DNV GL-led consortium to develop framework for business cases for community battery storage
A new DNV GL-led consortium, including partners Alfen – manufacturer and end-to-end system integrator of Battery Energy Storage Systems (BESS) and Peeks – a commercial aggregator for flexibility in the energy system, will provide insight in the social and economic feasibility of community battery systems. One of the results of this partnership includes the investigation of the parameters for a successful community energy storage business case. These parameters will be used to develop a framework for widespread implementation of community storage. This partnership enables a multi-stakeholder approach which is required for an optimal business case, whereas most storage projects focus on a single stakeholder with few benefits.
Community battery systems can, from a technology point of view, help network operators adjust their electricity system and prepare for a growing share of renewable energy in the energy mix. However, a solid business case for the implementation of such community storage systems isn’t there yet. This is due to regulatory restrictions such as the grid code that prescribes that grid operators may not interfere in the commercial marketplace and therefore cannot benefit from revenue streams that are needed to make the community battery profitable. Besides that, there is also a lack of familiarity with the potential of current storage technologies and the opportunities that collaboration can bring. Collaborations enable more benefits to be stacked, leading to higher revenues and an improved business case without additional investments.
Everyone pays a fee to the grid operator to use the infrastructure. Local authorities benefit from consumers and businesses having a reliable power supply without inconvenience of ongoing maintenance and grid reinforcement. Grid operators are responsible for a stable and reliable power supply and must socialize the costs involved and thus pass on to the customers.
Both the grid operator and the energy user can benefit from energy storage in the low voltage grid, where a storage system keeps the cost of network investments in various cases lower than traditional grid reinforcement. The grid code, however, makes it complex. It does not allow a grid operator to carry out commercial activities. For a storage system to provide system services and avoid grid reinforcement, it will likely be deployed for a few hours, for instance approximately 10% of the year. The remaining 90% of the year, the system is on standby. The new multi-stakeholder approach would allow a party to be commercially active and to deploy the storage system for the rest of the time for trade on the energy market (APX, primary reserve, secondary reserve). This structure allows both the grid operator and the consumer to benefit, while also increasing the amount of renewables into the grid.
Allowing commercial activities is essential to make community storage a good investment. Stakeholders are expected to benefit from lower network operation and management costs and build a more robust network for the future. An additional benefit is that storage does not bring much operational costs (only a small efficiency loss) and simultaneously creates the possibility to integrate more renewable energy in the built environment, helping to contribute to a sustainable future.
This new consortium will fine-tune the business case in consultation with grid operators, specifically focusing on what’s required for an agreement between the grid operators and the commercial party using distribution grid services from the storage system. The major result from the project will be a business model framework and the accelerating adoption of community storage projects.
The consortium expects to publish the results and the framework in September 2017.