Battery Storage Knowledge Bank

Economics of storage: Large Commercial

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Introduction

The economic model for larger scale batteries is slightly different from the model for residential / small commercial batteries.

In the economics of storage on a large commercial scale the focus shifts from on site use of solar and / or time-of-use optimisation to income from grid balancing services plus time-of-use optimisation (otherwise known as peak shaving or 'buying cheap, using peak').

The background behind the different revenue streams is set out in our page Benefits of Storage – Commercial (>50kWh).

10 year IRR% between 5% and 20%

The financial return, in terms of 10 year IRR%, available on large scale battery investments can be anywhere between 5% and 20%, depending on the tendered rate for providing grid balancing services, the contract term for such services, and on the savings from peak shaving.

By way of example, we have set out below the income and savings available from a 1,000kWh storage system with a 1,000kW charge and discharge capacity.

   

Income / Revenue per annum

Ancillary services (income)

Firm frequency response during nights, weekends, and for all but a few weekdays around the Red Band; capacity market reserve

£110,000

66%

Time shifting (cost avoidance)

Charge and discharge battery to reduce CM Levy, then DUoS

£3,200

2%

Discharge battery during the assumed TRIAD hours, using warning software to avoid TNUoS charges

£55,000

33%

Backup

 

£6,000

-4%

Running costs

 

-£9,400

-6%

Total

 

£164,800

100%

10 year IRR% / payback

 

~ 20%

3.5 - 4 years

 

For more information, or to analyse the best option for you, please contact us on 0118 951 4490.

Or download our free funded battery storage fact sheet:

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