Woah! Hold your horses on battery storage!
Last week, I read three articles on the internet on battery storage opportunities for farmers. All three were informative and full of optimism. But, all three were also dangerous.
The articles left the impression that any landowner can invest in battery storage and it would be a good investment. This is simply not the case. Furthermore, the positivity the articles effused can only help but fuel the sales patter of battery storage rogue traders, and thus puts landowners at risk of being taken for a ride.
We urge those in the industry and the media who are jumping on the battery storage bandwagon and spouting forth the huge opportunities to approach battery storage much more cautiously.
There are two options for battery storage for landowners. A self-funded scheme or leasing a site to a large-scale storage developer.
Self-funded schemes are best suited to sites that have a high on-site demand for electricity all year, combined with an already established intermittent renewable energy source (for example solar or wind). But landowners must be cautious if investing in their own schemes, battery storage technology is expensive and the risks of losing money on a scheme are high.
The considerations and risks for self-funded schemes are:
- Unregulated industry – whilst solar and other renewables installers and their products must be certified under the Microgeneration Certification Scheme, there is no such scheme for energy storage. This leaves the market currently unregulated and any landowner unprotected from unskilled and incompetent installers.
- Incomes can vary depending on ‘stacking’ – to be viable many projects rely on stacking the many different revenue streams available from battery storage. Getting the modelling right needs the right expertise – getting it wrong can lose a scheme money.
- Misselling – installers often quote paybacks of five to seven years, but only small proportion of schemes will achieve those returns. There is no government incentive to add battery storage to existing schemes, so any scheme must be financially viable on its own.
- Expensive technology – storage technology is expensive, although the costs are coming down. Bad investments can lead to very expensive mistakes.
- Battery life and warranties – on some sites the power generation and consumption profiles could stop some batteries working after a year or two, offering the landowner no financial return at all.
- Battery storage could be the wrong technology for the site and local grid – the local grid network is usually only suitable for one technology. Battery storage could be inappropriate for the network, but gensets or solar would be a better option.
The right battery storage scheme on the right site will give a return. But a key factor for a landowner is establishing whether it is appropriate to invest at all. Battery storage opportunities are moderate with potential for losing money. A landowner could invest significant capital in a battery project, and risk losing money if they are advised to install the wrong scheme.
Land and property owners must take independent advice from experts with a track record of success, to ensure they avoid any risks and they get the right battery storage technology, scale and warranties to maximise the success of any scheme.
Leasing a site to a large-scale storage developer
If leasing a battery storage site to a developer, landowners must be made aware that only certain sites and parts of the grid are suitable for battery storage. Gensets or other technology may be better suited to the local grid, but by signing authority to a battery developer the landowner is greatly reducing their chances of ever getting an energy scheme connected to the grid. Again, landowners being approached by battery storage developers should turn to independent advisers before proceeding.
In conclusion, battery storage does hold opportunities for those with the right site and with those who take the right advice and find the right developers or installers. But the optimism and positivity in the industry and media must be reined in as the risks are huge and could put landowners in situations where they are riding a dead horse.