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, according to a feasibility study published today by DNV GL.
DNV GL, a global quality assurance and risk management company, says the findings are 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.
DNV GL explains that 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 (GHG) emissions. But such resources put an extra strain on the local electricity distribution infrastructure, which must be prepared to handle any peaks in generation output, according to the study.
Distribution network operators (DNOs) can expand the capacity of their network with additional underground cables, but this can take a lot of time and money, the study notes. 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. However, regulations in most countries prevent the network operator from 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 homeowners, 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.
For DNOs, multi-stakeholder community storage solutions are a much cheaper alternative to expanding the grid, the study finds. Moreover, they can be installed and be fully operational much more quickly than new grid capacity and with significantly less disturbance to the local environment and population, as there is no need to dig up 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, the study says.
“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,” says Ditlev Engel, CEO of DNV GL’s energy business. “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.”
In addition to showing the feasibility of community energy storage solutions, the 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 circumstance. Where community storage is a viable option, the decision tree can also be used to optimize business models within a multi-stakeholder approach, says DNV GL.
The report is available to download here.