Alastair Morris, Chief Commercial Officer at Powerstar, considers how Battery Energy Storage (BESS) technology can help companies to profitably manage energy security and net zero targets in volatile times.
Progress is lagging behind ambition, and it is a significant issue in the transition to net zero, as highlighted in the latest Progress Report from the Climate Change Committee (CCC). Couple these policy problems with an energy crisis, and the difficulty of balancing the agendas of energy security and sustainability is clear.
In his foreword to the CCC’s latest Progress Report, Lord Deben was explicit, observing that, despite the UK being a world leader for net zero ambitions, implementation is severely lacking across key themes and sectors. He pinpoints “sharply rising fuel costs (which) should have given added impetus to improving energy efficiency, yet the necessary programmes are not in place…” With targets of 95% low-carbon electricity generation by 2030 and a fully decarbonised sector by 2035, the CCC is now focused on scrutinising delivery of these legally binding goals.
While policy is vague on implementation, UK companies are increasingly taking it into their own hands to address the energy crisis – the spiralling costs and the insecurity of supply – through investment in Battery Energy Storage (BESS). And, alongside these commercially pressing imperatives, BESS technology is helping companies work towards their own net zero commitments, harnessing on-site renewable power generation and reducing carbon emissions.
Considering long-term energy management strategies, the current energy crisis is not a one-off, and energy prices and supplies will be volatile for the foreseeable future. The transition to renewables can’t be a simple switch from coal and gas to solar and wind. Rather, it means changing energy transmission, distribution and energy storage.
Given the infrastructure implications, capitalising on the opportunities of a shift to renewables while pre-empting supply issues will be a balancing act for many years to come. The CCC Progress Report points to some positives – namely, electric car sales and renewable electricity deployment. However, renewable energy is still inflexible and potentially unstable, while electricity demands are growing exponentially in a data-driven world, and with the significant demands of EV charging.
In this context, the energy security and storage capabilities of a BESS make it a compelling technology choice for companies needing to protect digital assets, maintain an undisrupted workflow, and work towards their own net zero targets.
Why opt for battery energy storage?
In terms of power resilience, the benefits of a BESS in comparison to a traditional uninterruptible power supply are well-established. Although a UPS will protect specific equipment during any interruption to power supply, the unit remains idle most of the time, with a loss of capacity – generally between 10 and 15% – meaning continual costs and the associated unnecessary carbon emissions.
In comparison, a BESS offers site-wide protection, with an energy loss of around 1%. In commercial terms, the cheapest unit of energy is the one you don’t use. It’s also the greenest.
BESS technology offers the flexibility to use stored electricity as and when required. Using the appropriate control software this process can be automated, with AI determining what generation and usage to prioritise.
The commercial application of BESS for Behind the Meter (BtM) scenarios provides an integrated energy management and microgrid solution for the greater flexibility and control of energy usage that are vital during an energy crisis.
In addition to resilience for security of supply during any power disruption, energy storage allows companies to shift the times when grid-supplied electricity is used and provides the capability to buffer large loads so that these can be more easily and more cheaply connected. This is particularly pertinent while EV charging remains a significant issue, as highlighted by the CCC Report.
How policy is falling behind decarbonisation
Security of supply and sustainability are two arms of the Energy Trilemma, and the UK ranks highly – currently fourth – on the World Energy Council’s latest Energy Trilemma Index. However, the third arm of the Trilemma – energy affordability – is the UK’s Achilles’ heel. It is also the aspect which brings together the agendas of security and sustainability in the current economic landscape, demonstrating what are, arguably, the greatest benefits of BESS as a means for companies to balance competing priorities.
The UK’s Review of Electricity Markets Arrangements proposals, outlining plans to minimise exposure to wholesale natural gas prices, is highly relevant here. Linking power supply to gas prices is illogical and untenable in an increasingly decarbonised energy sector and decoupling the two – as tabled in the proposals – would be the biggest shakeup of the UK electricity market this century.
Policy falling behind ambition and implementation is problematic – but solving the UK’s baseload generation issues won’t be quickly resolved by nuclear technology, where the timeframe could span decades.
Successful decoupling of gas and energy prices would require flexibility, and this approach is evident in policy terms, including National Grid’s proposals to incentivise end-users to minimise electricity demand during peak times, with new proposals from BEIS to offer cheaper electricity rates when demand is low and renewable generation is good.
Using BESS for financial gain
For BESS users, there are opportunities – income generation through the UK’s Capacity Market, as well as potential financial savings for companies that can take advantage of fluctuating energy costs through storage. As the UK’s energy generation moves further to renewables, these are still inherently inflexible and even though electricity prices would seem likely to reduce if decoupled from gas prices, this inflexibility may well mean short-term variance in electricity costs.
BESS technology allows companies to mitigate against such volatility by purchasing and storing electricity when prices are lower to then be used at peak times when prices are higher – maintaining power resilience in cases of disruption and assisting with budgeting in times of great cost fluctuations.
Perhaps the most financially compelling opportunity for BESS users, though, is the ability to take advantage of income generation – where battery technology really comes into its own.
Businesses who can engage with National Grid on demand side response (DSR) are operating at the forefront of the shift away from the old model of centralised energy dispatch and towards more distributed power generation.
DSR works for the grid as a cost-effective mechanism to manage supply and demand. For BESS users, there are revenue-generating opportunities either through a direct contract with the grid, with the local distribution network operator or, at a smaller scale, via an aggregator service.
In essence, battery storage enables end-users to fulfil DSR contract obligations by turning up, turning down or offsetting their own demand in real-time, helping the grid to smooth out peaks and troughs in overall demand. With a BESS, companies can secure a better price for surplus power by storing and selling when demand peaks and prices are highest.
As a mechanism to ensure supply meets demand, the Capacity Market has many critics, not least because of its descending clock format which, effectively, has subsidised fossil fuel generation – the lowest bidders at auction – to stay on standby. However, the Electricity Market Review includes a proposal to use more low carbon flexibility technologies to provide for the Capacity Market, which may well see further incentives for BESS users and new opportunities as government policy develops.
It is in this context – an energy crisis at the time when net zero targets are most pressing – that resilient power generation and storage capabilities provide a compelling case for companies to make profitable investment in BESS technology.
With a BESS, companies can secure a better price for surplus power by storing and selling when demand peaks and prices are highest.
