Maximising Revenue and Efficiency with BESS
Battery Energy Storage Systems (BESS) are revolutionising the way commercial, industrial, and utility-scale operators approach energy management. With capabilities beyond simple storage, BESS unlocks diverse revenue streams by supporting the grid, participating in market mechanisms, and enhancing energy efficiency. Here, we delve into how C&I and utility-scale operators can leverage BESS for operational excellence and financial gain.
C&I BESS Revenue Streams and Operational Modes
1. Self-Consumption Optimization
Overview: In this mode, BESS stores excess energy from on-site renewables (like rooftop solar) and discharges it when demand peaks, reducing reliance on the grid.
Benefits: This model reduces grid purchases, particularly during peak-rate times, which is ideal for companies aiming to maximise renewable energy use and minimise costs.
Revenue Impact: By increasing on-site energy consumption, self-consumption optimization minimises costs and improves profitability when renewable energy rates are favourable compared to grid prices.
2. Time-of-Use (TOU) Optimization
Overview: BESS charges during low-cost periods (e.g., afternoon) and discharges during high-cost times (e.g., evenings), leveraging time-of-use pricing.
Benefits: This mode helps businesses avoid peak-rate charges, offering significant cost savings for C&I users in regions with notable TOU rate differences.
Revenue Impact: By reducing peak-hour consumption, TOU optimization reduces electricity bills, allowing businesses to reallocate resources to other critical areas.
3. Demand Charge Reduction / Power Expansion
Overview: Many businesses face high demand charges based on their peak energy usage. BESS can lower these peaks by discharging during high-demand times.
Benefits: By minimising demand charges, businesses can effectively “expand” their power capacity without costly grid upgrades.
Revenue Impact: Demand charge reduction creates long-term savings, while avoiding infrastructure upgrades allows for more efficient budget allocation.
4. Imbalance Mechanism Market Participation
Overview: In select markets, BESS can join imbalance markets, adjusting to real-time supply-demand shifts. BESS discharges during undersupply and absorbs surplus energy during oversupply.
Benefits: This model helps balance the grid while generating revenue through frequency stability support.
Revenue Impact: Imbalance market participation provides an income stream, especially during grid strain or high-demand times, benefiting C&I BESS operators.
Utility-Scale BESS Revenue Streams and Market Mechanisms
1. Capacity Reserve and Power Expansion
Overview: BESS provides capacity reserve, ensuring energy availability during high-demand events, supporting grid operators without needing additional generation.
Benefits: Capacity reserves help the grid handle peak loads and emergencies, eliminating the need for new generation assets.
Revenue Impact: BESS operators earn stable income by reserving capacity, even if unused, ensuring reliable revenue for system readiness.
2. Day-Ahead and Intra-Day Market Participation
Overview: BESS participates in wholesale energy markets, storing energy at low-cost times and selling it when prices peak, generating revenue through market arbitrage.
Benefits: Utility-scale BESS supports the grid while benefiting from price volatility in day-ahead and intra-day markets.
Revenue Impact: Market arbitrage can generate consistent revenue, particularly for utility-scale operators managing larger energy volumes, optimising income in fluctuating markets.
3. Tolling Agreements
Overview: Under tolling agreements, energy offtakers pay to use the storage system over 5–10 years, providing a stable and predictable income.
Benefits: This arrangement offloads operational risks from BESS operators while ensuring long-term revenue stability.
Revenue Impact: Tolling agreements are ideal for operators seeking guaranteed income with minimal market exposure.
4. Energy-Only Agreements
Overview: These agreements involve selling stored energy to utilities or grid operators under fixed terms, typically lasting 1–5 years.
Benefits: Provides straightforward, fixed income with shorter contract durations, offering flexibility and clarity for operators.
Revenue Impact: These agreements are perfect for entering the market and securing immediate returns.
5. Capacity Sale Agreements
Overview: BESS operators partner with ISOs/RTOs for long-term contracts (5–15 years), providing capacity payments for grid stability.
Benefits: Ensures financial stability with consistent revenue from capacity reserves.
Revenue Impact: These agreements support operational viability and long-term profitability.
6. Energy Hedges (CFD)
Overview: Contracts for Difference (CFD) provide a secure hedge against market volatility over 1–3 years.
Benefits: Guarantees revenue irrespective of market price fluctuations.
Revenue Impact: Ideal for mitigating risks while securing predictable income streams.
7. Top-Bottom Hedges (TB Hedges)
Overview: Revenue stability is maintained within predefined price bands over 3–5 years, balancing risks and rewards.
Benefits: Provides moderate risk mitigation with potential for higher rewards.
Revenue Impact: Ensures revenue stability while capturing market opportunities within defined parameters.
8. Virtual Power Purchase Agreements (VPPAs)
Overview: Corporates commit to long-term contracts (10–20 years) supporting sustainability goals and securing risk-managed pricing.
Benefits: Aligns with corporate ESG goals while locking in competitive pricing.
Revenue Impact: Offers predictable revenue while advancing sustainability initiatives.
9. Ancillary Services
Overview: BESS provides premium-priced grid services like frequency regulation under short-term, variable agreements.
Benefits: Supports grid reliability while generating additional revenue streams.
Revenue Impact: Ancillary services command high pricing, enhancing financial outcomes for operators.
Finding the Right BESS Solution with Solarity
At Solarity, we specialise in delivering customised BESS solutions tailored to both C&I and utility-scale applications. Whether you’re seeking to reduce energy costs through peak shaving, optimise self-consumption, or participate in lucrative markets, our technology and expertise are here to help you maximise your energy strategy and financial results.
Contact Solarity today to explore how our advanced BESS solutions can empower your operations, streamline costs, and unlock new revenue. Embrace the future of energy with a partner dedicated to innovation and excellence.
Posts you might like:
Subscribe to our newsletter
so that you don’t miss any news!
