A case for solar pv and BESS - Why business should invest.
by SOCO ENERGY | June 13, 2023
Solar energy and battery energy storage systems (BESS) are becoming increasingly popular in South Africa as a way to reduce energy costs and increase energy independence. By combining solar panels and BESS, businesses can take advantage of a range of benefits, municipal energy cost saving including energy arbitrage and diesel fuel savings during power failures, peak shaving, or frequency regulation, etc.
To be more specific, the primary goals of implementing an BESS is to address several challenges that arise when integrating renewables into the grid on a large scale including:
- Batteries are more effective at frequency regulation compared to traditional spinning reserves from power plants.
- Batteries provide a cost-effective alternative to network expansion for reducing the need to curtail wind and solar power generation.
- Renewable power generation often does not coincide with electricity demand, therefore excess renewable energy needs to be either curtailed or exported. BESS allows excess power to be stored in batteries for use later when renewable power generation is low and electricity price and demand is high.
- Storage systems can make the grid more resilient to the impacts of climate change.
Furthermore, one of the main benefits of solar energy and BESS for businesses is the opportunity to save money on energy costs. By generating their own electricity, businesses can significantly reduce their reliance on the grid and the associated costs. This is particularly true for businesses that consume a large amount of electricity, such as manufacturing facilities and large office buildings, shopping malls, etc. Since 2018, South African has seen an increasing number of days of load shedding largely due to a constrained power system with an old unreliable generation system which demands for a new and additional generation capacity.
Figure 1: Trend of increasing days of load shedding (Source: Absa RBB Sectors)
In addition to load-shedding, South African energy consumers are facing increasing tariffs by Eskom (15%) and municipalities (18%) which, for BESS and PV customers, makes the investment an even more attractive business case.
One of the key benefits of solar energy and BESS mentioned briefly earlier is the ability to take advantage of energy arbitrage. This refers to the practice of buying electricity when it is cheap or storing energy generated in a BESS from excess solar and utilising it back downstream when it is more expensive to consume municipal energy. Energy arbitrage is especially viable for consumers on the Time of Use (TOU) tariff structure. This can generate additional savings for the business, further offsetting the initial cost of the solar panels and BESS.
Solar energy and BESS can also provide a valuable backup power source during power failures. Diesel generators are often used as a backup power source, but they can be expensive to operate and maintain. By using solar energy and BESS, businesses can avoid the need to frequently start their diesel generators and avoid the associated fuel costs. This is especially important for businesses that rely on electricity to run critical operations, such as manufacturing, hospitals or data centres, etc.
In addition to the financial benefits, solar energy and BESS also offer environmental benefits. Solar energy is a clean, renewable source of electricity, and by generating their own electricity, businesses can significantly reduce their carbon footprint. This is particularly important in South Africa, where electricity generation is heavily reliant on coal, a major contributor to greenhouse gas emissions.
In conclusion, solar energy and BESS offer a range of benefits for South African businesses. By generating their own electricity, businesses can reduce energy costs, take advantage of energy arbitrage, and avoid the need for expensive diesel generators and achieve real energy independence. Additionally, solar energy and BESS offer environmental benefits by reducing reliance on fossil fuels and reducing greenhouse gas emissions. Overall, solar energy and BESS are an attractive and cost-effective option for businesses looking to increase energy independence and reduce energy costs.
Are you ready to take power back? Reach out to us at SOCO ENERGY for more information and assessment of your needs.