Around 30 GigaWatts of the UK’s older fossil fuel and nuclear capacity is due to be decommissioned by 2025. At the same time, more and more of us are taking delivery of our first electric car, pulling away from the lights much faster than the petrol heads while fuelling a significant increase in the national electricity demand.
Furthermore, with the advent of renewables, the problem of balancing supply and demand within the National Grid is become ever more challenging, leading to periods of excess demand and ‘negative electricity prices’.
And with all this comes an increasing expectation of power cuts, grid constraints and increasing electricity costs.
Enter battery storage, and in particular, home battery storage. And smart meters, and smart electricity tariffs.
Smart electricity tariffs
We have often mentioned ‘multi-tiered’ time-of-use tariffs like Bulb's smart tariff, which charges different rates for peak and off-peak periods.
To take full advantage of this tariff, you really need a battery. As well as soaking up excess solar output, this will enable you to charge your battery (and your electric car) at night, and then discharge during the peak 4pm-7pm period such that you avoid the punitive peak rate.
Many of our customers have installed Powerwall 2 to do just this. From now on Powerwall 2 can also be used to keep their solar system working and provide back-up in the event of a power cut.
Saving excess solar, peak charge avoidance, and providing a back-up in a power cut are the three main uses of domestic battery storage. But your home solar battery can also be part of a ‘virtual power station’, used to balance the grid.
In February 2019, Shell announced that it was buying the German battery company, Sonnen. Sonnen is responsible for building Germany’s biggest virtual battery – a network of domestic battery storage systems located across Germany and helping to balance supply and demand in the German power grid.
Similar developments are occurring in the UK:
- EDF Energy is building a network of small-scale batteries. In return for helping balance the grid for 10 years, they are offering an upfront discount on the cost of a Powervault battery.
- Meanwhile a plethora of new utility companies such as Octopus Energy, Social Energy and Tonik have entered the market offering innovating tariffs based on wholesale pricing and accessing income from grid balancing. You generally need a smart meter (SMETS2) to be able to benefit, enabling your electricity consumption to be recorded at half hourly intervals (around 17,500 meter readings a year).
Agile Octopus
With the Agile Octopus tariff, you get access to half-hourly prices, tied to wholesale prices and updated daily. So when wholesale prices drop, so do your electricity bills. Here’s what a week’s worth of wholesale electricity pricing looks like, courtesy of my new favourite website:
According to Agile, over the last 12 months, a typical UK family would have saved £210 compared to the average Big 6 variable tariff. They could save another £120 by shifting their electricity use outside peak hours. No battery required for this.
Separately, Octopus has this week launched its own version of the Export Tariff, called Outgoing Octopus (good name… who wouldn’t want an extrovert octopus for a pet). This pays a flat rate of 5.5p per kWh of exported electricity. By contrast, Agile Octopus pays a variable rate based on day-ahead wholesale prices.
Social Energy
Social Energy is new utility company. The company has teamed up with Solax, Duracell and Triple Power to produce the first domestic battery system eligible to earn income from providing balancing services to the National Grid.
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Under the Social Energy concept, the customer installs a battery alongside solar, and a smart meter. They then sign up to Social Energy’s variable rate tariff (currently around 16p per kWh in the south of England).
Social Energy will then use your battery to generate savings on this tariff by:
- storing excess solar for use at night / when the solar panels are not producing enough electricity to cover the loads;
- allowing the customer to buy cheap electricity at night, store it and then use it in the day.
- trading electricity;
- charging and discharging the battery to balance supply and demand in the grid, and earning an income;
- applying the smarts of Artificial Intelligence (via the Social Energy Hub) to learn the customer’s behaviour (i.e. electricity usage), know the weather forecast, monitor national supply and demand and use this information to manage your battery to minimise your bill.
Social Energy makes its money as a utility and by sharing any trading profits and grid services income with the customer.
The savings are not guaranteed, but Social Energy predicts that they will cut the customer’s bill by somewhere between 35% and 70%.
As with all battery storage investments, the overall return will depend on what happens to electricity prices – the higher they rise, the more you save. It also depends on the life expectancy of the battery - this can be reduced by grid balancing, depending on how much the battery gets charged and discharged through grid balancing.
Look beyond the tariff
If you are purchasing a battery system with a view to signing up for one of these tariffs it’s important to be aware that you may at some point wish to reclaim your battery for your own use and switch to an alternative tariff. To allow your battery to be controlled remotely by a utility, you typically need to sign a contract with a one or two month notice period. In the event that you give notice, you need to ensure that you are left with a system that has sufficient functionality to serve as a viable asset in its own right, without the utility's remote control software. Storage of excess solar and time of use charging and discharging are the minimum functionality you should be looking at.
And as always with battery storage, pay attention to the system warranties. The devil is in the detail.
Request a quote
If you'd like a quotation for Powerwall 2, Powervault or Social Energy's system (Solax + Duracell+ grid services tariff), please get in touch. Call 0118 951 4490, email info@spiritenergy.co.uk, or fill in our online form:
