Batteries Demystified, Part 2: The Commercial Reality of Battery Storage

So how long is it until we’re all using batteries?

The big hurdle for mass roll-out of battery storage systems currently is cost. Solar photovoltaic (PV) systems significantly reduce greenhouse gas emissions, but for many of our clients, the purchase of a PV system is simply an investment. While PV systems have dropped in price over the past decade, to the point where the initial investment is returned 5 times over the lifespan of the product, batteries have not yet reached a point where they return the investment within their warranted period.

Even the best value battery storage unit on the market costs 37c/kWh considering the total warranted energy production. When you can buy grid electricity for only 25.7c/kWh in a residential scenario, and often not much more at a commercial site, it currently makes little financial sense to invest in a battery system.

Times are changing, however. While electricity tariffs typically increase with time, the prices of batteries are decreasing every year. We would expect to see financially viable battery storage systems within the next 5 years.

Which one will we all buy?

Tesla? Not necessarily. While the marketing for the Powerwall is top notch, there are many battery systems which boast better specifications for the price of the Tesla system, especially when looking at large-scale commercial applications.

Currently there are about 20 commercially ready battery storage solutions on the market. Most of these are targeted to the residential market, with capacities ranging from 1 kWh to 10 kWh: enough to power a moderately sized house at night.

Even more important than the energy storage, however, is the instantaneous output. We’re talking here about power, not just energy. Power is the rate at which energy is delivered, measured in kW not kWh.

Bigger is better… or is it?

When people enquire about batteries, it’s often with the idea that they will be able to disconnect from the grid or at least significantly reduce their dependency on grid electricity. So their ideal battery should not just be big enough capacity-wise (energy) but rated high enough to sustain their peak demand (power).

The reality is that a site’s electricity usage is rarely consistent; in residential cases, high peak use times (typically 5pm to 7pm) are offset by periods of low use (1am to 4am), while commercial sites tend to have high daytime usage. Using a residential example, your household might only use 10 kWh per day from the grid at night, but it might use another 8 kWh just in the period from 5pm to 7pm! So if the battery you’ve chosen only has an instantaneous output of 2 kW, then you’d only be able to draw 4 kWh in that 2-hour period. In other words, you’d still need to get half your electricity during that period from the grid.

The same occurs in commercial settings, just on a larger scale and with a different timeframe. Your PV system may produce excess electricity between 10am and 3pm (if it’s oversized for your needs) and a battery system should in theory allow you to use that electricity at a later period, avoiding export to the grid. But it’s not quite that simple if your site’s load profile is very heavy during dusk or dawn periods, as that will probably exceed the maximum output of the battery systems, relying on the grid to provide the rest – just like in our residential example.

Storage units like batteries can be used in two distinct ways: either to capture the small amount of electricity that would usually be wasted (exported to the grid) on a correctly-sized PV system, or the PV system can be significantly oversized to charge the batteries during daylight hours so that you can use the energy later at night – assuming your battery has a high enough instantaneous output.

Selecting the right battery system for your site requires detailed analysis of your electricity consumption profile and the PV system’s energy generation profile. Let’s look into some possible daily profiles.

Scenario 1: Batteries for Energy Recovery

In the example above, only a small battery system would be needed to capture the energy that would otherwise be exported to the grid. This is an energy recovery system which would be designed to optimise an existing PV installation.

For this kind of system, a battery with a high cycle life would be ideal as the PV generation may not actually be as smooth as the above graph – that is, the battery would experience multiple cycles in a day as the “PV Generation” line crosses the “AC Load” line on multiple occasions. Also, an energy recovery system like this only requires a small capacity battery but may require a high instantaneous output if the site profile warrants it.

Scenario 2: Batteries for an Oversized System

If a PV system has been oversized (perhaps in anticipation of using a battery storage system to save any extra energy for later), the profile is more likely to look like this:

In the situation above, the capacity of a battery would need to be much higher to store the large amount of additional power during peak PV generation times. With this load profile having moderate night-time use, the battery’s instantaneous output would not need to be very high.

In addition to these scenarios, some sites also have demand-based tariffs, which some battery storage systems can offset with their own inbuilt demand management software.

So what should we do right now?

If you are not grid-connected: Batteries are likely to be a great option for you.

If you are grid-connected: Unfortunately, nothing. Not just yet. When the warranted output of batteries approaches the 20c/kWh mark (rather than 37c/kWh at the moment) then detailed analysis can be completed to determine the right arrangement for you. Until then, the business case doesn’t quite stack up for battery systems. So keep it on the cards for your forward planning, but don’t get your wallet out yet if you’re looking to save money!

(It’s also worth mentioning that if you wanted to reduce your carbon footprint through a lithium-ion battery system, you might want to consider the environmental impacts of obtaining that lithium. The jury is still out on that one… but that’s a discussion for another time!)