Centrica: Floodgates on battery storage investment to open in 2017

Tim Barrs: Battery storage investment boom primed for June 2017

Investor interest in energy storage is increasing rapidly with battery storage projects gathering pace this year, according to Centrica. The energy giant also predicts a significant increase in capacity market contracts for batteries from here on in.

Tim Barrs, who leads energy storage sales under the firm’s British Gas brand, says non-domestic users looking to shift loads away from peak price periods and monetise assets via grid balancing services should plan their investments now to beat the rush.

“Battery storage has yet to achieve the widespread ‘bankable status’ that we saw with large scale solar PV”, says Barrs. “But knowledgeable investors are improving their understanding and confidence in revenue streams and I think we will see a groundswell [of investment] by summer.”

The supply of battery cells, a global commodity, may initially be the limiting factor. “But I think when it happens, it will happen very, very quickly,” he says. “So I expect that rush to start being noticeable by June this year.”

Lithium-ion battery costs fell again last year, by 11-24% depending upon application, according to financial advisors, Lazard. While the impact of the Brexit vote on Sterling has largely negated those savings in the UK, Barrs says “good” battery storage schemes can demonstrate strong returns. A well-managed asset has the ability to run beyond the 10-year contracts Centrica’s Distributed Energy & Power business strikes with customers – and even then, only the batteries themselves may need to be changed. Around 1MW of batteries would take just two days to replace, according to Barrs.

At present, strong commercial projects range from 500kW upwards, says Barrs, but that’s not to say smaller projects aren’t viable. “Balancing the fixed infrastructure costs associated with smaller batteries is an important factor to consider when sizing the potential installation. Of course, the larger you go, the more those costs are diluted”.

Revenue streams

For Industrial & Commercial businesses, two key functions provided by batteries are load shifting and grid balancing, says Barrs.

“Reducing your peak consumption is an important first step. Once you have done this, and factoring in charging cycles for the batteries, you might have 18-20 hours per day to make the asset available [for grid balancing services].”

Barrs says dynamic frequency response, which calls for 2-second response times to meet Grid requirements, can last for up to 30 minutes but typically an event is only around 15 seconds in duration. This dynamic response is suited to battery assets, and is a balancing service for which National Grid pays a premium. It requires providers push power onto or absorb power from the grid to moderate frequency and keep the system stable.

Capacity market

Currently battery owners can also consider a range of revenue streams for battery assets, an area which is constantly evolving and is expected to support growth in coming years.

Battery storage assets won 500MW of capacity contracts in the December 2016 auction, including Centrica’s 49MW project at Roosecote in Cumbria, which will be one of the world’s largest and most sophisticated facilities to date.

Unlike the Roosecote project, which will operate as a standalone facility, Barrs says combining batteries with existing assets, such as back-up generators, provides a comprehensive platform for a customer to participate in a number of National Grid markets, while improving their own site resilience.

Smarter systems

Barrs is also convinced that other revenue streams will come into focus as the energy market evolves. This will introduce more creative and innovative solutions to be supported commercially, while supporting network stability.

“It’s a win-win on all sides so I think from the summer onwards we will see a real rush of assets going up.”

In the meantime, he says it is essential for early adopters to “ensure your design and build is correct and your interaction with the grid is robust”.

“You have to double check everything,” he adds, “and work with partners that are in it for the duration, providing an end to end solution”.

To find out how Centrica and British Gas can help you to take control of your energy, go to www.centrica.com/takecontrol.

This is a sponsored article created by The Energyst in partnership with Centrica.

Related stories:

Capacity market too low for large gas, but gigawatts of DSR, batteries and CHP win contracts

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National Grid says UK will miss 2020 targets, predicts big battery future

British Gas: £4bn energy efficiency opportunity for UK firms

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