Maximizing Savings with BESS (Battery Energy Storage System): Useful examples to Cutting Daily Energy Costs

Battery Energy Storage Systems (BESS) are increasingly being adopted across various sectors due to their ability to store energy and release it when needed. When compared to relying solely on grid electricity, BESS offers several advantages, especially when considering time-of-use electricity rates, demand charges, and other cost structures. Below is a detailed outline of useful situations where BESS provides significant advantages over using grid electricity.

1. Peak Shaving During High Electricity Demand Periods

Scenario : Many utilities charge higher rates during peak hours (e.g., 4 PM–9 PM). BESS can reduce costs by discharging stored energy during these periods.

Advantage : Avoid high peak-hour rates and reduce demand charges.

• Example : A commercial building in California pays $0.30/kWh during off-peak hours and $0.50/kWh during peak hours. By charging the battery at $0.30/kWh and discharging during peak hours, the building avoids paying $0.50/kWh.
• Calculation :Daily peak consumption = 200 kWhSavings per day = 200 kWh × ($0.50 – $0.30) = $40/dayAnnual savings = $40 × 365 = $14,600/year

2. Time-of-Use Optimization

Scenario : Utilities implement time-of-use (TOU) pricing, where electricity rates vary throughout the day. BESS allows users to store energy during low-rate periods and use it during high-rate periods.

Advantage : Minimize electricity costs by shifting usage to cheaper periods.

• Example : A residential user in Texas pays $0.10/kWh during off-peak hours (midnight–6 AM) and $0.25/kWh during peak hours (3 PM–8 PM).
• Calculation :Daily peak consumption = 10 kWhSavings per day = 10 kWh × ($0.25 – $0.10) = $1.50/dayAnnual savings = $1.50 × 365 = $547.50/year

3. Reducing Demand Charges for Commercial Users

Scenario : Commercial customers often face demand charges based on their highest power draw during a billing cycle. BESS can smooth out spikes in demand.

Advantage : Lower demand charges by reducing peak load.

• Example : A manufacturing plant pays $10/kW for demand charges. Without BESS, the peak demand is 500 kW. With BESS, the peak demand is reduced to 400 kW.
• Calculation :Monthly demand charge reduction = (500 kW – 400 kW) × $10/kW = $1,000/monthAnnual savings = $1,000 × 12 = $12,000/year

4. Backup Power During Grid Outages

Scenario : In areas prone to power outages (e.g., hurricanes, wildfires), BESS provides reliable backup power.

Advantage : Avoid downtime and potential revenue loss during outages.

• Example : A hospital in Florida uses BESS to power critical systems during outages. The grid outage lasts 12 hours, and the hospital consumes 500 kWh during this period.
• Calculation :Cost of diesel generator fuel = $0.30/kWhSavings from BESS = 500 kWh × $0.30/kWh = $150 per outageAssuming 5 outages/year: $150 × 5 = $750/year

5. Renewable Energy Integration

Scenario : Solar or wind energy generation may not align with consumption patterns. BESS stores excess renewable energy for later use.

Advantage : Maximize self-consumption of renewable energy and reduce reliance on the grid.

• Example : A solar-powered home generates 30 kWh/day but only consumes 20 kWh during daylight hours. The remaining 10 kWh is stored in BESS for nighttime use.
• Calculation :Nighttime grid rate = $0.20/kWhSavings per day = 10 kWh × $0.20 = $2/dayAnnual savings = $2 × 365 = $730/year

6. Frequency Regulation Services

Scenario : Grid operators pay for frequency regulation services to stabilize the grid. BESS can participate in these programs by quickly charging or discharging.

Advantage : Generate additional revenue streams.

• Example : A utility in New York pays $5/kW-month for frequency regulation services. A 1 MW BESS participates in the program.
• Calculation :Monthly revenue = 1,000 kW × $5/kW = $5,000/monthAnnual revenue = $5,000 × 12 = $60,000/year

7. Arbitrage in Wholesale Energy Markets

Scenario : In deregulated markets, electricity prices fluctuate hourly. BESS operators can buy low-cost energy and sell it back at higher prices.

Advantage : Profit from price differences in wholesale markets.

• Example : An energy trader buys electricity at $0.05/kWh during low-demand hours and sells it at $0.20/kWh during high-demand hours.
• Calculation :Daily arbitrage volume = 1 MWhDaily profit = 1,000 kWh × ($0.20 – $0.05) = $150/dayAnnual profit = $150 × 365 = $54,750/year

8. Load Shifting for EV Charging

Scenario : Electric vehicle (EV) charging stations experience high demand during peak hours. BESS can shift charging loads to off-peak hours.

Advantage : Reduce peak demand charges and electricity costs for EV charging.

• Example : An EV charging station in California charges 10 vehicles during peak hours, consuming 500 kWh. Off-peak rates are $0.15/kWh, while peak rates are $0.40/kWh.
• Calculation :Savings per day = 500 kWh × ($0.40 – $0.15) = $125/dayAnnual savings = $125 × 365 = $45,625/year

9. Microgrid Operation in Remote Areas

Scenario : Remote communities or industrial sites rely on expensive diesel generators or unreliable grid connections. BESS combined with renewables can provide stable, cost-effective power.

Advantage : Reduce fuel costs and improve reliability.

• Example : A remote mining site in Australia replaces 50% of its diesel consumption with BESS and solar. Diesel costs $0.30/kWh, and the site consumes 10,000 kWh/day.
• Calculation :Diesel savings = 50% × 10,000 kWh/day × $0.30/kWh = $1,500/dayAnnual savings = $1,500 × 365 = $547,500/year

10. Ancillary Services for Grid Support

Scenario : BESS can provide ancillary services like voltage support, black-start capability, and spinning reserves to grid operators.

Advantage : Earn revenue while improving grid stability.

• Example : A utility in Texas pays $10/kW-year for voltage support services. A 500 kW BESS participates in the program.
• Calculation :Annual revenue = 500 kW × $10/kW = $5,000/year

Battery Energy Storage Systems offer significant financial and operational advantages over relying solely on grid electricity, particularly in scenarios involving peak shaving, time-of-use optimization, demand charge reduction, renewable energy integration, and participation in energy markets. The examples above demonstrate how BESS can save costs, generate revenue, and enhance energy resilience.

BESS provides advantages in peak shaving, time-of-use optimization, demand charge reduction, backup power, renewable energy integration, frequency regulation, arbitrage, EV load shifting, microgrid operation, and ancillary services .

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