Battery energy storage systems (BESS) in commercial settings deliver cost savings through multiple mechanisms, combining operational efficiency with strategic energy management:
1. Demand Charge Reduction
BESS stores energy during low-demand periods and discharges it during peak hours, significantly reducing demand charges (based on the highest instantaneous power draw from the grid). This is often the largest electricity cost component for commercial users. For example, a 4-hour BESS can lower peak grid consumption, directly cutting these charges.
2. Energy Arbitrage
By charging batteries during off-peak hours (when electricity prices are low) and discharging during high-cost periods, businesses reduce energy procurement costs. EVESCO’s systems, for instance, shift consumption to cheaper times, directly lowering bills.
3. Lower CAPEX with Declining Costs
Battery costs are projected to decline through 2035 at annual rates of 1.4–4.0% across scenarios (Conservative to Advanced), driven by improved lithium-ion chemistry and economies of scale.
- Current Li-ion BESS costs:
- Projected reductions: Up to 52% CAPEX decline by 2035 under the Advanced Scenario.
| Duration | Cost per kWh |
|---|---|
| 1-hour | $211 |
| 4-hour | $199 |
| 8-hour | $164 |
4. Enhanced Renewable Integration
BESS paired with solar/wind stores excess renewable energy, reducing reliance on grid power during high-tariff periods. This avoids purchasing peak-rate electricity, exemplified by AES Corporation’s deployments.
5. Revenue from Grid Services
Businesses can participate in demand response programs or wholesale energy trading. EVESCO’s systems enable revenue through balancing services like FFR (Fast Frequency Response) or capacity markets.
6. Resilience & Backup Savings
BESS provides uninterrupted power during outages, preventing operational losses (e.g., in refrigerated storage or manufacturing).
Payback Period & ROI
- Typical payback: 5–10 years, depending on system size and local tariffs.
- Long-term savings: Energy arbitrage and demand charge reduction often yield annual savings exceeding 20–30% of electricity costs.
Key Cost Drivers:
- Battery chemistry: Li-ion dominates for its balance of cost ($164–$211/kWh) and lifespan.
- System design: Higher energy-to-power ratios (E/P) reduce $/kWh costs (e.g., 8-hour storage at $164/kWh vs. 1-hour at $211).
- Incentives: Tax credits and subsidies (not detailed in sources but implied as market accelerators).
By optimizing these factors, commercial BESS users achieve dual financial and sustainability benefits.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-cost-savings-associated-with-using-battery-energy-storage-systems-in-commercial-settings/
