How can businesses get more value from their investment in solar and storage?

May 26, 2016

What do you need to know to minimise your risk and maximise the value of your commercial-scale solar and storage system?

In our fast-moving environment, the time for businesses to act on solar and storage is now. Early movers are well placed to capture the best opportunities from commercial solar generation (large solar arrays in places such as shopping malls, warehouses, universities or airports) and other types of mid-scale embedded generation – and, notably, network operators are already moving ahead with some of their own innovations and installations to add value to the electricity network.

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The business case for investments in commercial solar and storage are made almost entirely on the basis of projected savings on electricity bills assuming continuation of current tariffs. However, current tariff structures don’t reflect the way network operators experience costs to supply electricity, and the threat of future adjustments can make these sizeable investments risky for astute businesses. So how can you make the best of the available opportunities and add value to your investment?

As you prepare to act, you need to understand some key factors:

  • how and where you can add value
  • how to benefit financially from embedded generation and storage by working with network service providers (i.e. what schemes are available)
  • how to manage the technical and commercial risks, and
  • how to make the most of falling technology prices (particularly for batteries).

Behind the meter, or grid support?

Most existing embedded generation is rooftop solar PV installed ‘behind the meter’, reducing the business’s electricity bills, generating the business’s energy needs, and improving the business’s overall carbon footprint. The size of these systems has usually closely matched the load, and export to the grid has been less of a priority.

However, as storage technologies become cheaper and more readily available, greater scope emerges for renewable embedded generation to export power into the grid: providing extra generation in capacity-constrained areas, supporting peak demand, and reducing or deferring the need for grid upgrades or extension at the fringes of the grid or in new developments. They can also support reliability and power quality standards.

In this market, businesses considering solar and storage need to think of themselves as project developers. One way for developers to capitalise on the available prospects, minimise risk, and add value to a commercial embedded generation investment is to work out how to turn these possible forms of network support into additional revenue streams.

Benefits of network support

When embedded generation and storage adds value to the network, significant benefits are available for both commercial generators and network operators, and these benefits can be shared. Yet, despite these opportunities, there are still very few examples of mid-scale systems being recognised to provide network support.

Network support is typically where a system that is not part of the traditional network, such as solar, wind, or batteries, helps the network to deliver its function of reliable electricity supply to customers. As a simple example, a network operator facing rising demand in a specific area would traditionally plan for a substation upgrade. But if it costs less, they may consider a network support strategy to install local embedded generation and storage.

Whilst regulatory reform is underway to formalise parts of this, plenty of potential opportunities exist now. To make the most of these options, proponents need a good understanding of the key issues, and close collaboration with network service providers.

New developments, new possibilities

Opportunities for network support at existing premises can be very valuable, but these only exist in specific locations. Such prospects are certainly worth exploring; however, it is in the context of new developments that opportunities are becoming most abundant.

Where a new connection is required for a residential development, a large shopping complex or a similar large development, an opening exists to optimise the combination of baseload power supply from the network with peaking power from embedded generation such as commercial solar and/or storage. This option is particularly effective where the local resource coincides with the load, such as a good daytime solar resource that matches a daytime shopping centre load.

The embedded generation or storage may be able to significantly reduce the capacity requirements for the network connection, and alleviate broader network constraints that would need to be addressed if the entire additional load were drawn from the network. In all cases, battery storage increases the available possibilities by addressing instances where peak demand exists but generation output is not available, or where renewable energy generation does not coincide well with load.

Preparing for action

A good place to start exploring the possibilities for commercial solar and storage in more detail is Australia’s Clean Energy Council report Grid Support: Revealing Mid-scale Generation and Storage Potential. The Clean Energy Council engaged Entura to conduct this extensive study because we understand the regulatory constraints, the technology and its applications, and the multiple revenue streams that make up the business case for its proponents.

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The report is based on detailed analysis of the commercial, technical and regulatory aspects of commercial solar and storage, and identifies the key areas that still need to be addressed so that network operators and commercial solar developers can fully harness the potential benefits these technologies can offer the grid.

To discuss how Entura can support you to best take advantage of the benefits of mid-scale embedded generation and storage, contact Chris Blanksby on +61 408 536 625, Akhil Pai on +61 406 874 101 or Silke Schwartz on +61 407 886 872.

About the author

Dr Chris Blanksby is a Senior Renewable Energy Engineer at Entura, and Entura’s lead solar energy specialist. In addition to leading the above-mentioned report for the Clean Energy Council, Chris previously led the work on demand-side-management opportunities for the Clean Energy Council. Chris has undertaken and published research on the solar resource in Australia, and has led several due diligence and owner’s engineer projects for wind, solar and microgrid projects in Australia, the Pacific and Asia. Chris is currently leading Entura’s owner’s engineer team assisting the Government of Cook Islands to implement six solar PV microgrid projects, and build capacity towards their 100% renewable target.

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