More than just self-consumption

In industrial settings, the rules that apply for battery storage systems are different from those for residential buildings. Simply increasing the amount of PV power consumed on-site is often inadequate in a profitable operation. Among other things, the costs companies pay for power are lower and their yield expectations are higher, which is why additional applications are in demand. But these also have to be a good fit for the company.

In residential buildings, the novelty of battery storage systems for PV power has long since worn off. Large megawatt-scale storage systems that provide grid services and reactive power have been significantly expanded over the past few years. But what about the sizes in between: the industrial storage systems that were talked about at last year’s Energy Storage Conference and Exhibition? pv magazine posed this question to a number of well-known companies. We asked about industrial and large-scale storage systems, inviting six key players in the industrial segment to a roundtable discussion, which was published in pv magazine Deutschland earlier this year.

The first thing that stood out is that companies all have very different ideas of what an industrial storage system is. “We see industrial storage systems in small and medium-sized enterprises, multifamily homes, and in agricultural applications,” said Stefan Hagedorn, Business Development Manager at manufacturer E3/DC, during the roundtable. “We refer to storage systems in companies that consume more than 100,000 kWh of power as industrial storage systems,” said Jürgen Münzer, a project manager at power company Lechwerke. Urban Windelen, Managing Director at BVES, draws the line at systems with a connected load of 30 kW, but he also says that the decisive factor can be the installation site, in industrial and commercial enterprises, that is. And at such locations, a 10 kWh unit could be used efficiently.

Our call to take part in the updated overview of industrial and large-scale storage systems was accepted by 25 providers. This shows, among other things, that far from every provider of domestic storage equipment has industrial systems on offer.

In answer to the question of how many of their own storage systems were installed in industrial settings in 2016, only five companies responded to pv magazine’s survey. Beck Automation, for example, reported eight systems (six of them in Germany) with a total capacity of 800 kWh, while Trina Energy Storage counts eight systems worldwide with a total capacity of 5 MWh. SegenSolar reported the sale of 18 industrial storage systems globally, with a total capacity of 530 kwh. It reported that 10 of these systems had been installed in Germany. IBC Solar reports 150 systems worldwide with a total of 4 MWh capacity.
E3/DC states that over the past year in Germany it sold 130 industrial storage systems, with a total capacity of 3.6 MWh. Deutsche Energieversorgung reported selling 250 Senec industrial storage systems in 2016. All of the providers listed expect significant sales increases in the coming year.

From interest to demand

These providers expect the market to gain traction. Of course, we should not forget that the aforementioned figures are unconfirmed information provided by manufacturers. Nevertheless, says Martin Ammon of market and economic research company EuPD Research, “there is plenty of interest.” A recent study showed that many industrial enterprises were interested in increasing their share of power consumed on-site through the use of a battery storage system. In the survey of more than 200 companies, 33 firms said that they were already using battery storage systems. Of these, 48.5% claimed to use their storage systems for the “effective use of self-generated electricity.” However, Ammon estimates that the share of industrial PV systems currently installed immediately with storage systems is still low. “It is probably still in the low single-digit percentage range,” said Ammon. Starting in 2023 or 2024, the number of industrial PV systems with expiring 20 year guaranteed FITs will begin to grow. At that time, at the latest, market players expect a significant uptick in the self-consumption segment. That is not to say that the market will remain stagnant until then, however.

The discussion of self-consumption is developing along similar lines to talk about domestic storage systems. Providers of smaller systems, in particular, have embraced this model. It already works in places where industrial storage systems receive incentives, such as in North Rhine-Westphalia and Thuringia. Daniel Hannemann, Managing Director of Tesvolt and a roundtable participant, believes that such incentives will lead to a “clear market stimulus.” But E3/DC’s Hagedorn remarked, “We have already completed projects that are economically feasible through the optimization of self-consumption alone.” For example, in multifamily homes and often in combination with cogeneration plants. But there also has to be some measure of “green consciousness.” Applications for storage systems based on self-consumption are similar from manufacturer to manufacturer. Agricultural facilities are mentioned, as are production facilities and consumer markets. “So far, our equipment has been used in bakeries, auto dealerships, and hair salons,” said Mathias Hammer, CEO at Deutsche Energieversorgung (Senec). In some cases the applications were combined in such a way that cheaper power available at night could be stored in the batteries to increase system profitability.

Florian Mayr, of the consultancy Apricum, has also detected a growing interest in storage systems in discussions with industry players. “Today there is still a big difference between interest and projects that are actually implemented,” says Mayr. “If the idea is purely self-consumption and autonomy, then the economic feasibility – at least, in terms of return on investment – is currently still questionable.” However, the attractiveness of these systems can be improved by other optional uses of the storage system, such as serving as an emergency power generator. “But blanket statements are really out of place here. Whether a storage system pays off is just far too dependent on the individual case.”

Whether, and how much, an increase in self-consumption of solar power contributes to the economic feasibility of PV storage systems also depends on the load curve of the company using the system. Ideally, the company should have a relatively high base load at night and on weekends: companies with round-the-clock shift workers or which have processes that require constant ventilation, cooling or heating. If, for whatever reason, increasing self-consumption is not sufficient for economic feasibility, additional uses, such as provision of emergency power, are needed. “We are already seeing battery installations for which the combination of self-consumption and emergency power was the decisive criterion,” says Mayr of Apricum.

