Examining the use cases for industrial-scale battery storage

The UK's 6MW / 10MWh 'Big Battery', in UK Power Networks' Smarter Network Storage trial. Image: S&C Electric.
In contrast to “behind-the-meter” household energy storage systems, whose operational strategy is generally aimed at local financial optimisation of power consumption, the use cases for battery technologies on an industrial scale are primarily determined by the requirements of the electricity supply grids, particularly the regional distribution grids.

Over the past decade, stricter connection conditions have paved the way for pilot applications in this area in some regions with particularly weak utility grids. For example, in French overseas territories it has been the case for some years now that renewable energy generators can be connected to the utility grid only if a significant portion of daily energy production is postponed until the evening hours—and this postponement can be achieved only with a storage system. In this case, the storage system stabilises the utility grids statically by balancing consumption and generation over the course of the day; this is referred to as energy application.

Countries such as Puerto Rico and Mexico see more of a risk with regard to the dynamic stability of utility grids; they define permissible ramp gradients for the peaks and valleys in renewable energy generation. Whereas it is relatively easy in terms of control engineering to limit increases in photovoltaic energy generation with increasing irradiation, for example, sudden decreases in generation in the event of cloud drift can only be countered with a storage system. In this case, the focus is on storage system performance — less energy is actually stored and lower capacities are required.

What both of these application examples have in common is that volatility in generation is reduced at the point of origin. And as with “behind-the-meter” storage systems, this local optimisation may not necessarily be the best solution—in most cases, a generally more efficient storage system design could probably be found through smarter configuration in the utility grid, although in this case the owner of the power generation system would no longer be qualified to be the operator.

Provision of operating reserve—an almost generic use case for battery-storage systems

The provision of operating reserve generally also serves the purpose of both dynamic and static stabilisation of utility grids. In addition, the load on power plants is initially reduced in the utility grid, when large loads are switched off or additional renewable energy generation is fed in. The surplus must be absorbed through reduced generation by other power plants or through energy storage; this is referred to as negative primary operating reserve.

By contrast, if generation stops—for example due to shaded PV systems or a sudden period of low winds—this needs to be replaced in the short term, in this case with positive primary operating reserve. Longer-term balancing processes can also be summed up with the terms “secondary reserve” and “tertiary reserve” (also referred to as “minute reserve”). These applications also work with battery-storage systems, without having to be directly allocated to the power generation systems or loads that cause them.

In Europe and the U.S., battery-storage systems are already being used in commercial applications to provide operating reserve. One such example is the 10 MWh storage system operated by UK Power Networks in Bedfordshire (dubbed the Big Battery, for UK Power Networks’ Smarter Network Storage trial). However, pilot plants are currently much more common, such as the M5BAT system in Aachen with around 5MWh, which is subsidised by the German government. The crucial aspect, of course, is efficiency—projects are still failing because the payback periods are too long.

But things are changing. In the current primary reserve market in Germany, for example, annual income of approximately €130,000 (US$145,000) to €150,000 can be generated for each megawatt of installed power. Assuming that battery-storage systems can currently be installed for less than €800,000 per megawatt, this creates interesting financial prospects.

When you speak to municipal utilities, which always have to provide operating reserve from conventional power generation, you are generally met with a positive attitude. A conventional power plant whose operations do not have to be curbed to be able to increase its power output at any time, could be operated much more efficiently when combined with a battery-storage system, with the additional income from the sale of surplus power generation helping refinance the battery-storage system. In all of these considerations, however, we must warn against overestimating this market. All of Europe tenders 3GW of primary operating reserve in total, with only 600MW of this, for example, attributable to Germany. If all of the virtual power plants from household storage systems that also want to participate in this market do in fact join the market in the future, there could soon be a price war that harms the market long term.

While in the home, battery storage is most likely to be about optimising energy use - especially in conjunction with PV - at utility-scale the picture is more varied and complex. Image: SMA.
Efficient provision of operating reserve on a large scale in South Korea

The provision of operating reserve is evidently even more efficient in South Korea, where the state-owned electric utility company KEPCO recently concluded its second tender for installation of large-scale battery-storage systems in the utility grid. After 50 MW last year, a total of 200MW / 200MWh is to be installed in 2015. But why is South Korea leading the way so decisively here? Two interconnected factors come into play. First, South Korea is an island as far as energy technology is concerned: Surrounded by the sea on three sides, it also has no connection to the supply grids in neighbouring North Korea. In addition, the South Korean government anticipates sustained economic growth and therefore also growing energy demand. This demand will mainly be covered by renewable energy.

As an island, South Korea cannot purchase operating reserve abroad, but instead has to provide this in full itself. Likewise, it is not possible to sell surpluses to foreign countries. The fact that the industry producing these high-quality battery-storage systems is so strong in the country, almost certainly facilitated the selection of the technical concept. In the coming years, storage capacity will be expanded to over 1GWh—more than is tendered in Germany for primary operating reserve.


In technical terms, large-scale battery-storage systems are ideally suited for provision of operating reserve. In addition to the dynamic advantages of the power electronics connection, other advantages of using batteries for grid stabilisation include fast implementation, simple scalability and the fact that they can be used in almost any location. However, with regard to efficiency there needs to be a framework that guarantees sustainable investment security, in which doubts are still being expressed in Europe at least. However, if the need is great enough and if as in Korea—and also in California, where legislators have stipulated expansion targets for energy storage—there is not only a market but also a regulator that keeps the long-term stability of the utility grids in mind, then there are hardly any obstacles in expansion of large-scale battery-storage systems.

This Guest Blog was co-authored by Volker Wachenfeld and Dr. Alexsandra Sasa Bukvic-Schaefer, who is also in the Hybrid Energy Solutions & Storage Integration division of SMA Solar Technology.

Providing operating reserve to balance supply and demand on the grid in Germany can generate EUR150,000 per megawatt, but the overall size - and potential size - of this market should not be overestimated. Image: UK Power Networks.

This article requires Premium SubscriptionBasic (FREE) Subscription

Enjoy 12 months of exclusive analysis

  • Regular insight and analysis of the industry’s biggest developments
  • In-depth interviews with the industry’s leading figures
  • Annual digital subscription to the PV Tech Power journal
  • Discounts on Solar Media’s portfolio of events, in-person and virtual

Or continue reading this article for free

Email Newsletter