Running on Batteries – Behind-the-Meter solutions for energy users
Battery installations behind-the-meter can help business minimise energy costs and boost green credentials. Big headlines in the industry have attracted attention towards batteries, but what is a behind-the-meter battery solution and can it help your business manage its energy needs?
The price and provenance of energy is more than ever a source of concern for businesses. Getting your energy arrangements right can have considerable implications for the price you pay, and there is an increased focus (and, indeed, pressure) for energy users to increase efficiency, reduce usage and boost their green credentials.
One solution is to look at "behind-the-meter" arrangements. "Behind-the-meter" means anything on the customer side of their electricity meter. The purpose of all behind-the-meter solutions is to reduce the amount of power that runs from the electricity grid through that meter to the customer, thereby reducing power supply costs. This can include steps taken to reduce energy usage – insulation, energy efficient lighting etc – or generation of their own electricity, for example with rooftop solar PV panels.
Battery storage is one such solution. These installations are larger versions of familiar technologies such as lithium-ion or lead-acid batteries, and can be charged by power from the grid – the electricity can then be used later. Batteries at this scale can potentially store enough electricity to power a whole building for a significant period.
Battery installations have received significant attention from the media over the past 12 months, with high-profile market participants making big strides – examples include the Tesla Gigafactory South Australia Mega-Battery or the San Diego Gas & Electric Escondido installation. This raised profile has helped forward-thinking businesses become aware of the advantages of utilising behind-the-meter battery technology.
Examples of some of the advantages of using a battery are:
Arbitrage – time-shifting the energy taken from the electricity grid to coincide with cheaper periods in the charging cycle – for example, charging up the battery overnight (when electricity prices are lower) to use that power when the energy prices are at their highest the following day.
Resilience – utilising the battery alongside other energy resilience solutions (such as a generator) to maintain an 'uninterruptible' power supply, drawing power from the battery if the power from the grid is disrupted.
Utilising Green Energy – where a business has its own solar or wind power (which may not be generating when the power from them is needed most) the battery can help shift the use of that power to a more useful time, minimising the need to import electricity from external suppliers at more expensive rates.
Triad avoidance and other benefits may also be available, allowing a business to further minimise its costs or potentially even earn a supplementary income stream from their behind-the-meter battery.
Manufacturers, hospitality providers, health care services, leisure centers and other users of large amounts of power - for whom energy is both business critical and a major expense - are well placed to obtain significant benefits from installing a behind-the-meter battery solution. Predictable patterns of high demand for energy (usually coinciding with high-cost peak times) mean that arbitrage can have a considerable impact on costs. If you are looking at a behind-the-meter battery solution some initial considerations are as follows:
Ownership vs Benefit Sharing models
There are several models for delivering behind-the-meter battery solutions, including a business owning its own battery or granting a lease of part of their site to a battery operator to install a battery and sharing the benefits. The shared benefits model means that the business can either benefit solely from reduced energy bills, or can agree to share other benefits with the battery operator. Both models have advantages (and disadvantages) which will be explored in more detail in a forthcoming article.
A business will need to consider whether there are appropriate planning consents in place for a battery. This will include the use class of the proposed site, as well as permissions for constructing the installation. If the proposed site is already in Use Class B2 (General Industrial), a battery may be a 'Permitted Development' (although this position is not entirely clear-cut). However, you (or the battery operator) may wish to apply for a Certificate of Lawful Development to satisfy any funders, or future buyers.
Limitations of Liability
Ensuring that the limitations of liability in the contractual documents appropriately reflect the risk of any downtime and losses caused by failure of the technology or installation is essential. For major energy consumers, the losses to the business for an interrupted power supply may far exceed the monetary benefits or savings from the battery itself.
Michelmores' Energy Team has extensive experience advising on energy projects including behind-the-meter batteries, and understand the drivers and needs of businesses with high energy use when considering behind-the-meter solutions.