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STORAGE AS A SERVICE: FUTURE PROOFING YOUR BUSINESS TODAY

In the latest instalment of his As a Service series, Robert Macklin, Chief Financial Officer at Powerstar, discusses Storage as a Service (STaaS®), which allows companies to future proof their business and its operations through energy storage technology without capital outlay.

The full article was published by Robert on LinkedIn on Tuesday 31st July, 2018.

 

 

 

 

 


Storage as a Service: future proofing your business today

Currently, the UK stands in the midst of an energy trilemma with fears over magnified energy consumption, excessive CO2 emissions, and exorbitant energy costs causing Governmental and social expectations to increase pressure on UK businesses to hit ambitious energy targets in the name of a decarbonised future.

In addition, doubts over the reliability of the National Grid continue to rise as we move towards this idyllic sustainable future and more renewable generation, which is variable in nature, is introduced into the UK’s energy mix.

Furthermore, for such a future to be achievable on a macro level within the UK, affordable energy solutions which successfully manage all aspects of the energy crisis must be accessible for businesses of all sizes, and that is where the ‘as a service’ model comes in.

The problems: lack of energy resilience, carbon emissions, and funding

Due to the expanding operations that many businesses put in place in order to meet the high standards that consumers demand, it is essential that companies can reliably deliver on time to survive in competitive marketplaces. However, ever-increasing demand is causing energy related failures to become more common, with Centrica’s resilience report last autumn highlighting that 81% of participants reported an energy failure.[1] This poses a risk to operations as well as a business’s bottom line, with Centrica’s report also unearthing that energy related failures can cost businesses as much as 17% of annual revenues.

A solution to this issue exists through the ability of leading-edge energy storage solutions to offer full Uninterruptible Power Supply (UPS) capabilities. Full UPS capabilities offer security of supply in the event of a blackout or brownout, allowing the system to automatically and seamlessly support the load independently of the grid, often within milliseconds. This negates the potentially costly loss of power and enables the company to continue its operating procedures at a time when it would otherwise need to halt production and operations, potentially wasting valuable resources in the process.

In addition to issues of energy resilience, rising energy consumption and the inflated costs they give rise to, as well as ambitious decarbonisation targets from the UK Government, are encouraging a continued and exponential investment into renewable sources for many businesses. This is evidenced by the recent achievement in April 2018, which saw the UK cease its reliance on coal power for 3 consecutive days as renewables contribute to a greater share of the mix.[2]

However, renewable generation sources such as solar and wind are not always reliable and can often suffer from periods of low generation (e.g. if the wind stops blowing) or excess generation (e.g. during particularly sunny days). Both scenarios can be troublesome for businesses that require a constant and reliable supply of energy, and the latter in particular means the excess energy generated will be wasted.

Through the implementation of a smart energy storage solution, existing on-site renewable generation can be maximised by storing the energy generated and utilising the energy later when required. This allows a site to utilise renewable generation to its full potential, reducing reliance on the antiquated energy grid and reducing CO2 emissions, thereby assisting in its pursuit of carbon neutrality as part of a sustainable future.

However, funding leading-edge technology to achieve the aforementioned benefits can often incur financial risk and may be met with several barriers due to capex or budget restrictions. Despite this, the Government continues to pressure businesses to meet its ambitious energy goals.

Store your cash for the future, but gain the benefits today

Investing in energy storage technology requires capital investment at the conception of the project, and, although the system will pay for itself through energy consumption savings or revenue through grid contracts, it can still be deemed unviable to businesses that have reserved their capex for activities core to the business’ operations or are restricted by funding rules or third parties.

However, Powerstar has taken steps to help businesses remove the barriers to entry when considering technology such as energy storage by introducing Storage as a Service (STaaS®). STaaS allows businesses to implement energy storage technology without investing a significant portion of capital expenditure.

The new funding model allows companies to benefit from its award-winning energy storage technology, Powerstar VIRTUE, as a service. This involves a service contract being agreed between Powerstar and the benefactor, which specifies length of service term and payment structure providing a straightforward, flexible funding option to the client.

This enables businesses to reduce, or even completely negate, upfront costs, and the terms can scale up or down as required, at any point in the agreement. This means the project in place can easily respond to accommodate changes to the business’ requirements, (a) without the need to raise further capital to secure additional equipment, or, (b) if the equipment is suddenly no longer required, without significant financial loss, providing a future proof solution that offers a level of security not available with outright purchases.

The fixed regular payments of the STaaS agreement are based on the economic benefit of the solution; these payments will always be less than the savings and/or revenue achieved through the solution itself, meaning the customer is cash positive from day one.

As with all Powerstar solutions, an engineering-led, bespoke and concept to completion approach is utilised meaning the STaaS agreement will be tailored specifically to the client’s needs, priorities and the characteristics of the facility, allowing for flexibility to ensure maximum value for the customer.

The business case

Whilst the way in which businesses seek high-value products and services continues to transition to a heavily serviced model, it is important to explore how funding models such as STaaS would work when subjected to the bespoke specifications of each businesses requirements.

Below represents an example of how STaaS could work for the first 10 years of the agreement.

Contact Powerstar to find out more

To learn more about Powerstar’s STaaS funding model, or the full range of flexible funding options available to customers, contact Powerstar on 01142 576 200 or by emailing info@powerstar.com to discuss your needs with an expert member of the team. Powerstar also offers a free consultation to businesses interested in its range of award-winning technology, and technology demonstrations are available at the head office in Sheffield upon request.

[1] The Resilience Report – Centrica Business Solutions, 2017
[2] https://www.bbc.co.uk/news/business-43879564

If you’re interested in learning more about flexible funding options like Storage as a Service, contact us via the short form below, email us at info@powerstar.com, or call the Sheffield based head office on 01142 576 200.

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