23 September 2020

Energy storage and an energy intensive industry feature in Aluminium International Today

Energy storage and an energy intensive industry

Connected Energy's Matthew Lumsden wrote a piece for the September/October edition of Aluminium International Today magazine. You can read the article online here, starting on page 87, https://issuu.com/quartzbusinessmedia/docs/alumini...

Energy storage and energy intensive industry

The move towards distributed non dispatchable renewable generation is adding complexity into the energy model and the technical and market mechanisms that will enable load to match generation will continue to evolve for some time yet. In addition to these anticipated trends the impact that COVID 19 has had on commercial and industrial demand is not trivial. The macro-picture is therefore complex and to some extent includes unforeseen factors that are difficult to predict.

What is clear however, is that energy will continue to become an increasingly important cost component in manufacturing industry and that ‘energy’ is not as simple as it used to be. The energy solution often now needs to factor in carbon, emissions/air quality, noise, resilience, peak-load and constraint management, changing load profiles, on-site generation and revenue, as well as cost.

By way of illustration at Connected Energy we are regularly receiving enquiries from parties wanting to flatten expensive peak loads, enable an increase in site load, maximise the value of on-site PV and maximise revenue generation opportunities. Questions often relating to the use of a battery energy storage system (BESS) to help optimise a site system.

Historically the low carbon energy related incentives initiated by UK government have been technology focussed – ROCs, FiTs, RHI and incentives towards the installation of EV chargers (to name only a handful ) have encouraged the deployment of technologies but have not supported companies in delving into the detail of system optimisation.

More recently Innovate UK (one of the UK government’s technology innovation funding agencies) has begun funding several large scale demonstration projects focussing on local energy systems that aim to explore how relatively autonomous assets operating within a defined region can be optimised as a system (see https://www.c-e-int.com/smarthubs/) Whilst the project boundaries are greater than those of a typical commercial site, these larger systems offer new opportunities for discrete sites to add value to their assets.

The on-site, behind-the-meter installation of BESS can provide a new revenue source through the provision of services to the Transmission System Operator(TSO) and in some cases to the local Distribution Network Operator (DNO/DSO).Network operators have a continual requirement to manage the balance between energy supply and demand on the network and through a number of market mechanisms reward energy storage operators for charging or discharging their systems as and when required. Once a system is installed on site, the revenue generation is typically achieved via a third-party aggregator who contracts with the network operators. The commercial justification for this type of model varies across international markets and can also be impacted significantly by measures implemented by local network operators.

However, referring back to the system approach mentioned earlier, energy storage has a role to play in optimising a site energy system or in facilitating greater utilisation:

- Where peaks in the load profile are increasing fixed network charges, the system can be charged in advance then discharged to flatten the peaks,

- Where load spikes are threatening to breach connection constraints, the BESS can be discharged so that part of the required supply is pulled from the storage unit. Often the cost of connection upgrades is significant and storage can be a much lower cost solution. A project recently modelled by Connected Energy enabled a £600k energy storage system to replace a £2.6m connection upgrade thereby enable a manufacturing site to be diversified.

- Where on-site generation exists, the use of this low-cost energy can be managed so that export is minimised or time shifted so that more is used to reduce energy pulled from the grid during higher tariff periods. Often on-site generation also requires a connection upgrade, the cost of which may be mitigated by the installation of a BESS.

- Energy storage can also be used to provide back-up power during outages. Whilst often systems are not designed to provide the instantaneous response of a UPS, they can provide a very fast response potentially coming into play after the UPS has fulfilled its initial purpose.

The key to achieving this more complex utilisation of a BESS is the control software.

The Connected Energy management platform for example, enables multiple value streams to be captured by creating a hierarchy of business rules that determine the conditions under which a BESS should charge or discharge.

A schedule is used to determine intervals when the system should typically charge or discharge, but this also interacts with rules relating to metered points on site, these might be specific loads or sources of generation. In addition to these operating conditions, the system can also interact with demand response aggregators who may need to charge or discharge the battery to meet the requirements of the grid operator.

It is important to recognise that in using the system to provide a range of functions it is likely that some opportunities will be sub-optimised. So, for example, if part of the capacity must always be available to provide back-up power, the amount of capacity available to charge from on-site renewable generation will be reduced. But often the net value of the combined value streams provides a better overall business case.

One challenge of operating a BESS simply to generate revenue from grid services, is that all the revenue carries merchant risk that can span more than 20 years. By identifying additional site-system related benefits the overall investment risk can be reduced.

Something else that should be considered is the location of the BESS on site. Installation costs can often make or break a business case. Installing a system close to a connection point thereby reducing cable runs and utilising an existing hard standing can make a very material impact on the project costs.

So, in considering the installation of a BESS it is worth undertaking a detailed review of how the system and its operation could be optimised to create value for the business. Current operations, connection conditions and tariff structure are all likely to impact upon the ideal system configuration, operating model and business case.


Read the article, starting on page 87, here - https://issuu.com/quartzbusinessmedia/docs/alumini...