Start Clearing Space for a Battery

Lord Redesdale will chair a seminar session on the topic of ‘Balancing Mechanism Units: the Main Income Stream for Battery Storage’ at EMEX from 13:10–13:40 on 22 November in the ‘Renewables, Supply and Storage’ theatre.

In five years, most large buildings will have a battery on site. However, as an energy manager, the battery may not be either under your control or owned by your organisation. It also will be metered separately and charge and discharge without you even knowing about it.  

Very soon you could have batteries ranging from 100KW to 2MW on all your sites.  Why should this be exciting? Well the answer is that the battery will not only supply power in the event of a blackout, but will also earn you oodles of money.  At the moment, batteries, though they could be installed tomorrow, often fail to show a sufficient economic return to install.

This situation is about to change because of what batteries are used to achieve. Batteries up to now have been seen in two roles – emergency power and frequency response; the game changer is the use of batteries to level the national grid. Instead of big centralised power generation being built, imagine batteries based in thousands of sites such as hospitals, schools and office blocks, that could be used to reduce demand equivalent to a large power station. The value of this demand reduction at peak is immense and, with a few simple changes to the electricity code, could be realised through Balancing Mechanism Units (BMUs). So what is the problem and how will batteries address it?

There is already the power on the grid to charge the batteries but it will need careful management to allow charging off peak to discharge at peak. At present the grid works on a model that has changed little since the 1930’s. Enormous amounts of power are produced in big coal, nuclear and gas plants. The demands of the grid are met through excess generation. This is a simple, if enormously wasteful, process that worked when coal and gas was cheap, and carbon emissions ignored, but became a real problem when the UK retired a large part of the generating fleet without replacing base-load generation.

The UK now has a shortfall in generating capacity; we have been building a lot of renewable power, excellent for low carbon generation but unfortunately is often intermittent in nature. Here is where batteries come in. We generate to meet peak demand which means that due to inflexibility of power generation at off peak periods, really large amounts are wasted.  We could store that power in batteries at sites that could range from domestic to industrial.

The batteries would be managed remotely which means that an insignificant demand reduction can be scaled through all the batteries on the network to deliver impressive levels of demand reduction. Here is where the money comes in; the grid pays through the nose for carbon intensive diesel generation or spinning reserve to meet shortfalls in peak demand. Instead of generating more power why not pay the same amount for the same amount of reduction? Batteries sited in areas of grid stress could be paid more for demand reduction, which would give a fiscal reason to pick where the batteries are targeted.

Here is where you as an energy manager can turn batteries into a profit centre. Battery operators could pay you to site batteries in your buildings. The batteries would not impose any limits on how much energy you can draw at any time because if the battery is discharged you just go back to drawing from the grid. However, at peak periods the grid will pay a significant amount for BMUs – say from around £50 to a record £1,500 a MWh. You could purchase the batteries yourself or more likely rent your space to a third party for either lower energy bills or straight cash which would be an off-balance sheet solution.

The changes to make this happen are simple, instead of batteries being a behind the meter solution, the meters will be attached to the battery. This allows the discharge of the battery to be measured and earn BMUs. The caveat is that the batteries will only be allowed to discharge at site rather than exporting to grid. This is because any discharge can be guaranteed as demand reduction and it will cut down on the cost of upgrading the grid.

The mass roll out of batteries could be here in just six months, with some changes to the code. The market being driven by financial incentives rather than subsidies will mean that the 1MW battery on your site, rather than an exciting new gadget, will be so common it will become the ignored box, which is perhaps the definition of a quiet revolution.