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Battery Storage Knowledge Bank

Economics of storage: Large Commercial

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Introduction

The economic model for larger scale batteries is typically 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 Optimization’ to ‘Income from Grid Balancing Services’ plus ‘Time of Use Optimization’ (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.

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

 

    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%
Back-up   £6,000 -4%
Running Costs   - £9,400 -6%
Total   £164,800 100%
10 Year IRR% /Payback   ~ 20% 3.5 - 4 years