Keep the power on: Battery energy storage systems are a valuable investment

Solar power and battery energy storage systems are great options for your business’s future energy mix, says Absa

25 November 2021 - 06:26
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Image: Supplied/Absa

Eskom’s ageing fleet of power stations has plagued the power utility and the country for years.

The sharp increase in the number of load-shedding days since 2018 (see figure 1) highlights the challenges that Eskom faces: a constrained power system with an old, unreliable and poorly maintained generation fleet as well as the need for new generation capacity.

As a result, the risk of load-shedding — and unplanned power outages — will remain until substantial new power capacity is invested in. 

These risks are compounded by the steep increases in electricity tariffs by Eskom and municipalities.

Figure 1: The increase in the number of load-shedding days since 2018. Source: Absa RBB Sectors. Picture: SUPPLIED/ABSA
Figure 1: The increase in the number of load-shedding days since 2018. Source: Absa RBB Sectors. Picture: SUPPLIED/ABSA

That is why a growing number of business owners are exploring the option of installing renewable energy technologies such as solar photovoltaic (PV) systems to power their daily operations.

Absa has also seen a growing trend of businesses looking at investing in battery energy storage systems (BESS) to complement such systems.

The decline in prices of the batteries required to run these systems, in this case lithium-ion, as well as their benefits in times of load-shedding, have made for a stronger business case.

WATCH | How a local business was able to mitigate the risks of load-shedding, unplanned power outages and increasing electricity costs with a renewable energy mix of solar PV and BESS.

As a power storage system, BESS are practical because they can be used in many different applications independent of location in contrast to, for example, pumped hydro storage.

The main uses for BESS are grouped into two categories. First, they can be used in stationary applications such as providing backup power when there is an outage. Second, they can be used in mobile applications such as in portable machinery, electric vehicles and cellphones. 

The type of BESS application needs to be aligned with the right BESS technology to maximise value for business owners.

Here are three examples of how businesses can capitalise on their investment in BESS:

Increased PV energy self-consumption

The challenge with solar PV systems is that resource availability (in other words sunshine) does not always coincide with demand.

Generating more solar power than is needed is problematic as businesses are often not allowed to supply this excess PV energy back to power utilities. BESS allow businesses to make the most of this excess PV energy by saving it for later use (see figure 2).

Figure 2: PV energy self-consumption. Source: Redelectrical.co.uk Picture: SUPPLIED/ABSA
Figure 2: PV energy self-consumption. Source: Redelectrical.co.uk Picture: SUPPLIED/ABSA

Peak shaving

As the demand for energy increases, so too does the cost of delivering this energy.

Often the country’s demand is so high that “peaking generation” units such as gas turbines need to be used to meet demand. Because of the costs of running these “peaking generation” units, electricity tariffs during these “peak” times are higher than during “off-peak” times. 

As shown in figure 3, shaving this peak — through businesses discharging their energy stored in batteries to supply their peak needs — can be beneficial to both the power utility (which saves on expensive fuel) and the end customer (who saves on monthly electricity costs).

Figure 3: Peak shaving application for BESS. Source: EE Publishers. Picture: SUPPLIED/ABSA
Figure 3: Peak shaving application for BESS. Source: EE Publishers. Picture: SUPPLIED/ABSA

Arbitrage

The value of energy, as with any commodity, is inherently linked to demand: the higher the demand, the higher the price.

This pattern can be capitalised on by charging BESS during low-demand periods at a low cost and selling the stored energy at a competitive price during high-demand periods.

This is illustrated in figure 4 below. The maroon zone indicates low energy prices and the red zone indicates high energy prices. The difference between the two gives the value that can be obtained.

Figure 4: Arbitrage cycle for BESS demonstrating a value extraction opportunity. Reconstructed from energystorageconsultants.com Picture: SUPPLIED/ABSA
Figure 4: Arbitrage cycle for BESS demonstrating a value extraction opportunity. Reconstructed from energystorageconsultants.com Picture: SUPPLIED/ABSA

For your business’s future energy mix, solar PV and BESS are likely to be the most viable options.

Given the declining costs of the technology and increasing energy costs, our abundant sunlight availability and the long lifespan of the technology, the business case is increasingly attractive.

This article was paid for by Absa.

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