In a newly released study, climate and energy strategy advisory firm Meridian Economics has determined that optimally sized batteries offer immediate opportunities for many commercial and industrial firms to reduce their electricity costs.

The study, published on December 4, aimed to evaluate the business case for commercial and industrial companies to invest in behind-the-meter batteries. It sought to identify the different value streams created by batteries and quantify their contributions to reducing the cost of grid-bought electricity.

The findings revealed that, for consumers with varying hourly load profiles, the optimal financial value in net present value (NPV) terms is achieved at current battery costs by installations with a power capacity of 30% to 40% of peak demand and a storage capacity of 5% to 10% of average daily consumption.

Smaller battery capacities, while yielding a lower NPV, offer higher returns on investment. The study also highlighted that State-owned utility Eskom’s proposed tariff restructuring could enhance the value proposition for battery investments, provided customers reduce their reserved capacity, known as notified maximum demand.

Additionally, the study concluded that waiting for battery costs to fall further would not be advantageous, as the cost of higher electricity tariffs during the interim would outweigh the benefits.

As battery costs decline over time, incremental additions to existing installations may become viable.

For baseload consumers, the study identified opportunities for smaller investments with power capacities of about 10% of peak demand and storage capacities of about 2% of average daily consumption.

While larger battery installations currently rely on energy arbitrage for cost savings, this alone would be insufficient to justify the investment under current and projected energy tariffs.

However, this could change if battery storage costs decrease significantly, by about 25% to 30%.

The research emphasised that in all scenarios, the value created by batteries would be significantly enhanced when combined with increased rooftop solar installations.

Further, behind-the-meter battery systems could offer municipalities an opportunity to alleviate peak demand on distribution infrastructure, creating capacity for new customer connections.