22 November 2022
by Anthony Maguire, Director of Longevity Power
In the drive for carbon neutrality, asset managers are understandably keen to generate as much of their required electricity as possible from onsite renewables such as rooftop and carport solar PV. However, going 100% off-grid is complicated by the fact that the generation profile of a solar PV system is very unlikely to align perfectly with the consumption profile for the building.
Variations in solar system outputs across seasons
While a solar system on a typical warehouse roof can often generate far more electricity than the building would ever need over the course of a year, as the Figure below demonstrates, that same building will still require power from the grid because of the misalignment in generation and consumption profiles.
Daily winter weekday (left) and summer weekday (right) generation & consumption profiles associated with a 1.5 MWp rooftop solar PV system at a typical 30,000 m2 warehouse in the Midlands, UK
While on a typical winter day, the system will rarely export any power to the grid, on a typical summer day, over 70% of the generated power is being exported back to the grid.
When met with this reality, it is only natural to start to wonder whether some form of onsite battery storage system could potentially reduce this grid-export, thereby increasing the extent to which the building can become off-grid. However, as we will explore in this article, there are a few challenges associated with this approach:
Battery Storage is inherently short-term
Firstly, battery storage is intended for the short-term (<4 hours) storage of power. As the Figure demonstrates, while some power could be stored over short durations and used across the rest of the day, this is more of a seasonal issue than a diurnal one. In order to effectively store this power, we would therefore need to use some form of seasonal storage solution, and unfortunately the current options in this area are not yet commercially viable.
Secondly, because the export happens as one large event in the middle of the day, in order to absorb all this excess power, the battery would have to be very large. For instance, in the example above, on a typical weekday in the summer, 6.2 MWh of excess power is generated by the PV system. To give some idea of the space requirements for a battery this large, a Ford plant in Ontario has recently deployed an 8 MWh battery, and it takes up around 5 shipping containers with additional space required for inverters and substations. In our example, even if the site did have the space requirements to allow for such a large battery, there would not be sufficient demand at the site for the battery to fully deploy before it had to start absorbing more excess power from the PV system again. Clearly this is an extreme example, but the Figure below demonstrates that, while an onsite battery can increase onsite consumption by up to 15%, there comes a point of diminishing returns whereby increasing the size of the battery 4-fold yields only a further 8% reduction in grid export.
Exported solar PV power (%) associated with different sized batteries (Total Energy Capacity kWh) from a 1.5 MWp PV system at a 30,000 m2 warehouse asset in the Midlands, UK. For the purposes of this analysis, we have assumed a 2-hour discharge duration.
Poor Return on Investment
Thirdly, there is rarely a business case for behind-the-meter battery storage in Europe. This is both a function of the current price of batteries which, whilst falling, remain relatively high, and the lack of fiscal incentives for landlords to install them. In our example above, installing a 1.5 MWh battery would yield a 17% reduction in grid exports. However, the difference in tariff price for self-consumed power Vs grid exports is not sufficiently high to justify the ~£1 million outlay this would require. While utility scale storage is thriving in the UK, the market for behind-the-meter battery storage is less well developed. Behind-the-meter batteries work best in instances in which consumers are both exposed to the full suite of transmission charges, and have a time-of-use tariff, thus allowing savings to be generated by shifting consumption from high tariff periods to low tariff periods. In addition to this, asset owners must acquire additional revenue from ancillary services such as frequency response which, while potentially lucrative, tend to come with relatively short contract periods, and with great uncertainty around future pricing.
Changing the narrative
For most assets, energy self-sufficiency is unlikely to be a realistic proposition. Instead, the goal should be a more interconnected, decentralised grid supported by local energy communities. Rather than storing all our excess power in a battery, that energy could be shared with nearby assets that might not otherwise be able to support onsite renewable energy generation. To facilitate this evolution, we need a less rigid grid structure. Currently, sharing power between neighbouring buildings is extremely rare and would usually require a private wire arrangement whereby the generating system is physically connected to the point of consumption. This not only adds additional costs to the installation, but also locks the generator into selling to a single consumer, who may not be in situ for the lifetime of the system, which is at least 25 years. The latest edition of the Renewable Energy Directive (RED) raised the prospect of collective self-consumption, whereby multiple off takers can purchase power from a single source of generation via a virtual metering arrangement. This would negate the need for a physical connection, and should allow for more fluid, shorter-term contractual arrangements. However, many member states are yet to have transposed this aspect of the Directive, and for those that have, practical case studies are few and far between.
With the gradual loss of conventional baseload power, battery storage is going to play an increasingly vital role in maintaining grid frequency and balancing short-term supply and demand. Furthermore, as costs come down and countries put in place increasingly favourable markets for behind-the-meter battery storage, it is going to become an increasingly attractive source of revenue for asset owners. However, while it can increase the proportion of generated power that is consumed onsite by 10-20%, assets are unlikely to ever be fully off-grid, nor should that be the target. Instead, we should be pushing for more dynamic, localised electricity grids which allow for the sharing of renewable power between neighbouring load centres.
How can Longevity Power help you?
Longevity Power is currently working with our clients to understand what RED means for their assets, pushing local distribution system operators (DSOs) to provide virtual metering solutions, and developing relationships with neighbouring consumers. For more information on how Longevity Power could help you to do the same, contact firstname.lastname@example.org