In this contributed blog, James Allston, Co-CEO of Orkestra Energy, explains how detailed feasibility modeling reveals the actual value of C&I solar and battery systems.
Just as voters can exhaust an unpopular government, consumers can also “vote with their wallets” when a market does not work for them. For British electricity users – especially in the commercial and industrial segment – choosing the right rate can be a strikingly powerful step.
There is no mistake that you are confronted with a difficult dilemma. Retail electricity prices for companies and industrial consumers are consistently the highest in Europe. In addition, complex rates can cover up potential savings and lock many companies in offers with bloated costs.
The data speak for itself. According to the Department for Energy Security and Net Zero, compiled by the International Energy Agency, smaller companies pay on average £ 29.92/kWh, larger industrial customers £ 26.77/kWh and very large industrial consumers £ 22.87/kWh. Under EU27 countries with available data, the UK is at the top of the table – for all the wrong reasons.
Source: Department for Energy Fairy and Net Nul / International Energy Office / Climate Copy.
Small consumers: 20 – 499 MWh Pa
Average consumers: 2,000 – 19,999 MWh Pa
Big consumers: 20,000 – 69,999 MWh Pa
Very large consumers: 70,000 – 150,000 MWh PA
Calls for action
This persistent trend has not led to handwringing under commentators.
A clear answer is the acceleration of solar installations on the roof. In August, Solar Energy UK shared National Raster data compiled by the University of Sheffield, which shows that PV generation is increasing. The data showed that in the first 8 months alone the solar generation in the country had beaten all earlier annual archives – 15 TWH approaches.
Distributed energy sources – namely solar energy and batteries – can make even greater savings to British business customers and the electricity system wider. Yet this value is often obscured by opaque tariff structures, whereby reforms from the past cannot stimulate flexibility.
Uneven progress towards flexibility
A good example is the case of triade costs. These are designed to allocate the costs of the transmission system to large consumers on the basis of their use during peak periods – known as the use of the System transmission network (TNUOS). Although they were complex, they were effective. Triad costs sent a clear price signal to large electricity customers: reduce consumption in times of grid stress (usually in the winter months) and benefit from lower network costs.
Between November and February, companies that successfully reduce the demand during triad finals reduced their costs considerably.
In February 2023, however, the income intake for transmission networks of prices based on Triade was largely moved to fixed fee. This standing charge restores the transmission costs, but eliminates any incentive to shift or reduce the demand during expensive periods. The net effect (excuse the word clearance):
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Locks higher costs in electricity,
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Removes drivers for flexibility, and
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Significantly removes any incentive for companies to have optimum capacity allocations (there are no wonder that there are now significant costs and delays to connect to the grid!).
In theory, Flexibility markets In the UK, it is supposed to fill the void and create new price stimuli for capacity, but these are patchwork, complex and usually of token value.
Missed opportunities at distribution level
As with transmission costs, distribution network costs have also largely been moved to costs with fixed interest rates. For commercial customers, duos costs can be around 17% of the electricity bill, according to Consultancy Brownnow Utilities.
But on the other hand, red, amber and green – corresponding to periods of high, average and low demand are levied by distributors. Red periods roughly run from 4:00 pm to 7:00, Amber from 7 a.m. to 4 p.m. and 7 p.m.-11 p.m. and green for all other times.
In theory, this structure should encourage customers to relocate consumption to cheaper, lower voltage periods. In practice, however, the benefit is often lost. Many suppliers of electricity bundle duos in a single or two rowed,-kilowatt-up costs, so that customers have little or no incentive to bend their consumption. As a result, companies lack potential savings of flexibility and the system as a completely higher costs.
Some suppliers give customers direct access to these signals. Octopus Energy’s Form Shifter Trio Is a remarkable example available for small companies that consume less than 150 MWh per year. This rate offers three price tires –Peak, Day and Night – which correlate with the Red, Amber, Green Duos costs. Many other suppliers also offer pass-through or decayed rates that reveal and itemizing All costs of the grid, and can optionally expose a site to the day of wholesale prices. These options are far from the status quo, so companies must request them.
According to such rates, companies are rewarded for shifting demand in scheduling -friendly ways. The most effective strategy combines flexible consumption with on-site generation: solar sun on the roof in combination with battery storage. This set -up not only reduces dependence on the grid, but also enables companies to cover peak request periods when prices and system prints are the highest.
Unveiling the value of flexibility
To illustrate this dynamic, Orchestra carried out detailed feasibility modeling of solar-plus-battery systems for representative commercial electricity consumers. We analyzed both a typically small to medium company and a larger industrial customer, in 14 British utilities. The study looked at typical half-hour consumption profiles, various system sizes and various strategies for charging batteries and discharge-on search for the sweet spot between the customer’s demand profile, the system behind the meter and strategies for loading batteries and discharge.
Take our hypothetical example ‘reinforced parts’, a medium-sized manufacturer of car parts that works six days a week. With an annual consumption of 964 MWh and an electricity bill of £ 336,000, it is a relatively large electric user on a pass-through rate. In the Bristol Utility region, our modeling discovered that a 1 MW solar panel on the roof would have a net present value of £ 1.28 million – with an annual savings of electricity account of 33%.
The impact of decayed rates
When connected parts add a 240 kWh battery and only uses it to maximize self-consumption, the NPV drops slightly to £ 1.21 million. But that battery optimally cycling through the battery and the NPV climbs; And with both optimum bicycles and optimizing the capacity costs of the site, it jumps to £ 1.42 million (see graph below). This combination of solar energy, storage, smart control and the correct rate yields 39% annual electricity savings -a victory for both reinforced parts and the solar provider.
The most important collection meals is that fully unlocked transit rates offer considerable opportunities for British companies to reduce energy costs, for solar installers to grow their market and work more efficiently for the electricity network. The most important thing is that they enable consumers to record the full value of Solar-Plus-Battery systems, which marks an important step towards the flexible energy system that the UK needs.
British companies can vote with their wallets. And with the right tools, sun companies can show them how it was done.