Considerable price spreads

As is so often the case, price is also a decisive factor, both on the basis of output and capacity. Of the companies surveyed, 10 provided information on price ranges per installed kWh of capacity. The difference between the minimum and maximum prices varied dramatically, not only from company to company but also within the individual companies for different products. For example, Qinous lists a minimum price of €500/kWh and a maximum price of €1,100/kWh. Many other companies represented on the list are within this price range, and some are even a bit higher.

The lowest possible price was listed by Chinese company Narada Power Source, at €250/kWh for the complete system, including the power conversion system. What makes this possible is that Narada uses particularly inexpensive, but also high-performing, lead-carbon batteries, explains Andreas Thissen, an energy consultant at Narada. Thissen believes that industrial enterprises, in particular, stand to gain an edge by using lead-based systems. Deutsche Energieversorgung’s Hammer also sees a price advantage for lead batteries in larger battery systems, as they can reduce costs with larger cells. “This price difference is disappearing, however.” Deutsche Energieversorgung is also launching a lithium-based device for the industrial segment this year. On the question of lithium or lead, the decision generally seems to fall in the direction of lithium. However. Of the 54 systems represented in our overview, at least three employ lead batteries, one uses vanadium redox flow technology, and the other 50 are based on different types of lithium battery. In the roundtable discussion, Aaron Gerdemann of power electronics manufacturer Refu put forth his belief that hybrid systems could also make sense. In one project, he is combining “the better cycle stability in power applications of lithium-ion batteries with energy applications and less expensive lead batteries.”

In large industrial systems, batteries make up a significantly higher share of the cost than power electronics. Some experts expect prices to fall when high voltage systems are used. Refu already offers this technology. The battery voltage at rated power is 500 to 800 V, but the input voltage range goes down to 250 V, which according to Gerdemann is necessary. Battery voltage drops when the charge is low. If the input voltage range of the battery inverter is not high enough, the discharge power drops considerably at low charge levels. That is why Gerdemann recommends manufacturers make sure that the specified voltage range can also be used at the rated power level.

Demand for high performance

Performance is particularly relevant for business models not based on self-consumption. Commercial customers with consumption exceeding 100,000 kWh are required to measure their load profiles every 15 minutes. “I can then use the load profile and the cost structure of the company’s power supply agreement to determine whether a battery storage system makes sense,” says Jürgen Münzer from Lechwerke. He and Franz-Josef Feilmeier, CEO of the storage system provider Fenecon, describe such a case, – a chocolate factory that does not even have a PV system. Nevertheless, the 80 kWh storage system with 80 kW of output amortizes within four years, according to their estimate. The trick is so-called atypical use of the power grid. In the view of the experts, this is also an exciting business model for companies that have a very high constant load profile. Peak load capping is more attractive, however, for companies with very volatile load profiles. “We always try to combine various business models to increase the profitability,” said Feilmeier in the roundtable discussion.

This is where policy comes in. The storage industry continues to suffer from the fact that the power market only takes producers and consumers into account. A storage system is sometimes one and sometimes the other. “People cling doggedly to terms like ‘consumer’ and ‘producer’, while the definition of storage systems is framed in law, even though this is obviously nonsense,” says BVES’s Windelen.

“Storage systems are independent components, and they are neither consumers nor producers.” If people could accept that, a basic stumbling block to the sensible use of storage applications could be cleared away. This particularly affects what surcharges and fees have to be paid – some of them twice. Attorney Bettina Hennig of law firm Bredow Valentin Herz commented about how the situation arose from the amendment to Germany’s renewable energy law (EEG).

Active marketing a must

From an installer’s point of view, the expectation of return on investment is a problem that is often far more challenging in industrial applications than in a residential house. Willi Harhammer is the Founder and Managing Director of installation company iKratos Solar Energietechnik. Among his industrial customers are metal and woodworking companies, as well as food and beverage manufacturers. Storage systems he designs for these customers are currently on the order of some 30 kWh.

“In the industrial segment, you need a return on investment in four to eight years. In a residential building, it’s more like 12 to 15 years,” says Harhammer. Furthermore, the price of electricity for industrial enterprises is often significantly lower, which makes self-consumption models more difficult. Harhammer also points out another issue: “If an industrial company increases its share of self-consumption, it reduces the amount of electricity supplied by the power company. That can result in the customer having to pay a higher price for the electricity supplied, which makes the overall calculation even more complicated.” Industrial storage systems are still not an easily scalable mass-produced product, says Florian Mayr. “The various cases are far too individual for that.” And yet, this segment is undeniably experiencing a general upward trend, even though the current growth is from a very small basis. “It’s not like companies are crying out for this product,” says Willi Harhammer. “We currently have to do active marketing to larger companies. But we don’t always have time for that.” That is due in part to the fact that the product, with all its facets, is relatively complicated, and thus requires a lot of explaining. Companies wanting to sell industrial storage systems in the near future will therefore have to approach customers themselves to raise awareness. But for Harhammer this is nothing new. After all, it took five years for the domestic storage market to get rolling. “In our industry you also have to develop a vision if you want to survive in the long run,” says Harhammer. To rest on full order books and wait to see what happens next is not an option for his company, in any case.