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Running on Batteries

October 10, 2018

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Running on Batteries – Behind-the-Meter solutions for energy users

By Kieran Van Bussel, Associate and member of the Energy sector team at Michelmores

Battery installations behind-the-meter can help business minimise energy costs and boost green credentials. Big headlines in the industry have attracted attention towards batteries, but what is a behind-the-meter battery solution and can it help your business manage its energy needs?

The price and provenance of energy is more than ever a source of concern for businesses. Getting your energy arrangements right can have considerable implications for the price you pay, and there is an increased focus and pressure for energy users to increase efficiency, reduce usage and boost their green credentials.

One solution is to look at "behind-the-meter" arrangements.  "Behind-the-meter" means anything on the customer side of their electricity meter. The purpose of all behind-the-meter solutions is to reduce the amount of power that runs from the electricity grid through that meter to the customer, thereby reducing power supply costs.  This can include steps taken to reduce energy usage – insulation, energy efficient lighting or generation of their own electricity, for example with rooftop solar PV panels.


The solution?

Battery storage is one such solution. These installations are larger versions of familiar technologies such as lithium-ion or lead-acid batteries and can be charged by power from the grid – the electricity can then be used later. Batteries at this scale can potentially store enough electricity to power a whole building for a significant period.

Battery installations have received significant attention from the media over the past 12 months, with high-profile market participants making big strides. Some large-scale examples of this include the Tesla Gigafactory South Australia Mega-Battery, which saw the world’s largest lithium ion battery built in 100 days, and the San Diego Gas & Electric Escondido installation. This raised profile has helped forward-thinking businesses become aware of the advantages of utilising behind-the-meter battery technology.


So, what are the advantages?

First up is arbitrage.  In energy terms, this means time-shifting the energy taken from the electricity grid to coincide with cheaper periods in the charging cycle – for example, charging up the battery overnight (when electricity prices are lower) to use that power when the energy prices are at their highest the following day.

Behind-the-meter solutions are also excellent components for ensuring a reliable energy solution. By utilising the battery alongside other energy resilience solutions (such as a generator) it is possible to maintain an 'uninterruptible' power supply which draws power from the battery if the power from the grid is disrupted.

Equally, these types of solutions answer the increasing demand for businesses to better utilise green energy and manage carbon outputs more responsibly. Where a business has its own solar or wind power, which may not be generating when the power from them is needed most, the battery can help shift the use of that power to a more useful time, minimising the need to import electricity from external suppliers at more expensive rates.

Triad avoidance and other benefits may also be available, allowing a business to further minimise its costs or potentially even earn a supplementary income stream from their behind-the-meter battery.

Manufacturers, hospitality providers, health care services, leisure centers and other users of large amounts of power - for whom energy is both business critical and a major expense - are well placed to obtain significant benefits from installing a behind-the-meter battery solution. Predictable patterns of high demand for energy, usually coinciding with high-cost peak times, mean that arbitrage can have a considerable impact on costs. If you are looking at a behind-the-meter battery solution some initial considerations are as follows:


Ownership vs Benefit Sharing models

There are several models for delivering behind-the-meter battery solutions, including a business owning its own battery or granting a lease of part of their site to a battery operator to install a battery and sharing the benefits.  The shared benefits model means that the business can either benefit solely from reduced energy bills or can agree to share other benefits with the battery operator.


Planning

A business will need to consider whether there are appropriate planning consents in place for a battery. This will include the use class of the proposed site, as well as permissions for constructing the installation. If the proposed site is already in Use Class B2 (General Industrial), a battery may be a 'Permitted Development', although this position is not entirely clear-cut. However, you or the battery operator may wish to apply for a Certificate of Lawful Development to satisfy any funders, or future buyers.


Limitations of Liability

Ensuring that the limitations of liability in the contractual documents appropriately reflect the risk of any downtime and losses caused by failure of the technology or installation is essential.  For major energy consumers, the losses to the business for an interrupted power supply may far exceed the monetary benefits or savings from the battery itself.

Choosing your energy solution comes with a number of considerations, cost implications and logistical complexities. Whilst serving a business in the most efficient and cost-effective way has in the past been the prime priority for those choosing an energy source, nowadays the broader implications of environmental responsibility and sustainability are also high on the agenda. Behind-the-meter solutions speak to many of the concerns modern businesses have. If in doubt however about the practicality or legal implications of introducing this to your energy strategy, speak with an expert for advice and consider the full range of options available for your particular site. Vast quantities of businesses could use greener energy supplies and we encourage all decision makers to actively assess how they can better facilitate this.

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