The demise of subsidies for solar PV has seen the number of new installations plummet – both for residential and commercial sites. The latest data* shows that investment in solar crashed by 56% in 2017 since the Government dramatically cut support. 2017 is the second successive year that solar deployment has fallen in the UK.
The dramatic fall in solar PV installations continues despite the cost of solar continuing to come down – equally dramatically – over the past 5 years. To install a 50kW system in 2011 would have cost around £120,000. In 2018, the same 50kW system could be installed for roughly £42,000. The fact is the low costs mean that the returns from solar PV are still very good; it is common misperception that the demise of subsidies means that solar is no longer a sound investment.
Storage to the rescue?
Within the energy industry, storage has been the hot topic of the past 18 months. The reality is that in terms of installation numbers, the deployment of battery storage hasn’t lived up to the hype. There are a number of reasons for this.
First, businesses have to reach a fundamental level of awareness and understanding before investing in storage. Even when a business understands the benefits, the financial justification has to add up. While early adopters have embraced the technology, we are nowhere near crossing the bridge to mainstream use of battery storage technology.
The energy storage sector is continually growing through innovation. Meanwhile, businesses are finding new and improved ways to benefit from the use of battery systems, which leads to rising demand and falling costs. Lithium-ion batteries – the core component of battery storage, are expected to fall as much as 50% by 2020.
The business case for investing in solar and battery storage becomes stronger when the two are linked.
With limited subsidies available for solar, it’s difficult to see a return on investment based on payments for generating and exporting power alone. However, by using the solar power that is generated to supply plant and other electrical loads – so called ‘self-consumption’, businesses reduce the electricity that they need to buy from the grid.
Self-consumption is possible for most businesses because they operate during daylight hours when solar is generating at its peak. Adding battery storage enables commercial users to fully optimise their self-consumption, ensuring that they maximise the use of the power they generate from the sun by storing any power that isn’t used in real-time rather than exporting it to the grid.
Ensuring a constant source of readily available power is imperative for many organisations. It’s not just hospitals and data centres that need backup power; manufacturers with critical processes and businesses like call centres and many others recognise that having a business continuity strategy is essential to keep their businesses online.
In the past, many businesses have depended on diesel generators to provide backup power. The new Medium Combustion Plant Directive (MCPD) has introduced new restrictions on the use of diesel generators for standby power. For some businesses, batteries can offer an alternative, cleaner source of standby power to ensure that their operations stay up and running.
Overcoming grid constraints
Some businesses who want to deploy large solar plants to offset their dependence on the grid come up against a major obstacle when they find that their local infrastructure isn’t up to the job. Installing new connections to the grid to handle the power output from larger solar installations can be prohibitively expensive.
In such cases, storing PV to maximise self-consumption can be a way to overcome transmission constraints and enable the installation of large PV arrays to go ahead without incurring excessive connection charges.
It’s becoming clear that taking a more holistic approach to energy for many businesses is the key to unlocking the returns from new technology. Combining battery storage with solar PV delivers a whole that is greater than the sum of its parts.