Peak Shaving and Battery Energy Storage

Battery energy storage systems (BESS) offer a host of benefits to your wider energy management strategy. One aspect of this, which can be vital to addressing rising energy costs, is known as peak shaving.

This is a technique that allows end users to use their batteries to reduce their overall energy costs, without impacting on productivity or requiring investment in other technologies. Here, we give an overview of how peak shaving works.

What is Peak Shaving?

Peak power shaving is a highly effective technique employed by energy consumers to rapidly and temporarily decrease their overall power consumption at a specific site. This proactive approach prevents a sudden surge in energy usage, ensuring it stays within the agreed capacity limits. Additionally, it minimizes the duration of high energy consumption during periods of peak demand on the grid, ultimately helping to reduce costs associated with elevated energy prices.

Energy suppliers have a responsibility to provide their end users with sufficient power, up to an agreed limit. Exceeding your site’s authorised supply capacity puts this at risk, and it is typically met with punitive charges. In addition, peak demand costs further encourage end users to draw less power when demand is high.

Mechanisms have been in place to encourage end users to use less energy during periods of peak demand, and more during periods of low demand, since the 1960s. By varying the cost of grid energy linked to demand during a given period, grid and distribution operators can more effectively match current demand with available supply.

Peak Shaving vs Load Shifting

While peak shaving is achieved through rapid reductions in demand, such as through scaling down production or using a battery energy storage system, load shifting refers to more fundamental changes in operations to reduce energy costs. This typically is achieving through energy-intensive users such as manufacturers changing their shift times or varying levels of production to ensure that more of their power consumption falls during off-peak periods.

Time of Use Mechanisms

There are several mechanisms in place to encourage end users, particularly in energy-intensive industries, to offset their power consumption during peak periods. These include:

DUoS: Distribution Use of System (DUoS) charges are used to recover the cost of installing and maintaining distribution networks. Charges are based on volume of electricity, but vary depending on region and time of day, split into Red, Amber, and Green bands of charges.

TNUoS: Transmission Network Use of System (TNUoS) charges are used to recover the cost of installing and maintaining the UK’s transmission system. Previously, charges were calculated based on an end-users share of demand on the transmission network during periods of peak demand, known as Triads. Following the Targeted Charging Review, non-domestic users are now placed into bands based on their Agreed Capacity or net volume. This encourages intensive energy users to invest in energy reduction efforts more proactively across their site, rather than simply offsetting during Triad periods.

Peak Shaving with Battery Storage

Battery energy storage systems provide the flexibility to allow a site to both peak shave and load shift much more dynamically. The ability to store electricity for later use can be used to stock up on energy during periods of low demand and cost, and then use that stored energy to prevent a site from exceeding its supply capacity or incurring additional costs during peak demand periods.

Sites with on-site generation such as solar can combine this with battery storage to make their peak shaving of electricity even more effective. On-site generation technologies are already effective at reducing a site’s grid electricity demand, but struggle to provide guaranteed peak shaving due to the inflexible nature of their generation. Battery energy storage helps to resolve that problem, ensuring electricity generated when the sun is shining is available when needed for peak shaving.

Peak shaving in practice can be difficult to manage effectively, and typically requires the support of an experienced partner to ensure that maximum savings are secured. Find out more about Powerstar’s experience here.