When Is the Right Time to Invest in Battery Energy Storage?

Oct. 8, 2021
Here, Carlos Nieto, Global Product Line Manager for Energy Storage at ABB's Packaging & Solutions division, asks: when is the right time to invest in battery energy storage and what are the key specifications when specifying it?

For industrial and commercial suppliers, there is an ever present need to reduce capital expenditure while making electrical systems more efficient and robust. When it comes to power consumption, this board-level demand translates to a tug of war between investing in a full system upgrade, including substations, or updating existing infrastructure to shave peak demand.

The future energy task is a complex one, especially for industry. On the one hand, there is the issue of maintaining prosperity and substantiating new growth, with many commercial and industrial businesses seeking to recoup losses incurred on account of national shutdowns and unprecedented operational disruption enforced during the pandemic.

At the same time, there is a pressing need to lessen environmental impact. As leading economies look towards a more sustainable post-pandemic recovery, the emerging new normal will see higher energy costs, along with new decarbonized industry standards and government demands. The result is increased onus on the environmental measures which can drive efficiencies and optimize energy consumption levels while helping to futureproof and maintain greater links to the wider world.

Fortunately, the electrification market has responded with a plethora of innovative technologies which can balance the need for sizeable carbon reductions while keeping costs and disruption to a minimum for industrial and commercial suppliers. One such example is battery energy storage.

Although not new, commercial and industry energy storage systems, otherwise referred to as ‘behind-the-meter’, are quickly coming to the fore as a way for businesses to manage energy costs by leveraging peak shaving, load shifting and maximization of self-consumption. Another big benefit is that these systems can provide critical backup power, preventing revenue losses due to production outages which can all too quickly go into the thousands – with power outages in the U.S. alone costing the economy $150 billion annually.1

However, inherently it can be difficult for industrial and commercial premises to determine the exact point at which battery energy storage will prove most beneficial.

Looking at the most common scenarios, to begin with it may be a simple business case for the industrial or commercial business — its energy bills have become higher, and there is a need to be more tactical about the way energy is used on the grid to reduce cost. Say, for example, it has recently extended its infrastructure, such as an automaker which has installed EV charging to promote wider adoption and is seeking to offset the additional cost brought on by the according large peak loads. For others, it may be that their utility contract has changed to incur higher demand charges and they want to negate this while safeguarding from future price hikes. Either way, investment in battery storage makes complete commercial sense.

There is also the proactive approach, whereby a business will be seeking to reduce its carbon footprint as part of a wider decarbonization strategy, most likely having already invested in other green assets such as solar, and thus energy storage enables further environmental gains. Or it could be about energy independence, where the business has installed various distributed energy sources on site to negate reliance on the grid – hereby energy storage effectively offers ‘the glue’ that can connect individual fuel sources together. 

A final and equally compelling case for battery energy storage is in business climates where an interruptible power supply is paramount. As aged grids become increasingly unreliable, deviations and other disturbances to electrical supply are more common. For a busy factory or manufacturer, the result of even a few minutes downtime can be huge in terms of the loss to productivity – worse still in remote circumstances, such as a mining business, resuming operations can take days, even weeks. Take, for example, the mining sector in Zimbabwe which loses up to $10 million annually due to crippling power outages that affect production and viability of the industry.2 Hereby, energy storage can be critical in ensuring its ‘business as usual’ even in the event of a grid failure.

Should the argument for energy storage appear conclusive, the next concern is specifying the most suitable solution for each individual business’ needs.

Here, the first consideration should be safety. Any industrial or commercial provider has a duty of care to ensure safe and secure working conditions for personnel and other maintenance staff, so it is incredibly important the energy storage solution, which they will most likely be working near to, is built to the highest safety standards. This is even more pertinent given that the acceleration of infrastructure will mean these types of installations may come to be located in the public domain, such as parking lots, where children, the elderly and other vulnerable members of society may be present.

Thus, choosing from a reputable manufacturer who has a proven track record in this area and can guarantee all key standards are met is imperative. Key concerns should be that the solution has been factory-tested and pre-engineered to reduce risk —and contained in a lockable enclosure to prevent unauthorized entry and protect components from vandalism.

Scalability must also be accounted for. As the world moves towards future decarbonization, it is becoming increasingly difficult for commercial and industrial users to predict what loads they may require a year from now, never mind in five years’ time when new technologies may have been brought into the mix. In this vein, the ability to grow, support commercial objectives and scale up as needs increase is essential when specifying any type of battery energy storage investment.

Alongside this sits the digitalization piece. From monitoring and controlling operations to optimizing efficiencies and the analytical power of data, through to the introduction of artificial intelligence and machine learning, digitalization is becoming paramount in enabling the insights needed to make better decisions about energy savings and emissions. Energy storage plays a part in this by enabling users to control use based on new digital knowledge — so any system must not only complement the current infrastructure but support the smart building vision.

Finally, it may sound obvious but choosing the right supplier can pay dividends. At ABB, for example, we realize that specifying a battery energy storage solution can come as a minefield for busy largescale businesses. That’s why we work closely with our customers to not just specify the most suitable solution, but ensure they are comfortable in their investment and that it aligns to their long-term strategic goals. This forms part of a long-term partnership approach designed to support each pivotal point in their decarbonization journey.

There is no escaping it; industry 4.0 is happening all around us, as renewables and alternative forms of distribution continue to become embedded in the grid. While this brings new complexity for industrial and commercial businesses, it also provides an opportunity to reimagine their sustainable strategy and take advantage of innovation. With benefits that include sizeable carbon savings, power supply reliability and an effective bridge between the current need and our carbon neutral future, surely it’s time to give energy storage the green light?

1 https://www.energy.gov/ne/articles/department-energy-report-explores-us-advanced-small-modular-reactors-boost-grid

2 https://www.chronicle.co.zw/power-outages-cost-mining-sector-millions/