Future-proofing renewable energy assets with battery storage

With more businesses capitalising on the benefits of renewable energy, Stephan Marty of  Wattstor looks at how independent energy generators can future-proof their onsite assets. 

Carbon dioxide emissions from the business sector were estimated to be 61.9 Mt in 2022. This accounted for around 18.7% of all carbon dioxide emissions that year, according to the UK government’s greenhouse gas emissions report. Therefore, commercial and industrial businesses will need to change the way they procure energy and implement strategies to reduce their carbon emissions if we are to achieve the country’s net zero targets by 2050. 

The world’s commitment to reducing CO₂ emissions to fight climate change has fuelled a surge in renewable energy, particularly wind and solar power. One way companies are taking action is by investing in onsite renewable generation. Reduced energy costs and greater resilience against fossil fuel price volatility have driven the adoption of onsite generation in recent years, and it is expected that more still will invest in renewable energy in the future.

Benefits of onsite generation

Businesses can benefit from onsite generation in several ways. After the initial investment has been paid, renewable energy generation assets have extremely low costs for producing electricity. Unlike fossil fuels such as gas or coal, there are no additional charges to source sunshine or wind. Once the build-out is installed, it can generate electricity at almost no expense, meaning that even at very low electricity prices it is still profitable to run. Additional savings can be achieved by avoiding the costs connected with purchasing power from the grid, such as transmission and distribution fees, as well as The Climate Change Levy.

Businesses can further benefit from an improved reputation as more consumers are looking for corporations to demonstrate a more conscientious stance – whether that be socially, environmentally or both. Making an active decision to switch to renewable energy now will help build a good reputation with suppliers and customers.

Challenges for renewable energy

It’s no surprise that 25% of businesses in the UK are investing in onsite power generation, considering all the benefits renewable energy can provide. However, as more companies follow suit and bring their renewable energy assets online, energy managers should consider any obstacles that may arise in the future.

At grid level, one potential challenge with renewable electricity generation is that it can’t be stored without the use of battery storage. Without it, the amount of electricity being generated and used needs to be balanced on a second-by-second basis. Businesses often have a PPA agreement to export any excess power back to the market or a local business to support demand.

However, with an increased number of independent power generators exporting surplus power, the volatility of electricity prices has also increased over the past few years. We’re already seeing increased periods in Europe where the wholesale price of electricity is either zero or negative. This is a phenomenon known as ‘solar price cannibalisation’.

High volume, lower demand 

Typically, solar price cannibalisation occurs during periods of high sunshine and wind, when renewable energy sources are abundant and electricity demand is low.

If electricity prices are zero or negative during these times, any electricity that is exported to the market and not locked into long-term PPAs has no value. In the future, this could mean securing a premium PPA could prove more difficult. 

Solar price cannibalisation could also make businesses less motivated to invest in onsite generation. If periods of zero electricity prices become more common, organisations may prioritise purchasing cheap or even free grid power at certain times, rather than focusing their investment on their renewable generation assets. 

The movement towards onsite power generation has the power to reshape how companies think about and manage their energy. But as more organisations follow suit and competition grows, how can independent generators remain profitable and market resilient?

Investing in battery storage 

There are relatively simple ways to avoid the consequences of solar price cannibalisation. One way to future-proof renewable energy build-outs and maximise return on investment is to add battery energy storage. This means that the energy generated onsite can be stored and used at a later time to power operations, heat or cool business premises, charge EVs and more – rather than be sold to the market for little or no money.

Battery storage also allows businesses to store electricity for later use when simultaneous consumption and generation are not possible, such as during nighttime operations when there is no sunshine. This reduces their need to rely on the grid for surplus electricity during periods of no energy production. Additionally, battery storage allows for delayed exporting to the grid to support peak demand.

Investing in renewable energy is still essential in achieving zero emissions, and is the best way for businesses to mitigate the cost volatility of fossil fuels. However, when looking at the long-term return of a project, the solar cannibalisation effect should be considered. When investing in renewable energy, it is vital to consider battery storage as part of a whole system solution. 

Although the upfront costs may be a concern, Wattstor’s fully funded energy systems enable sites to create significant savings, profit from electricity markets, boost their ESG credentials, and stabilise their electricity prices, all without risk.  ■

● Find out more about implementing renewable energy projects at https://wattstor.com/renewable-onsite-energy-guide/