ARNHEM, Netherlands (April 4, 2018) — Small-scale, grid-connected energy storage solutions – or “community batteries” – can have a viable business case, supporting the ongoing growth of decentralized energy generation resources. This is one of the key findings of a feasibility study published today by DNV GL, based on work by an industry-wide consortium that includes energy storage firm Alfen and flexibility aggregator Peeeks. The study finds that – given current costs for lithium-ion battery technology and grid expansion projects – community storage can be both economically and socially viable. Furthermore, it outlines a decision-making framework to help grid operators and other stakeholders identify and optimize business models and revenue streams for community storage in any market.
Helping grids cope with decentralized generation
Decentralized energy sources such as rooftop solar panels or individual wind turbines are an important part of the transition to a more sustainable energy future. They can help energy users reduce their bills and contribute to a more sustainable energy mix with lower greenhouse gas emissions. But such resources put extra strain on the local electricity distribution infrastructure, which must be prepared to handle any peaks in generation output.
Distribution network operators (DNOs) can expand the capacity of their network with additional underground cables, but this takes a lot of time and money. An alternative is to install batteries close to decentralized resources to store any excess energy generated and feed it into the grid when demand exceeds supply. Regulations in most countries prevent the network operator owning these distributed storage solutions. Instead an independent player owns the battery facility and sells its capacity as a service to the DNO and other stakeholders.
The report identifies the conditions and stakeholders, such as home owners, energy retailers and network operators, required to make community storage services viable. Furthermore, it shows that a multi-stakeholder approach brings benefits for all parties.
Viable community storage: a win for all
For DNOs, multi-stakeholder community storage solutions are a much cheaper alternative to expanding the grid. Moreover, they can be installed and fully operational much faster than new grid capacity and with significantly less disturbance to the local environment and population as there is no need to dig up kilometres of roads to lay new cables. For parties interested in installing and operating community storage services, the study shows that long-term contracts are a commercially interesting option, potentially making it easier to find funding for new projects. Meanwhile, end users – whether residential, commercial or industrial – can be confident of a reliable and affordable supply of sustainable electricity.
“This is an important finding for the energy transition, showing that there is a fast and affordable solution for handling the intermittency of renewable energy sources that is also economically viable for everyone in the value chain. This latest study, carried out by DNV GL experts in conjunction with a consortium of industry leaders, shows that community batteries support the immediate deployment of decentralized energy resources. They can be applied today without waiting for costly and time-consuming grid expansion,” said Ditlev Engel, CEO of DNV GL’s Energy business.
In addition to showing the feasibility of community energy storage solutions, the new study also outlines the factors that hamper successful implementation. The findings are collated into a decision tree that can be used globally to determine whether a community battery solution is potentially interesting in any specific circumstances. Where community storage is a viable option, the decision tree can also be used to optimize business models within a multi-stakeholder approach.
The report is available to download here. If you have questions, please contact project leader Haike van de Vegte.