With the national push for carbon reduction firmly in place, exploring more efficient and smarter methods of energy procurement and management has never been more important.
The advent of new smart grid technologies such as battery storage as well as the growing economies of scale that comes with proliferation and adoption create an opportunity for organisations to review their energy strategy to capture tangible financial and reputational benefits.
Take control of your energy costs
To date, most companies have used better procurement as the primary way of reducing energy costs. The opportunities are reduced and such an approach limits the options available. In the UK, energy bills for large industrial or commercial businesses are a significant component of annual operating costs. Businesses with knowledge of their energy consumption patterns can generate significant cost savings by optimising their business operations and regulating energy supply to avoid periods of peak energy demand and the imposition of costly charges. However, energy management around business operations is not without limitations. In cases where a consistent flow of energy is required to power critical operations, adjusting the schedule of usage may prove challenging.
Microgrids, or integrated power networks that are connected to distributed generation such as solar panels and combined heat and power, electrical energy storage and controlled by a smart optimisation system, provide additional opportunities for energy cost reduction. As flexible systems, microgrids can operate whilst connected to the transmission and distribution network, or isolated from it, an approach known as islanding. By islanding from the grid in emergencies, a microgrid can both continue to supply energy even when the grid is down. In both cases, microgrids allow businesses to ensure that energy supply is fed to critical points of need.
This controllable network which comprises energy storage and distributed generation can enable businesses to modify energy consumption or generation patterns to achieve self-sufficiency or independence. It can also support business ambitions in a number of ways. Through microgrids, businesses can better manage and control their own energy costs and cut their electricity bills by locally generating, storing and consuming energy.
Energy arbitrage and connection benefits
Microgrids can reduce ongoing standing charges and energy bills by shifting and shaving peak demand. In typical grid connections, businesses request the maximum capacity they need, which assumes 24 hour usage. However, they may only require peak capacity for just a few hours during the day. Through microgrids, businesses may no longer need a large connection capacity agreement because energy supply can be better regulated to meet demand.
The installation of distributed generation can help shave demand during peak hours and battery storage systems can be programmed to charge up during off-peak hours and discharge during periods of peak demand. Through this operation customers may be able to reduce the non-commodity aspect of their electricity bills.
Self-generation and price certainty
The commodity element of the electricity price is more volatile and strongly depends on weather conditions, intermittent generation and primary fuel prices such as gas or coal. Customers who operate microgrids with generation assets are less dependent on energy imports as they can generate their own energy or buy locally generated energy, within the bounds of the microgrid, making them less vulnerable to unexpected peaks in energy prices of the wholesale market. Figure 1 depicts the historical average annual wholesale electricity prices since 2001 and projections to 2035. This is an upward price trend occurring over time. Microgrids can help safeguard against the increasing upward volatility of retail energy prices.
Developing a microgrid strategy
As the adoption of energy-hungry devices such as electric vehicles and the electrifications of heat gather pace, the reliance on electricity will drive increases in energy costs due to increasing demand and the additional costs of upgrading the grid. Microgrids can be used to create a smarter energy infrastructure system to better optimise the distribution of energy and reduce costs.
Advances in technology and the falling cost of technology such as solar PV and energy storage1, are providing a good financial case for businesses to transition towards microgrids. Ensuring continuity of supply means that businesses can support their customers and this in turn drives customer satisfaction. While market awareness and the appeal of microgrids is on the rise, businesses do recognise that there are technical challenges associated with the development and ownership of microgrids. Microgrids are complex systems as they integrate several types of technologies into a single energy solution. The successful design of a microgrid solution requires market experts with experience in all aspects of the elements that make up a microgrid, including on-site generation, energy storage, as well as supervisory control and data acquisition (SCADA) systems used to monitor and control industrial plants or equipment. To unlock the full potential value of such projects, each application has to be evaluated on a case by case basis.
At UK Power Networks Services, we are experts in distributed energy solutions and power distribution, integrating decentralised energy resources and new emerging technologies. We provide holistic energy solutions that include energy technology consulting, asset financing, project delivery, design and build, operations and maintenance and asset management. As we are a client led business, with a technology agnostic approach to our solutions, we are able to provide the most suitable solution to businesses' energy requirements that aligns to their energy strategy and strategic operational objectives coupled with the financing required to successfully deliver the projects.
*Bloomberg New Energy Outlook 2018: https://bnef.turtl.co/story/neo2018?teaser=true
1. BEIS projections of the future electricity prices for the both commodity and non-commodity elements (Annex M: Growth assumptions and prices: Reference Scenario) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/670353/Annex-m-price-growth-assumptions.xls