Our electricity system in the UK is coming under significant pressure as it transforms into a new more flexible, low-carbon, system for the 21st Century and beyond.
This transformation could pose a growing threat to the profitability of many businesses that are reliant on a stable and secure supply of electricity and take no action to minimise the risks. Whilst some businesses have sought to protect themselves from power outages using diesel or gas back-up power systems, many have elected to accept the risk on the basis the likelihood of such an event is too small to justify the cost of tying up capital (or lease costs) in diesel generators. However, this transformation means the risk is growing.
Thankfully, with the threat comes opportunities in the form of a new generation of electricity storage systems based on batteries, such as the Tesla Powerpack. Driven by the growth in electric vehicles, prices of rechargeable lithium batteries have reduced in price to such an extent they offer a viable alternative back-up power solution. Not only can they provide short-term back-up power, but they can add to a business’s bottom line through additional energy saving and revenue generating functions. To understand if this is an opportunity your organisation could benefit from then read on.
So why is our electricity system coming under pressure?
Historically the system has been designed and built around large centralised power stations (Coal, Gas, Nuclear) and a network of wires, transformers and switchgear, branching and tapering towards the towns and cities where that power is required. Problem is this system is too inflexible for the demands it now faces:
- Our current coal-fired power stations are due to retire by 2025 as they are beyond their service life.
- Demand for electricity is growing and that situation will only get more acute with the announcement that the sale of new diesel/petrol vehicles will be banned from 2040 so driving the growth of EVs
- An increasing proportion of generation being provided by renewable energy technologies such as wind and solar. Nearly a third of UK electricity came from renewables in the second quarter of 2017. This “distributed generation” from renewable energy is both variable in output and has the potential to push power backwards through that tapered system which is not designed for that purpose.
Consequently, this is making it increasingly challenging for the system operator, National Grid, to ensure the system remains stable and to “keep the lights on” – at an affordable price for the end user. There are two principal challenges:
- To ensure there is sufficient generation capacity on the system, at the right times, and in the right places to match consumption.
- To maintain the standard AC frequency of 50Hz. This frequency is a function of the spinning inertia of large steam turbines, but as the number of such large thermal generators on the system reduces then the lower system inertia means the frequency can drift and become unstable.
In times gone by the solution would have been to build more, large centralised power stations and upgrade the transmission and distribution system. The problem with this traditional approach is that, apart from nuclear, these power stations burn fossil fuels so emit carbon dioxide. Both the power stations and the transmission and distribution would have to be sized for peak demand and then operate for most of the time below that level, so sub-optimally. This traditional approach would be prohibitively expensive in the context of our competitive energy market. Instead, the system is gradually being transformed into a more flexible and smart system where supply and demand are matched intelligently.
You may already see in your organisation’s energy tariff some elements of this emerging smart system if your organisation has a half-hourly metered supply. If that’s the case, then it is likely that you’ll be charged a different price for electricity at different times of the day and year. This takes two forms:
- Distribution Use of System (DUoS) charges where the price per unit of electricity is charged in bands according to the time of day and is highest in the “Red” band later afternoon, early evening (typically between 4pm and 7pm).
- Transmission Network Use of System (TNUoS) charges based on peak consumption at three points of the year between November and February (Triads).
These two charging systems are designed to encourage lower demand on the system during peak periods as an alternative to increasing generation.
What are the risks?
Quite simply the risk is fluctuations in power quality or loss of power altogether because this transition to a fully smart system is unlikely to be without problems along the way. A recent report published by Centrica gives some surprising insights:
- 81% of businesses experienced at least one energy-related failure in the last 12 months. The average number of incidents being 12 (energy-related) failures in the last 12 months. As a result:
- 23% of businesses suffered equipment damage
- 14% lost inventory
- 18% of businesses said outages damaged their brand
- 19% feel relationships with customers soured consequently
- 11% said that employees had been placed in dangerous or life-threatening situations because of power outages
What is most surprising is the estimated cost of a power outage ranges from 3% of annual turnover for an outage of only an hour, rising to 18% for outages lasting a day in some manufacturing businesses. In my opinion, it is more likely that businesses will experience short-duration outages which occur more often. Based on the above statistics, only 4 x 1hr outages a year could cost more than 10% of annual turnover and that is a significant cost.
How can batteries help?
As mentioned above, diesel or gas generators have been the most common form of back-up power and can be a cost-effective way of providing for longer power outages, but they do have their disadvantages:
- The ideal start-time delay is a subject of debate but at minimum, this is likely to be at least 3-5 seconds. They cannot, therefore, help protect against short-term power quality issues.
- They require a rigorous maintenance routine and, even then, there is always doubt if they will start when required.
- Diesel fuel can degrade over time, so the generator needs to be operated even when grid power is available.
- The impact of legislative change – such as restrictions on the use of diesel generators to improve air quality – is a constant concern when planning for the future
Battery energy storage systems (BESS) can be an alternative, or complementary to, other forms of back-up power systems. Their response times may not be as fast as UPS but the Tesla Powerpack can pick up a full site load in around 200ms, and then operate for several hours (depending on the system specified). The diagram below is a comparative illustration of start and run times of three different back-up solutions.
The big difference with the BESS over diesel/gas is that unlike the latter, the BESS can also operate as an energy management tool to reduce energy costs and provide services to National Grid to help with the growing need for flexibility:
Peak shaving – the BESS can be charged either: directly from the grid when power is cheap (e.g. green/amber DUoS band) or through onsite generation such as solar, and then discharged during peak times to reduce DUoS and TNUoS charges.
Peak Support – many commercial sites operate at or near the capacity of their incoming electricity supply which limits expansion or increases in production. Often the only way to increase that supply can be to pay for an expensive upgrade (even then the local network might be constrained). The BESS can provide extra peak power to supplement the incoming supply so mitigating the need (and cost) to upgrade it.
Frequency Response – the BESS can help control local grid frequency to minimise deviations from 50Hz. National Grid pays providers of this service (a 1MW BESS could earn upwards of £100,000 per annum) and their need is forecast to increase.
Capacity Market – the BESS can export electricity on demand (Demand Side Response/DSR) to effectively provide generation capacity to help National Grid balance the system. Again, National Grid pays for this service which, based on the last auction, could be around £22.50/kW (source: link).
If the likelihood is only short-term power loss or power quality issues then a BESS, such as the Tesla Powerpack, would be sufficient on its own. If longer term back-up is required as well then, the Powerpack can operate in parallel with diesel or gas. The Powerpack is fully scalable depending on a site’s power and energy requirements:
- Inverter Power output from 50kW upwards to multi-megawatt
- Useable energy capacity in multiples of 210kWh (each Powerpack)
- Connects from 380V to 480V 3phase or via a step-up transformer to the high-voltage system
- Enclosures rated for outdoor location
- Round trip efficiency of 88%
- Warranty of 10 to 15 years depending on duty
- Small & compact footprint
A typical system for a medium manufacturing plant might be 500kW inverter and 5 x 210kWh Powerpacks giving a 2hr system with the potential of financial returns repaying the capital cost in less than 4 years and make a significant contribution towards lowering operational costs.
Don't take a chance with your energy supply. Make a change today. For an initial discussion to see how we can provide a commercially attractive solution for your business, contact us.
NB - Discover how to get a free battery and installation with our Battery Energy Storage as a Service or BESaaS.