The value of electricity storage to large enterprises: A case study on Lancaster University

Abstract

Co-locating electricity storage with demand has significant potential to increase consumption of locally-generated electricity, defer infrastructure investments, and contribute to the task of balancing supply and demand on the wider network. In the UK, unlike domestic consumers, large enterprises are already incentivised to reduce peak demand through exposure to timeand demand-dependent network charges. This paper considers the potential of electricity storage to reduce the bills of large enterprises, focusing on Lancaster University as a case study. Through analysis of Lancaster University s recent demand and generation data and current and future charges, it is shown that recent widening of red distribution charge time bands has reduced the value of electricity storage to enterprises, and that in 2015 an enterprise such as Lancaster University could have expected electricity storage to deliver annual savings of around £27 per kWh of storage capacity, by reducing network charges. An analysis of these charges around Great Britain shows that the opportunity for storage to provide savings to enterprises is greatest in the south-west (at least £70/kWh.yr in 2017) and lowest in the north of Scotland (at least £20/kWh.yr). Whether investment in storage provides positive value to enterprises is shown to be strongly dependent upon location. Keywords: Electricity Storage; Economics; Distributed Energy Storage; Business Highlights: Electricity storage can be used by enterprises to reduce network charges.  An optimisation algorithm with price-switching based on net demand is presented.  In 2017, storage could provide savings of >£33/kWh.yr in the north-west of England.  Savings in the south-west will be >£70/kWh.yr, twice the average elsewhere in GB.  Payback period for batteries is 8 years in the south-west, 36 in the north-west. IntroductionA number of recent reports have suggested that significant future cost savings are likely to be delivered through implementation of energy storage, with two recent projections suggesting annual savings to Great Britain in 2030 of up to £2.4bn [1] and up to £8bn [2]. Electricity 3 storage will play a significant role in this, with increased electricity system stress resulting from a growing penetration of variable renewables. While large-scale electricity storage technologies such as pumped storage and compressed air are typically regarded as having the lowest costs per unit of storage capacity and power capacity [3], it is more likely that small-and mediumscale distributed storage devices will be built in the near-term. Experience in Germany is already showing this to be the case [4], with reduced capital costs being more appealing to investors faced with the uncertainty surrounding future revenue streams and government support for storage. Smaller-scale distributed storage (i.e. storage connected below the grid supply point) also offers a larger potential customer base than centralised systems (including many consumers looking to maximise the potential of on-site gene...

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