Can battery storage be commercially successful?

Industry commentators are already calling 2016 ‘the year of battery storage’, but James Graham believes many developers could face challenges with getting the commercial case to stack up…

Regular readers of our weekly newsletter The Informer will know that battery storage is a hot topic at the moment. We’re keen observers of the decreasing technology costs and are engaging with government on the regulatory change needed to support battery technology.

Everything is moving in the right direction and the possibilities for storage are exciting, but we are still hearing project developers talk about one major hurdle - how do they get the numbers to stack up?

> Take our survey to tell us what you think about the battery business case

Setting up a battery project - whether standalone, co-located with renewables or behind the meter - will be a costly exercise. The >1GW of projects currently in the pipeline will need a positive business case and payback timeline to turn their plans into reality.

Over 60 companies have pre-qualified for the first Enhanced Frequency Response auction to be held by National Grid in the summer, so many projects are betting on balancing services as a source of income. But will that deliver enough return on their investment?

For developers planning to use batteries to optimise solar or wind generation, will the spread between peak and off-peak prices be attractive enough to justify the investment?

Behind the meter battery projects will also have to look at how to make money as just avoiding peak energy prices for consumption is unlikely to be enough.

If you are planning to develop a battery project, we want to hear your thoughts on the commercial opportunities. Please take 5 minutes to complete our survey and we’ll share our report with you next month:

> Take the survey

For more information on our commercial agreements for battery projects, contact storage[at]smartestenergy.com or read more here.