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Could energy storage be the solution for grid constraints?

Grid constraints are a real and growing challenge for organisations looking to decarbonise both their buildings and their fleets. Matthew Lumsden, CEO of Connected Energy, explores how energy storage systems could help to bridge this gap.
Battery energy storage systems use a highly intelligent management system which takes their potential beyond being merely batteries to become the ‘brains’ of smart microgrids

Grid constraints are a real and growing challenge for organisations looking to decarbonise both their buildings and their fleets. Matthew Lumsden, CEO of Connected Energy, explores how energy storage systems could help to bridge this gap.

Across the public and private sectors, ambitious targets are being set to cut carbon emissions, with buildings and vehicles being key areas of focus.

However, in many areas the grid infrastructure is not yet robust enough to support mass adoption of electric vehicles and other high load items – like heat pumps. A lot of commercial premises are on a shared connection and typically have a limit on how much power they can draw down from the grid. For sites on half hourly meters, this is known as a kVA allowance or agreed supply capacity (ASC).

Capacity was not an issue during the early phase of vehicle electrification, as most sites only required a small number of EV charge points, so demand rarely exceeded capacity. However, as we move into a phase of mass adoption of EVs, coupled with the growing use of heat pumps, organisations are increasingly breaching their ASCs. This is because EV charging causes significant spikes in demand, particularly when multiple vehicles are plugged in at the same time.

The latest generation of smart EV chargers do offer load balancing to try and mitigate this, but reducing the rate at which a vehicle’s battery recharges is not always operationally feasible. It’s fine if a pool car needs a top-up charge, but less useful if you are recharging a fleet of delivery vehicles to get them back out on the road.

If your client breaches their kVA, they will incur penalty charges from the DNO. Known as DCP161 notices, these charges can be more than four times their tariff rates.

The conventional solutions to breaching your kVA

For many organisations, cancelling or postponing plans to decarbonise is not an option. Therefore, most discussions with your clients about overcoming this issue will centre on three conventional options. 

Firstly, paying the DNO to increase the ASC to avoid surcharges. However, if there is no spare capacity, the client can only proceed with electrification if they pay the DNO for a connection upgrade. This is increasingly occurring, as a business realises that its neighbour on the same shared connection has already taken the available spare kVA allowance. The problem with this approach is that a DNO upgrade can run to hundreds of thousands of pounds – plus DNOs are facing a deluge of such requests, so there are substantial waiting lists. This makes this doubly unattractive. The third option is to install solar to provide additional on-site power.

An alternative to a DNO upgrade that is worth exploring is battery energy storage systems. These systems can help bridge the power gap on a site in a more timely and often more cost-effective way than upgrading its grid connection. In this scenario, the energy storage system acts as a reservoir, drawing down energy from the grid when it is cheaper or greener, then providing it as required during working hours.

Paired with solar, battery energy storage can even help improve the return on investment by minimising the amount of green energy going to waste. For example, a council could power its offices using solar during the day, then store the excess energy in an energy storage system to help charge its fleet vehicles overnight.

The ‘brain’ behind the microgrid

Battery energy storage systems use a highly intelligent management system which takes their potential beyond being merely batteries to become the ‘brains’ of smart microgrids.

Along with providing local load balancing at scale, an energy storage system can bring together building management systems, on-site renewables and high load items like heat pumps and EV chargers to create integrated infrastructure.

In addition, when renewable electricity is abundant – either from on-site renewables or the grid – the energy storage system can fill up its batteries. However, when the grid experiences spikes in demand, the battery energy storage systems can inject energy back into the grid to help balance the load and smooth out fluctuations.

If the client has sufficient export capacity, battery energy storage systems can also help improve local grid resilience. The system can take part in grid balancing services – the grid operator pays organisations for this; therefore, it creates a revenue stream.

Choosing more sustainable battery energy storage systems

While battery energy storage can therefore help your clients with the next phase of their decarbonisation strategies, it is important to also consider how green the system is in itself.

Most battery energy storage systems use new lithium batteries, which come with their own environmental impact due to the mining of precious metals. Furthermore, a study by the Journal of the Indian Institute of Science found that only 1% of lithium batteries are recycled in Europe and North America, compared to 99% of lead acid batteries. This figure will substantially grow as lithium battery recycling becomes an emerging industry, but at present most batteries are used and then discarded. In fact, the International Energy Agency (IEA) estimates that total global capacity for recycling EV batteries stands at just 180,000t per year. It warns that, by 2040, there could be 1,300 GWh worth of batteries no longer suitable for EV use, far exceeding the recycling industry’s current capabilities.

If sustainability is one of the factors behind your client considering buying a battery energy storage system, then they might prefer to procure one that uses second life batteries rather than creating new ones.

Giving batteries a second life realises more value from the embedded resources and displaces the environmental impact of new battery production. It delays recycling until the industry has developed more efficient and cost-effective processes, while also improving the overall economics for our transition from fossil fuels to EVs.

Research commissioned by Connected Energy from the University of Lancaster has calculated that second life storage units provide a positive carbon benefit of 450t of CO2 emissions for every 1 MWh installed, compared with a first life energy storage unit.

Solving the problem

Battery energy storage systems are increasingly deployed as problem solvers because time is of the essence when it comes to electrification. Councils, NHS Trusts and large corporations have all set milestones and deadlines for decarbonisation. These systems can be the tool to help those organisations to meet their goals – and using second life systems can further strengthen the sustainability of energy storage.

Matthew Lumsden

CEO of Connected Energy

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