The surge in interest in battery storage projects has highlighted a fundamental change in the energy market, as commercially viable systems become progressively more available
The deployment of physical energy storage assets can broadly be separated into two project categories. The first kind of project consists of grid-scale assets in “front of the meter”, which are usually implemented by industry partners on large grid connections. The second type is “behind the meter” batteries which provide an added layer of flexibility to energy consumption patterns of sites already connected to the electricity network – and offer tremendous potential to unlock previously inaccessible revenue streams for industrial and commercial customers.
Both project types require different approaches to select the best battery type and optimise operational strategy and performance over time.
Selecting the optimal battery operating strategy
Battery flexibility can unlock several non-mutually exclusive revenue streams. For example, a battery can be used to reduce site demand (for “behind the meter” projects), or export to Grid (for “front of the meter” opportunities) during peak price periods, reducing costs associated with wholesale, Duos, Triads and Capacity Market levy charges. Outside periods of peak tariffs, batteries can participate in the frequency response market and earn a revenue from National Grid for helping to dynamically balance electricity supply and demand.
The characteristics of Battery Energy Storage Systems (BESS) differ widely between manufacturers, with important factors to consider including capital and operating costs, power rating, energy storage capacity, energy density, cell chemistry, operating temperature, round-trip efficiency, self-discharge, degradation profile and tolerance to various depth of discharge. All these parameters have an influence on the economic viability of the project, so it is important to select the appropriate technical solution for a given project.
Once the different parameters are known, the determination of the most economical operating strategy becomes an optimisation problem in response to an aggregated electricity price signal and a potential frequency response revenue, under several constraints such as the battery technical characteristics and the site operational constraints (existing demand/generation on site if any, and import and export capacity).
The operating strategy might change over time, for example because one component of the price signal has changed, or if there is a new opportunity for flexibility that is more financially viable than current revenue streams. In that case, the optimisation process will be performed again and the operating strategy modified accordingly.