In the UK there are significant charges placed for consuming energy at certain times of the day, these are on top of standard fees. However, many businesses can negate some of the extra costs by investing in energy storage technology.
The future of energy storage
With advancements in technology and communications, the way in which energy is supplied and consumed will continue to change. The traditional model of large thermal power stations will be replaced with a highly connected system of responsive energy generation from both supplier and consumers, within a Smart City infrastructure. The benefits will see consumers have a clean, secure and reliable electricity supply to power homes, business and vehicles.
Although there is no clear definition for a Smart City, the European Commission – Digital Single Market states that, “A smart city is a place where the traditional networks and services are made more efficient with the use of digital and telecommunication technologies for the benefit of its inhabitants and businesses.”
From the definition it is clear that the priorities of a Smart City are the same as any conventional city, which is to successfully manage and incorporate hard infrastructure, including: systems that control street lighting, road signals, water flow and crucially, the supply of energy to homes and businesses within local communities.
Within the Smart City, a microgrid system that is powered by renewables matching electricity supply with local demand rather than national demand, will offer users greater control and flexibility in their electrical supply. Connected consumers that harness the power of energy storage technology, can switch to the stored renewable supply at any time they wish, giving a constant and reliable supply of electricity, whilst reducing electricity costs and carbon emissions.
The benefits of storage can also help make a significant saving on companies’ energy bills, particularly when taking into consideration the additional peak tariffs placed by grid operators, such as DUoS and Triads. Energy storage technology can also provide users with financial incentives, which can be accessed by assisting the National Grid in maintaining frequency and demand.
DUoS – Distribution Use of Systems Charges
The charges that impact companies’ energy bills the most are DUoS tariffs. The UK’s electricity distribution operators control the fees with funds going towards the operation, maintenance and development of the country’s electricity distribution network. Traditionally, DUoS tariffs are split into four subheadings; fixed, capacity, reactive power and unit.
Fixed charges are daily costs added to users electricity bills, regardless of how much energy has been consumed. Capacity fees, also referred to as availability or fixed daily charges, are related to a sites’ Maximum Import Capacity (MIC). If a site is importing a higher capacity than required, the facility is effectively wasting money and will be penalised. Some products and electrical systems require reactive power, which increases energy flow on the distribution network. If a business uses more reactive power than the pre-determined figure, the company will be charged again.
Finally, the most well known DUoS tariff is the unit charge, which is placed on how many kilowatt hours (kWh) of electricity has been consumed during a specific period in the day. Unit charges vary from region to region (fig 1.) and normally account for around 15-19% of a typical non-domestic electricity bill. However, as each Distribution Network Operator has a local monopoly on the supply of electricity, it is not possible to ‘shop around’ for the cheapest DUoS tariffs and unfortunately these costs are on the rise each year.
To avoid DUoS charges, many businesses will simply try to limit or reduce electricity consumption at peak tariffs, usually Monday – Friday between 16:00 – 19:00 hours, although, a shutdown may not be possible if an organisation consumes a high level of energy throughout the day. As DUoS tariffs are published in advance, the charge can be avoided with correct load management systems, such as energy storage technology. The system will store the less expensive electricity at night, or during off peak periods, usually from 00:00 – 07:30, 21:00 – 24:00 and across the weekend. The battery will then be able to discharge the stored energy at a DUoS period, allowing companies to save up to 10% on electricity cost.
Further charges that many companies can avoid are Triads, three half-hour periods with the highest system demand between November and February. Triad charges are similar to DUoS in that the tariff is affected by the geographical location of businesses (fig 2.). On the other hand, Triads are difficult to predict and most electricity suppliers will try and warn customers when they believe a Triad period might be coming. These warnings are intended to give users the opportunity to reduce the amount of electricity used.
Due to the significant charges, many large consumers of energy will simply choose to shut down operations when the company believes a Triad period is going to occur. However, the shutting down process can be highly disruptive to business operations and potentially lead to missed revenue opportunities.
The only way to avoid Triad charges completely, whilst operating all electrical systems as normal, is for businesses to come off the National Grid and use electricity through energy storage technology. Storage mediums have been given the backing of the Carbon Trust which, in a 2016 report, listed Triad avoidance as a key benefit for customer focussed services. 
Saving through assisting the National Grid
Energy storage solutions not only save businesses due to coming off the National Grid in periods of high tariffs, the technology can also give financial incentives to large electricity consumers by providing the grid additional support to the when required, known as Demand Side Response (DSR). DSR can be any method of assisting reserve, frequency response, peak avoidance and capacity on the electricity network. The DSR incentives are broken up into three categories: Demand Side Balancing Reserve (DSBR), Firm Frequency Response (FFR) and Enhanced Frequency Response (EFR).
DSBR is a relatively recent incentive, given to large energy users that reduce electrical demand during high periods of demand, such a weekdays between 16:00 – 20:00. During the high demand time period, businesses can either switch off non-essential equipment or use off-grid power sources, such as energy storage, and continue to operate as usual. Supporting grid capacity using energy storage can be significantly cheaper than maintaining electricity use through periods of high demand hours, and DSBR also assists in reducing carbon emissions and improving energy security.
FFR payments are given to companies that can maintain frequency on the National Grid if the service ever deviates below a certain level, usually occurring with a large loss of generation. FFR covers a timeframe from up to a few seconds all the way to 30 minutes and in order to access its benefits, users should be able to supply frequency response when the low frequency trigger point is activated. With the ability for energy storage to be connected to the National Grid and discharge electricity almost instantly, the technology will ensure that at least 95% of all FFR demands from the grid are delivered successfully.
The most beneficial National Grid incentive is EFR, which is defined as being a frequency source that achieves 100% active power output at one second, or less, of registering a frequency deviation. Not much is known about EFR services, as it is a new scheme being developed to improve the management of system frequency. However, as energy storage technology can respond to changes in grid frequency within an 11 millisecond timeframe, the solution is expected to be one of the only mediums that will be able to apply for EFR benefits.
The smart solution
By avoiding DUoS and Triad charges, alongside providing National Grid incentives to customers, energy storage systems are already helping businesses make significant savings on electricity bills. Even though consumer focussed energy storage technology is in its infancy, the solution is emerging as one of the best solutions to address the growing concern that national energy grids are struggling to cope with the surge in demand for electricity, which continues to accelerate.
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