The five attributes of an ideal BESS site

An emerging technology critical to Australia’s energy transition, behind-the-meter Battery Energy Storage Systems (or BTM BESS) can provide large business customers with a range of revenue opportunities, as well as providing the key to greater energy efficiency innovations.

But what exactly does your business need to install and harness the benefits of a BESS? Read our guide below on the five key attributes of an ideal BESS site.

1. Having an adequate amount of physical space and electrical infrastructure

Batteries require a significant amount of physical space to be installed. For example, a 1MW BESS has a physical footprint of 50m2. BESS should ideally should be located less than 100 metres from a connection point to minimise construction costs and drops in voltage . Additionally, compliant, well-maintained and available electrical capacity on the switch boards and transformers is required to ensure that a BESS can be installed and operate optimally.

2. Having a site load of 3GWh per annum

To harness the full benefits of a BESS, the ideal site for a battery has an annual load in excess of 3GWh.

BESS economics are quite sensitive to the BESS capacity. As a general rule, the higher the BESS capacity the better the economics as the fixed construction costs are spread across greater revenue generation potential. BESS size needs to be matched to the site load. Therefore, sites with larger loads, all else being equal, can generally accommodate larger capacity BESS systems.

BESS hardware costs have been declining and it’s assumed that they will continue to decrease in the future. These decreasing hardware costs will likely equal an improvement in BESS economics.

3. Having high site demand charges

Demand charges are costs associated with maintaining distribution and transmission infrastructure. The costs originate from the networks that manage this infrastructure and are passed on and included on your retail electricity bill.

Demand or network charges are typically based on the highest demand for electricity at your site at a point in time. One of the ways that a battery can provide value if you have demand tariffs is by shaving peak demand, which means your maximum demand can be reduced, which could reduce overall demand charges.

Business sites with high existing demand charges are ideal for a BESS, as the higher the demand charges, the bigger the opportunity to generate savings.

However, not being charged high demand tariffs or not being charged demand tariffs at all, doesn’t mean that your business can’t benefit from a BESS, as there are other ways installing a battery might provide value, such as wholesale energy arbitrage.

4. Import or export constraints

The electricity grid is designed to distribute a threshold volume of power at any given time. To maintain grid stability, Distribution Network Service Providers (DNSPs) may constrain electricity import and export from new grid connected generation and storage assets, such as a BESS. The likelihood of this occurring varies from site to site depending on constraints that may exist in the network.

If a site is facing constraints from DNSP, this can have a significant impact on how much value a BESS can generate by limiting its ability to generate market revenue. That’s why the ideal site for a BESS is in an area where the DNSP has not implemented these constraints.

If your site already has solar implemented on it, the impact of these import and export limits is reduced as there is high potential for the BESS to charge from excess solar and discharge when the site needs more power.

A BESS installation actually compliments solar at any site by storing excess solar generation in the middle of the day for use in the late afternoon and evening as solar generation declines and the site still requires power. This function has become more valuable as feed-in tariffs for solar generation decline.

5. A loss factor greater than one

As electricity flows across a network of poles and wires from generator to the load connection point, some of it is inevitably lost via electrical resistance and heating of conductors. Loss factors are applied when calculating energy generation and use to allow for this.

The Australian Energy Market Operator (AEMO) is responsible for calculating the loss factors used in the National Electricity Market (NEM) based on principles in the National Electricity Rules (NER) and its detailed methodology. The NER requires AEMO to calculate a single static loss factor value for each load and generation connection point that reflects the transmission network flows anticipated for the following financial year.

In the NEM, loss factors impact spot energy prices. As a result, a generator with a relatively high loss factor, one and above for example, will receive a greater spot market revenue than a similar generator with a lower loss factor, less than one, all other factors being equal. This mechanism provides a price signal for investors to choose a location nearer a load centre when deciding on where to place a new generation asset, and for a load to locate near a centre of generation.

As a BESS is a generation asset the loss factor assigned to your site, which you can find on your retail bill, can have a significant impact on the viability of a positive financial outcome of installing a BESS. For example, the revenue generated by exporting excess energy from your BESS back to the energy grid could increase or decrease depending on where your site is located within the transmission network.

This is why we recommend that the ideal site for a BESS should have a loss factor of one or greater, to ensure your business is able to maximise the amount of revenue generated from your battery investment. However, if you’re interested in installing a BESS but have a business site with a loss factor below one, this doesn’t mean you can’t benefit from a BESS. Click here to discuss your situation with our expert Energy Solutions team and learn more about how a BESS could still be beneficial for your business.

Is your site battery ready?

There are a number of pathways to help your business make installing a battery a reality. Reach out to our expert Energy Solutions team who can help walk you through the whole process from project design to delivery and beyond.

Learn more about our previous experience delivering the installation of a battery at The GPT Group’s Chirnside Park location and how this battery has benefitted their business.