Blog: Five compelling reasons your company could make huge savings with battery energy storage systems
In the second of his blog series Nigel Dent, Connected Energy Head of Sales, outlines five compelling reasons your company could make huge savings with battery energy storage systems.
Over the last decade, research, innovation and investment in lithium-ion batteries has led to an 85% decline in cost, offering up electric vehicles (EVs) and battery energy storage systems (BESS) as viable options for both commercial and domestic use for the first time.
For those business owners in the commercial sector whose electricity bills exceed £50,000 per annum, it’s worth considering the range of benefits – both environmental and financial – to be gained from using a BESS. These systems not only reduce electricity costs but provide an excellent return on investment via grid connection and as an energy sales asset.
The Treasury Office published new information in March this year, on the ‘super tax deduction’ which is estimated to impact over 2.8 million companies, which could claim the tax relief. Between 1st April 2021 until 31st March 2023, companies investing in qualifying new plant and machinery assets will be able to claim a 130% super-deduction capital allowance and 50% first-year allowance (FYA) for qualifying special rate assets
Sidestep peak demand charges
Electricity demand is never straight and level, and peaks in demand can put pressure not only on the national grid, but also on businesses that consume a lot of energy as they pay a much higher rate for peak times. BESS allows businesses to avoid or at least heavily reduce these costs by combining access to the grid at low peak / low-cost times with stored energy during peak tariff periods. This ‘demand charge avoidance’ or ‘peak shaving’ can also be useful for businesses operating with grids overseas, where peak energy use incurs significant additional penalties on top of peak tariffs, or there are many customers reliant on the grid within a local area, i.e., at manufacturing / industrial sites.
Build a local microgrid
Microgrids are smaller local grids which are designed for use with no/little interaction with larger electricity grids, and for storage, batteries offer a greener alternative to previously utilised diesel generators. The falling costs of solar panels make a local, or company microgrid a more attractive option to businesses who want to move towards their own net zero goals by generating their own power – at least in part – from a renewable source. Additional benefits include use in remote locations, such as offshore sites, and reducing pressure on budgets which would otherwise have to allow for fluctuating energy prices.
In short, energy arbitrage is modelled on ‘buy low, sell high’ and involves either purchasing or storing generated power/electricity when prices are low and later selling it when the national grid is under pressure and prices are high. Here in the UK, energy trading regulations allow for bilateral power purchase agreements (PPAs). In practice, this means that is possible to see a BESS store and trade power to different grids and services at the same time – perhaps supplying a PPA and selling back to the national grid within the same 24-hour period. Energy arbitrage is often employed alongside other BESS revenue streams but is a positive step towards low carbon grid systems, even without the financial benefits.
BESS offers frequency response; in this process, the battery cells measure the frequency of the grid, and when the frequency dips below a pre-set threshold, the battery provides an instant supply of power to stabilise the grid. This system is extremely reliable and can be configured to take over a power supply within a fraction of a second, making it an attractive choice for businesses and industries which rely on uninterrupted power, such as for manufacturing, transport, or healthcare provision. Additionally, this removes the need to keep fossil fuelled back up generators running ‘just in case’ which contributes not only to emissions, but also higher energy prices from the grid.
I’m interested, what next?
Get in touch, we’d be happy to discuss your needs in an initial session before potentially offering a free desktop feasibility study to look at how energy storage could support your organisation.
We recommend that you speak to your own accountancy and/or finance functions to ensure your organisation could benefit from the super deduction scheme.