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In comparison to a home owner, a farmer has a different reason to invest in battery storage systems. While private PV system operators work toward optimizing self-consumption, storage systems in industry are mainly used to provide control reserve and thus ensure grid stability.
In commercial storage system applications, the main focus is on efficiency and a secure electricity supply it is a question of balancing load and demand peaks and providing an emergency electricity supply in the event of grid failures.
Flexible, custom-tailored system solutions for complex load and requirement structures are required. The SMA experts Volker Wachenfeld, executive vice president business unit offgrid & storage, and Nick Morbach, executive vice president business unit commercial, elaborate.
1. Elon Musk, CEO of Tesla, describes battery storage systems as the missing piece in the puzzle of global regenerative energy generation. What do you think?
Volker Wachenfeld: Although Elon Musk said that primarily in reference to his own products, the message is, without a doubt, universally valid: There is no stopping renewable energies. This also means that their already discernible volatility, due to fluctuations in energy generation depending on supply, will definitely increase significantly. Storage systems attenuate this volatility or even counteract it completely. They make grid integration easier and stabilize the global energy supply system, both statically and dynamically.
Nick Morbach: The principle must be "generate energy where it is needed and provide it when it is required." For an electricity supply with solar energy alone, in theory, hardly any more space is required than is already available on residential, commercial and industrial buildings. If we use these areas for solar generation and add storage systems, anything is possible in theory. To this end, storage systems practically only have to become less expensive. However, we are already on the road toward achieving this.
Volker Wachenfeld: The price of battery storage systems has fallen significantly over the last two years. Engaging appearances such as that of Elon Musk at the presentation of the Tesla Powerwall are playing no small part in increasing awareness of this issue. PV systems with storage systems are no longer viewed as incredibly complicated technology, but are an easy means to join the energy transition and also become part of a virtual power plant as an operator of a PV system, for example. If we combine wind and solar power with battery storage systems to create virtual power plants and thus intelligently manage millions of decentralized systems together, a secure electricity supply from regenerative sources will no longer be a problem at all. Naturally, political figures must want this as well. The question should not be about whether to install a storage system to complement a PV system, but how large the storage system must be, so that it is a perfect match for the entire system consisting of appliances, storage systems and the PV system.
2. Are storage systems worthwhile for commercial applications?
Nick Morbach: A commercial system optimizes the operators energy balance. This is basically similar to how a system operates in the Home Systems segment, where the storage system is nowadays used almost exclusively to manage self-consumption. Nevertheless, commercial operators do have additional optimization criteria. For example, in this segment, the electricity price is made up of the traditional energy charge, i.e., euros per kilowatt hour, and a demand charge, i.e., an additional amount for the peaks in procured power. By means of a battery storage system, the demand peaks can be reduced or moved to off-peak periods. To optimize this, a professional energy management system tailored to industrial requirements and linked to the building technology is required. At SMA, we are working diligently on providing our customers with such a system as part of our range of solutions. Even at weak grid-connection points, the storage system offers businesses additional opportunities to generate inexpensive electricity themselves using a PV system. The storage system prevents the grid connection from being overloaded, thereby facilitating the further expansion of decentralized generation in commercial applications as well.
Volker Wachenfeld: It is not just a question of whether they are worthwhile, but also what additional benefits they provide. SMA has been building storage system solutions for commercial applications in the off-grid segment for years. In off-grid regions, the primary focus is on establishing an electrical energy supply in the first place, one that facilitates economic development. As the demand for energy increases, the systems can be expanded up to a size of 300 kilowatts by means of modules. In addition to the economic aspect in a commercial setting, our grid-connected storage system solutions for applications up to 100 kilowatts meet additional and different requirements.
For example, the agricultural industry also needs a secure electricity supply. What happens if the milking machine, the heating lamps for rearing young animals or the ventilation in the henhouse fail due to a power outage? In such a case, storage systems can provide the necessary energy at any time. The same applies for hospitals, hotels and schools. Parking garages can use the storage systems to offer electricity to charge electric cars without increasing the connection power. Shipping companies can generally use storage systems for similar purposes in the field of solar maritime navigation. In Germany, we currently allocate around 10 percent of grid-integrated storage systems to the commercial segment in terms of size and application.
3. Which markets are most attractive for commercial storage system solutions?
Nick Morbach: In so-called mature PV markets, in which many companies have already been equipped with PV systems that sometimes already feature energy management functions, the tariff models are of decisive importance. The electricity price is made up of two components in the commercial sector. The issue of demand charge plays a role in nearly all markets, whereby the actual price can vary considerably depending on the market. Energy charges, however, are already offered in a tiered structure in some markets. These are called time-of-use (ToU) tariffs. By using a storage system solution, we can both reduce the power peaks (and hence the demand charges) and, at the same time, systematically charge and discharge the storage system at specific times by means of variable tariffs.
In Germany, the share of the energy charge that actually depends on the procurement costs is unfortunately less than one-third. More than two-thirds is made up of taxes and fees. Such a structure makes the use of time-of-use tariffs for the purpose of arbitrage models based on storage systems virtually impossible. [Note: Arbitrage (French: arbitrage, Latin: arbitratusdiscretion, free choice) means taking advantage of price differences for the same goods on different markets. Source: Wikipedia]. However, the U.S., for example, is now emerging as one of the most attractive markets, both because of the level of the demand charges and due to the attractive ToU structure.
Volker Wachenfeld: But we also should not lose sight of countries such as India. Due to the poor grid quality, storage systems can also take on an important role here to ensure a stable electricity supply. We have gained good experiences with our commercial hybrid system in Tamil Nadu. Electricity is expensive there and the supply is unreliable and a constant annoyance for companies engaged in production.