Battery storage: Efficient, sustainable – and lucrative?
Two privately financed battery storage facilities are showing how new, sustainable business opportunities are opening up at the grid edge.
Decarbonization of the energy system can only succeed if power grids become more flexible – and storage technologies play a key role in making this happen. The growing demand for flexibility is creating interesting new opportunities for industrial enterprises and investors that rely on grid edge technology. Two battery storage projects in Finland and Switzerland demonstrate how these opportunities can play out on the practical level. Key to their success is an innovative financing solution.
Everyone agrees that CO2 emissions need to be massively reduced over the next few decades in order to slow global warming. But who’s going to pay for the necessary measures? Governments are hoping for a greater commitment on the part of private enterprise, but many companies are reluctant to commit to significant investments in new technologies at the grid edge. Nevertheless, these technologies will help increase energy efficiency and facilitate the integration of renewable energies.
This dilemma has a solution, as demonstrated by the beverage manufacturer Sinebrychoff, a subsidiary of the Carlsberg Group with a filling volume of more than 300 million liters of beer and soft drinks. One of Finland’s largest beverage producers, the company has set a goal to decarbonize its production processes by 2030.
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As part of this effort, Sinebrychoff decided to install a powerful battery storage system in its production facilities in greater Helsinki. This type of storage system is attractive to industrial enterprises like Sinebrychoff for several reasons. First, it can improve the energy efficiency of operations, potentially lowering costs and supporting carbon reduction goals. Second, the company will also benefit from lower electricity tariffs because its installation of the storage system is being combined with an upgrade of its grid connection to 110 kilovolts (kV). Finally, the system will allow Sinebrychoff to decouple energy procurement from energy consumption: It will no longer need to procure energy from the grid precisely when it’s needed.
Virtual power plant enables marketing of flexible loads
From the company’s point of view, this means that it can avoid expensive, production-dependent peak loads, because these loads can be absorbed by the storage system. It also means that the loads will be made flexible through battery storage and can be marketed as a system service via a virtual power plant (VPP), which enables participation in the energy market.
Grid operators also benefit from this greater flexibility when compensating for voltage fluctuations that increasingly occur due to the expansion of renewable power generation. The solution also promises to substantially lighten the workload of grid operators: Switching Sinebrychoff’s large industrial plants on and off requires a tremendous amount of electricity, which the grid operator previously had to hold in reserve. If this is no longer necessary, it will create tremendous potential for reducing carbon emissions on the Finnish energy market in the future.
The new storage solution is ideal for beverage manufacturer Sinebrychoff because the company only has to provide the land for the storage system and otherwise has no responsibility for the investments.
There are several obstacles that could obstruct the realization of the full potential of this kind of solution. Although the cost of battery storage has decreased significantly over the last decade and continues to fall, a system with a 20-megawatt output like the one belonging to the Finnish beverage producer still requires a significant upfront investment. And neither maintenance nor management of energy storage systems is part of the core business of an industrial enterprise, which means that it’s preferable to employ a third party to perform these tasks.
Along with its project partners, Siemens has come up with an innovative solution that eliminates these obstacles and supports Sinebrychoff in its efforts to become sustainable. The project is financed by Switzerland-based MW Storage International AG. This company specializes in integrating and operating storage facilities and, with its initial investment in the project, owns a major stake in the battery storage system.
The new storage solution is ideal for beverage manufacturer Sinebrychoff because the company only has to provide the land for the storage system and otherwise has no responsibility for the investments. As a result, the solution poses no investment risk for the industrial enterprise. For the investors, on the other hand, the storage project will lead to the creation of a sustainable virtual power plant.
Many participants – one contract partner
Several different companies are bringing their subject matter expertise to the project’s implementation. The storage solution – a 20-megawatt Gridstack system – comes from Fluence, a joint venture of Siemens and AES. The Finnish national grid operator Fingrid and Vibeco are also involved. Vibeco is a Finnish specialist in virtual power plants (VPPs) and a subsidiary of Siemens. The company is developing the trading platform that will allow participation in the energy market.
This innovative model developed by Siemens and its partners is an ideal all-in-one solution.Pasi Lehtinen, Vice President Supply Chain at Sinebrychoff
Siemens Financial Services established the financial and legal framework, was heavily involved in the development of the business model, and supported the setup of the virtual power plant through intelligent financing. Siemens is also responsible for the construction of a medium-voltage switchgear and the high-voltage grid connection.
Despite the many participants, Sinebrychoff has only one contract partner for the project that is guaranteeing a turnkey solution: Siemens. “This innovative model developed by Siemens and its partners is an ideal all-in-one solution,” says Pasi Lehtinen, Vice President Supply Chain at Sinebrychoff.
We see this kind of turnkey solution as the model of the future for various industries, including food and beverage.Wilfried Karl, CEO of MW Storage International
Wilfried Karl, CEO of MW Storage International, is convinced that this approach also has potential for many other industrial enterprises. “We see this kind of turnkey solution as the model of the future for various industries, including food and beverage. The companies benefit from the latest storage technology – from financial to ecological advantages – and from proven expertise and an attractive business model. What is more, these innovative solutions are contributing to reach decarbonization targets.”
Private financing responsible for Switzerland’s largest battery storage facility
The project in Finland isn’t the first collaboration between MW Storage International and Siemens. In 2020, they used Fluence technology to build Switzerland’s largest battery storage facility to date.
The plant in Brunnen, in the municipality of Ingenbohl, has been in operation since September 2020. The storage facility has 20 megawatts of power and a capacity of 18 megawatt hours. It’s located on the premises of the local power company, CKW, which uses it for reactive power compensation. The storage system also provides system services for the national grid operator Swissgrid: “It’s the first large-scale battery storage facility in Switzerland to be implemented without the support of subsidies or grid fees,” says Karl.
We’re seeing tremendous potential for grid-relevant storage systems in European countries alone.Wilfried Karl, CEO of MW Storage International
This project also kills two birds with one stone: On the one hand, the storage solution permits the integration of more renewable energy in the power grid. On the other, it yields a return for the investors that are backing MW Storage – which makes it yet another example of how ecological sustainability and economic interests can be reconciled through investments in grid edge technology.
It’s no coincidence that MW Storage chose Siemens as its collaborator. “It’s important for our investors that we work with an experienced partner that has the necessary in-house expertise. We’re also looking for long-term collaboration,” says Karl.
He expects many other storage projects to be implemented in the coming years: first, because institutional investors are looking for alternative power plant options and second, because the demand for flexibility on the energy markets will continue to grow. According to Karl, “We’re seeing tremendous potential for grid-relevant storage systems in European countries alone.”
May 12, 2021
Picture credits: MW Storage International, Sinebrychoff, Fluence, Siemens
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