Thrive Renewables and Aura Power have launched a joint venture (JV) based on installing no-money-down battery storage to cut electricity bills for commercial and industrial (C&I) energy customers.

The JV is targeting thousands of businesses that spend at least £0.5 million a year (£50,000/month) on electricity. A 2MW battery could save a customer around £1 million over a 15-year standard contract.

Three to four potential customers are close to signing heads of terms with the JV, with initial installations happening by the end of the year. The new firm is advanced discussions with a dairy, a food processor and a tile producer.

There has been interest from diverse entities, according to Howard Henward, business development manager at Aura Power, spanning a university, metal forger and a paper mill.

“Battery storage is seeing lots of interest among C&I energy users in the UK, but they tend to have payback expectations of no more than three years, whereas for battery storage it can be between 4-7 years. That’s why the funded model we are commercialising appeals. The volatility and uncertainty in the UK energy market, which could impact revenues and savings, is also a concern to many companies. It is a risk we are comfortable with.”

The storage-as-service JV will install behind-the-meter energy storage. Henward says: “We have a transparent approach. The savings from network charges, such as Triad avoidance and Distribution Use of System (DUoS), are pooled along with revenues from providing grid balancing services, like frequency response. We agree a percentage split with the customer for the duration of the contract. Pooling both savings and revenues means we are all on the same page in terms of maximising the utility of the battery system.”

It might be that over the contract period, savings and revenue streams go up and down, but over time customers will save on the energy costs and can expect to see immediate savings from avoiding premium-cost peak energy charges and income from providing flexibility services to the grid.

 

A range of businesses and public sector entities, from tile manufacturers and food processors, to universities, could save on energy costs with a battery installation (Image courtesy: Total Tiles)

Market potential

Over 8000 businesses in the UK have annual electricity contracts of 10GWh or more and are likely to be spending at least £1 million a year, according to energy market analysts Cornwall Insight. The number with £500,000 annual bills is likely to be far larger.

“As battery costs continue to come down, the offering makes sense to companies and organisations looking to reduce their energy costs. Network charges and grid revenue streams will fluctuate but the grid will need frequency response to handle the growing amounts of renewables and there will most certainly be a peak demand charging regime, though name and methodology may change,” says Henward.

Aura Power has gained experience of the UK energy market and how to develop and operate battery storage to operate in the current grid regime. The JV will install and commission the battery and will own it but will hand over the reins of day-to-day operation to an aggregator and is in discussion with two potential aggregator partners.

According to Henward: “The number of companies with aggregator platforms and services has grown, but we are working with companies with experience of the frequency response markets and demand response, as well as those whose portfolios reflect experience of working with battery storage.”

Aura Power started out developing solar PV projects, though its founders have also had previous experience developing wind farms. More recently it turned its hand to energy storage and has developed a 10MW battery in Nevendon, Essex, which was one of the first enhanced frequency response (EFR) battery storage projects, as well as the 15MW Lockleaze battery storage system, near Bristol, which came online a year ago.

The JV will develop projects on a case by case basis, and has several lithium ion battery storage system providers that it can work with, depending on specific requirements of the project and lead times.

In cases where the system supplier does not provide an energy management system, the JV will source from third party vendors with experience of integrating with the chosen battery system.

Companies or organisations with steady consumption and spare import capacity, with a minimum annual energy spend of £0.5 million, are candidates and could include manufacturers, water utilities, pharmaceuticals businesses, cold storage facilities, hotels and large office buildings.

“After initial discussions with potential customers, the next step is for them to provide electricity bills, half hourly consumption data and whether they have any on-site generation or participate in demand response schemes. After receiving the necessary information and it looks positive the client is issued with an indicative earnings and savings estimate,” Henward explains.

While the battery system itself can be installed in weeks, the entire process takes 6-9 months, partly depending on the delivery lead times from battery system suppliers.

Thrive has invested in, owns and operates a 104MW portfolio of wind, hydro and solar assets. The JV moves it into the rapidly emerging storage market, combining its own funding and behind the meter renewable expertise with Aura Power’s market-leading experience of developing utility scale batteries.

Batteries will be installed behind the meter, offering a range of benefits. Businesses can:

  • avoid punitive Triad and red zone charges for using electricity at peak times;
  • save money by charging up when power is cheap;
  • earn money by providing services to the grid such as frequency response;
  • hedge against rising electricity costs;
  • maintain activities during power cuts;
  • correct power quality issues;
  • develop or increase on-site renewable generation;
  • support electric vehicle charging.