What exactly are energy storage systems? Are they the Achilles heel of the energy transition, as some media spin doctors have been peddling for years?Or are they "the strategic key element for the general application of a given energy source", as Herrmann Scheer, recipient of the Alternative Nobel Prize, postulated in 2006?
Market evolution in recent years
One thing is certain: although opinions on energy storage systems differ widely, there is an equally wide range of technical applications and solutions. The demand for customized, cost-effective energy storage systems is increasing, and we are only at the beginning of an unstoppable development, prompted by climate protection commitments, the expansion of renewables and the transformation of the transport sector.
At the same time, following major announcements by car manufacturers, billions are being invested in improving today’s battery and storage technologies. This has already led to a 60% price reduction for stationary battery storage systems over the last five years (on a system level) andresulted in the installation of more than 125,000 solar home storage units in Germany alone.
In recent years, the constantly growing market and the prospect of a large number of "discarded" batteries from the e-mobility sector have also brought about a plethora of battery storage system suppliers for commercial and industrial (C&I) applications. Two of the key issues are possible applications and the resulting business and revenue models for C&I applications, and the identification of these system integrators as well as differentiation and comparison against and with each other.
In this article we present selected results of our battery storage guide published earlier this year.
Saving of electricity costs as the main driver
Since the electricity generation costs from solar PV are now below the price of electricity from the public grid, there is a motivation to use battery storage to increase self-consumption. In private applications this has already been the case for many years. In commercial and industrial applications, however, the uptake has so far been limited to situations with particularly favorable conditions, due to the fact that companies tend to pay less for their electricity. However, since the prices of battery storage systems are falling rapidly, there is growing interest in such systems in the commercial and industrial sectors.
In addition to the prospect of increasing self-sufficiency offered by solar PV systems, saving electricity costs is a major driver and motivation to invest in a battery storage system. The savings result either from reduced electricity purchases or from savings in grid fees (or both). Figure 1 shows that grid fees, along with government levies and charges, are now one of the largest cost factors in the commercial sector in Germany. This development is currently continuing unabated.
Saving of grid fees as most attractive use case for C&I battery storage
Grid fees have been rising for years. This trend can be counteracted with battery storage facilities, because storage facilities in commerce and industry can help to reduce the demand on the grid. In return, customers are rewarded with lower grid fees. This is particularly interesting for large customers for whom energy consumption and peak demand is recorded and billed separately. Electricity storage devices can be used to influence the peak demand. Customers with a registered power measurement arrangement (RLM) also have information about their load profile, so that a storage system can be customized to optimize performance (see Figure 2).
The grid fees depend on the location of the power extraction from the grid. In Germany there are around 900 local distribution network operators with individual price and fee structures. Prices and their development fluctuate strongly depending on the region. On average, they have been rising constantly for years: between 2011 and 2017 by around 4% per year for household and commercial customers and by around 8% per year for industrial companies.
Numerous system integrators and vendors
In the extended survey carried out in the context of the battery storage guide for C&I applications, 48 providers of battery storage systems and components were identified. This survey comprised a detailed questionnaire on companies, services, products & characteristics, prices and payment terms.
One of the key findings of the system integrators analysis was that there are big differences in quality, features, services offered and (consequently) prices. Despite being an early market, we are already seeing significant competition. So, it really is helpful and advisable when obtaining quotes and having the intention of entering the market, to carefully compare the different solutions and quotations, and not (only) focusing on initial investment cost, which could be very misleading.
Summary and outlook
(Grid-connected) energy storage systems for C&I applications are currently economical mainly for Primary Frequency Control (PFC) and reduction of grid fees. In some cases, commercial and industrial companies can achieve payback periods for electricity storage facilities of just a few years. However, the technical and regulatory framework conditions have a very strong influence on potential revenues, and it is therefore essential to monitor them closely. The storage of solar electricity, on the other hand, is a relatively independent business model and is becoming more attractive every year. In a few years, Germany and other countries will experience a real breakthrough here, certainly when the first PV systems lose their feed-in tariffs, if not before.
More info: www.batterystorageguide.com
 Federal Network Agency, Monitoring Report 2017