Energy Storage

ENERGY PLANNING IN A CRISIS: MITIGATING A WORST-CASE SCENARIO FOR UK BUSINESS

Security, affordability, and sustainability of supply. The Energy Trilemma is much commented on and highly topical. As Chief Commercial Officer for Powerstar, who design and deliver resilient energy management solutions, Alastair Morris offers a perspective on the current climate and highlights some of the technology helping companies to manage energy insecurity in a time of soaring prices.

Nearly 80% of UK businesses currently consider rising energy prices to be their biggest concern yet they are still, at the time of writing, without any detail on governmental support packages, ahead of a bleak winter. In terms of the Trilemma, energy affordability is one of the most pressing issues facing the UK economy, so it is unsurprising that businesses are taking matters into their own hands – with investment in Battery Energy Storage Systems (BESS) a case in point.

Natural gas prices are currently responsible for about 80 percent of the massive increases in the wholesale electricity prices. While the UK is still overly reliant on gas generation – particularly so, if we are looking to Net Zero targets for full decarbonising of our energy supply – in 2020 gas accounted for less than 40 percent of our total power generation. In this context, the dramatic rise in wholesale electricity prices doesn’t make sense, and the UK’s Review of Electricity Markets Arrangements proposals, which outline plans to minimise exposure to the wholesale gas market, highlight this lack of logic. Continued linking of power supply to gas prices, as our energy sector continues progress towards full decarbonisation, is impractical and untenable. Decoupling the two – the most significant proposal tabled in the Review – would be a huge shake-up to the UK’s energy market. For businesses already taking a proactive approach to managing their energy resilience through investment in BESS, such as shift in policy presents opportunities.

In the short- to medium-term, the National Grid is looking to incentivise end users who can adapt and manage electricity demands with flexibility, for example by minimising demand during peak times, and this is reflected in proposals from BEIS to offer lower cost electricity when demand is low and when renewable generation is good, fostering a flexible approach and a focus on cheaper, greener energy.

The successful decoupling of electricity and gas prices will require focused flexibility, in overarching policy and strategy terms – and, for businesses looking to their own energy management, flexibility is perhaps the greatest attribute of a BESS. While renewables are inherently inflexible, the continued shift to greener energy may well see short term variance in electricity costs, even when decoupled from gas prices. BESS technology allows companies to mitigate this volatility, by purchasing and storing electricity when prices are lower to then use at peak times, helping to manage budgets when costs are fluctuating, as well as maintaining a power reserve to protect the site during instances of disruption to supply.

Another compelling advantage for BESS users in the current climate is the potential to generate income through storage by engaging with the UK’s Capacity Market, generating new revenue while helping the grid to manage supply and demand. Firm Frequency Response (FFR) contracts can offer relatively high income potential but, for a company to engage successfully with this scheme, a battery system is critical, due to the fast response times that are contractually required. Where Demand Side Response (DSR) contracts can be put in place, battery storage technology enables ends users to fulfil such contracts by turning up, turning down or offsetting demand in real-time and helping the grid to smooth out peaks and troughs in overall demand across the UK. A business that invests in BESS as part of its energy management strategy can also capitalise on the price fluctuations that are so significant in a volatile energy market through storing power and then selling surplus power when demand is greatest – and prices are highest. Similarly, where companies generate their own power on site, for example through solar, any excess can be stored and sold under the same mechanism.

The Energy Trilemma will be globally problematic for the foreseeable future. At a time when energy costs are the most pressing issue facing UK business, the case for investment in BESS is compelling, to address affordability and security of supply while helping support resilient economic survival in a turbulent climate.

For more information contact: www.powerstar.com info@powerstar.com T: 0333 230 1327