A groundbreaking study by Meridian Economics reveals that battery energy storage can be a game-changer for South African businesses, unlocking significant cost savings and a more sustainable energy future. This report, published on the first week of December 2024, highlights the financial viability of investing in behind-the-meter batteries, emphasising their potential to reduce energy costs for businesses significantly.
The study by the Cape Town-based energy strategy and advisory firm outlines various scenarios based on different battery sizes, customer load profiles, existing rooftop solar capacity, and electricity tariff structures. Key findings indicate that optimally sized batteries can provide immediate cost-saving opportunities, particularly for C&I customers with variable load profiles. The report demonstrates that the right battery configurations can yield high investment returns while offering multiple ancillary benefits.
Optimal Battery Specifications
Among the notable insights is the recommendation for specific battery capacities tailored to consumer needs. For instance, installations with power capacities of 30-40% of peak demand and storage capacities of 5-10% of average daily consumption are identified as providing maximum financial value in net present value terms (IRR). Smaller batteries may offer higher internal rates of return but typically result in lower overall financial benefits (NPV).
The study also emphasises the importance of timely investment decisions, cautioning against waiting for further reductions in battery costs. The cost of delayed investment could outweigh potential savings from future price drops, especially considering the current high electricity tariffs. As battery prices continue to decline, businesses can incrementally add capacity to their existing installations.
Baseload Consumer Opportunities
For baseload consumers, the report suggests that smaller investments—approximately 10% of peak demand for power capacity and 2% of average daily load for storage—can yield attractive returns. However, larger installations primarily benefit from energy arbitrage, which may not be sufficient at current energy tariffs unless battery costs decrease significantly.
Furthermore, the study highlights that the value created by batteries is greatly enhanced when paired with increased rooftop solar installations. This combination not only boosts self-consumption but also contributes to overall energy efficiency.
Municipal BTM Benefits
The implications extend beyond individual businesses; municipalities can leverage behind-the-meter(BTM) batteries to alleviate peak demand on distribution infrastructure and create capacity for new customer connections. This strategic approach supports broader sustainability goals and enhances energy resilience across communities.
In summary, Meridian Economics’ study presents a compelling case for C&I companies to invest in battery energy storage. By understanding the optimal configurations and timing for investments, businesses can achieve substantial cost savings while contributing to a more sustainable energy future in South Africa.
EDITORIAL: ESGFrontiers
The report can be downloaded in full here: https://meridianeconomics.co.za/wp-content/uploads/2024/12/Battery-Business-Case-V1.0.pdf
