Previously, it was easier to predict times of peak load on the system; whereas now it is becoming harder and harder to manage the load as consumption increases. Grid-connected storage solutions can provide that flexibility in both generation of electricity and managing peak consumption – and this will provide the Grid with more stability than ever and allow for real-time balancing of the Grid.

When deployed in the right places with effective operational strategies, energy storage can be very profitable and makes economic sense. In the case of batteries, as they are typically high-performance assets capable of accessing all markets & revenue streams, and they have the potential to dramatically improve profitability and performance in a number of use-cases – particularly “Behind The Meter” where payback of the capital outlay can be recovered within a relatively short timeframe.

Obstacles Still Need to be Removed

There are still a number of challenges for Grid-Connected storage solutions to overcome before they become widely implemented. First and foremost, solutions need to demonstrate an attractive net present value to potential investors and developers. As mentioned above, it’s a technology that’s still in its relative infancy, so most predictions are based on smaller-scale projects. People remain skeptical about whether those results will translate over to larger-scale projects. The costs around implementing such a solution (i.e. buying & installing the system) remain the biggest barrier, despite the cost of batteries falling dramatically (approximately 30% year-on-year). So, whilst the technology is relatively young, it’s hard to truly assess its future performance and value on a Grid-Scale basis.

Another barrier is simply the lack of knowledge or understanding around battery storage. Some people consider it still to be too theoretical, given the relatively low level of industry experience the market currently has. Therefore, there is also uncertainty around the true benefits of storage solutions. Estimating the actual financial and physical benefits is a fairly complex task, and people will likely need to see a consistent performance benefit from this technology before they are convinced. That is why Aggregator partners are essential for this transition to take place as they help add value by providing customers with access to a wider range of markets & savings (i.e. embedded benefits).

Aggregator partners: A Vital Component

Given the complexity around the installation and successful installation of storage facilities, it makes sense that it’s done by experts. Aggregators work closely with both Grid Operators (TSOs and DNOs) and different technologies to provide optimal system operation and make the most of any investment by providing market access and ongoing asset optimisation & management. This is done by calculating battery-specific requirements, forecasting potential errors, and possible application constraints. We do this by creating models from real-world data, to ensure that our models continuously match the requirements and upcoming demands of power consumption. Using real-world data, as opposed to simulations and models, is essential for the success of battery energy storage solutions – hence why an aggregator’s role – like KiWi Power’s – are vital.

At KiWi Power, we have been instrumental in setting up Demand Response programmes in the UK, and we are one of the only providers to offer access to the full suite of Grid-Balancing services. By working closely with System Operators, we are able to analyse the markets, predict peak consumption times, mitigate the risks around battery storage, as well as maximise value for our customers. To find out more about what KiWi Power can do for you, please don’t hesitate to get in touch.