Public sector organisations are increasingly examining how they consume energy and the associated costs of doing so. This raises the question of whether consumption at the point of production is the most efficient solution.
A current hot topic is energy storage technologies such as battery systems, pumped hydro storage, compressed air and flywheels. These technologies are capable of absorbing and releasing energy when required and providing additional power services which help benefit the grid system. They can also support renewable energy solutions and help to decarbonise the UK's energy supplies.
From a commercial perspective, energy storage technologies provide opportunities to reduce energy costs and create income, for example by selling frequency response and demand side services to the National Grid.
With the public sector spending over £1 billion per annum buying energy, what can it do to become more involved in energy storage projects and realise these benefits?
We have identified below a number of perceived challenges which can be overcome:
- Cost – financial models from energy storage projects can now demonstrate short payback periods against the initial capital expenditure, as well as savings, avoiding costs and the generation of revenue;
- Nascent technology – this is a fast growing area and energy storage technologies are continually developing. As more projects are completed, the price of finance is becoming cheaper and more innovative business models are being developed to drive this market;
- Existing assets – public sector organisations own a number of energy generating assets which can be maximised through energy storage solutions;
- Other priorities – in a time of having to contend with significant cuts in spending, public sector organisations should view energy as a means of saving costs and generating revenue.
Bevan Brittan has advised both private and public sector clients in this innovative energy space – including various NHS Trusts and local authorities about energy storage solutions and their role in National Grid support services. For more information, please contact one of the team: Nadeem Arshad, Nathan Bradberry or Thomas Graham.