Against the backdrop of global energy transition and green development, commercial and industrial energy storage projects, as a key link connecting renewable energy and electricity demand, are receiving increasing attention. Commercial and industrial energy storage systems store excess electricity and release it during peak demand periods, achieving peak shaving and valley filling, thereby reducing electricity costs for businesses and improving energy efficiency. However, in practical applications, many high-electricity users find that despite a strong desire to install such systems, they often cannot successfully implement commercial and industrial energy storage projects for various reasons. This article will analyze the reasons behind this phenomenon from multiple perspectives.
01 Transformer Capacity: A Key Threshold for Energy Storage Installation
Transformer capacity is one of the core factors determining whether a company is suitable to install an energy storage system. When charging, the energy storage system acts as an additional electrical load. If the transformer is already operating close to full load during off-peak and peak periods, installing the energy storage system will lead to transformer overload and may even damage the equipment.
(I) Transformer Capacity and Load Factor
The transformer’s load factor during off-peak and peak periods should be below 80% to ensure sufficient remaining capacity for charging the energy storage system. For example, a manufacturing company with an annual electricity consumption of 5 million kWh seems like an ideal candidate for installing an energy storage system. However, a detailed assessment revealed that the company’s transformer capacity is 1000 kVA, and its load rate during off-peak and peak periods is already close to 90%. This means that the transformer has almost no remaining capacity to charge the energy storage system. If the energy storage system is forcibly installed, it will not only fail to operate normally but may also cause safety hazards due to overload.
(II) The Contradiction Between Transformer Capacity and Electricity Consumption
Some companies have large transformer capacities but low actual electricity consumption, making energy storage systems unsuitable. For example, a small electronics manufacturing company with an annual electricity consumption of only 1 million kWh has installed a large-capacity transformer (2500 kVA) to meet potential future production expansion needs. Although the transformer capacity seems sufficient, the company’s current actual electricity load is low, and the production process is relatively stable with no significant peak-valley fluctuations. Therefore, the energy storage system cannot effectively perform its peak-shaving and valley-filling functions. In this case, installing an energy storage system will not only fail to bring significant electricity cost savings but may also increase additional costs due to idle equipment.
- Electricity Consumption Characteristics: Matching Peak-Valley Electricity Prices with Electricity Consumption Periods
One of the main benefits of commercial and industrial energy storage systems is arbitrage based on peak-valley electricity price differences, i.e., charging during off-peak hours and discharging during peak hours. Therefore, the electricity consumption characteristics of a business are crucial. If a business’s electricity consumption is mainly concentrated during off-peak and flat periods, the benefits of installing an energy storage system will be significantly reduced.
Users’ electricity load periods should cover both peak and low-peak hours. Businesses with entirely nighttime electricity consumption or relatively uniform loads throughout the day are not suitable for energy storage projects. For example, a data center company may have huge electricity consumption, but its load is relatively uniform throughout the day without significant peak-valley fluctuations, thus limiting the economic benefits of installing an energy storage system.
- Operational Model: Avoiding Peak-Shaving Operations
A business’s operational model is also a significant factor influencing the installation of commercial and industrial energy storage projects. While peak-shaving operations can reduce a business’s electricity costs, they prevent the energy storage system from effectively discharging during peak hours, thus impacting its economic efficiency.
(I) Disadvantages of Peak-Shaving Operation Mode
Peak-shaving operation mode results in enterprises consuming more electricity during off-peak and flat periods, and less during peak and sluggish periods. This means that energy storage systems, after charging during off-peak periods, cannot discharge during peak and sluggish periods to generate revenue. For example, a manufacturing company might adopt peak-shaving operation mode to reduce electricity costs, producing at night and resting during the day. However, this mode prevents the energy storage system from discharging during the day, thus preventing the realization of arbitrage profits from peak-valley electricity price differences.
(II) Suggestions for Optimizing Operation Mode
For users with a strong willingness to install energy storage systems and who can cooperate with the grid company to participate in electricity market activities such as demand-side response and obtain economic compensation by adjusting their electricity load, enterprises can optimize their operation mode to avoid peak-shaving operation mode in order to fully realize the economic benefits of industrial and commercial energy storage systems. For example, enterprises can adjust their production plans, scheduling some production tasks during daytime hours to normalize production and increase the discharge revenue of the energy storage system.
04 Geographical Location and Policy Support
The geographical location and policy support of the enterprise’s region are also important factors affecting the installation of industrial and commercial energy storage projects. If the region where the enterprise is located does not implement time-of-use pricing policies, or the peak-valley price difference is small, the economic benefits of installing an energy storage system will be significantly reduced.
(I) Geographical Location and Time-of-Use Pricing Policies
The region where the enterprise is located must implement time-of-use pricing policies, and the combined peak-valley price difference must exceed 0.6 yuan/kWh, enabling two charging and two discharging cycles. The larger the peak-valley price difference, the higher the returns. For example, Zhejiang, Guangdong, Jiangsu, Shanghai, and Chongqing, due to their large peak-valley price differences, have become popular investment areas for industrial and commercial energy storage projects. However, in some regions, due to the small peak-valley price difference, the economic benefits of installing energy storage systems are limited.
(II) Policy Support and Subsidies
Government policy support for industrial and commercial energy storage projects is also an important factor influencing their installation. For example, the government can reduce the economic pressure on investors through subsidies and tax incentives; and provide a favorable profit environment for energy storage systems by improving the electricity market mechanism and increasing the marketization of electricity prices. However, in some regions, due to insufficient policy support, investors have low interest in industrial and commercial energy storage projects.
05 Conclusions and Recommendations
In summary, even high-electricity-consuming users may be unable to install commercial and industrial energy storage projects. This is mainly due to insufficient transformer capacity, mismatch between electricity consumption characteristics and peak-valley pricing, unreasonable operating models, and insufficient geographical location and policy support. To address these issues, the following recommendations are made:
Strengthen Pre-installation Assessment: Before installing commercial and industrial energy storage systems, enterprises should conduct comprehensive pre-installation assessments, including evaluations of transformer capacity, electricity consumption characteristics, and operating models, to ensure project feasibility and economic benefits.
Optimize Operating Model: Enterprises should optimize their operating models, avoiding peak-shaving operations, and increasing the discharge revenue of the energy storage system by adjusting production plans and participating in demand-side response.
Seek Policy Support: Enterprises should actively seek government policy support, including subsidies and tax incentives, to reduce the economic burden on investors.
Choose a Suitable Geographical Location: When selecting investment locations, enterprises should prioritize areas implementing time-of-use pricing policies and with significant peak-valley price differences to improve project economic efficiency.
Furthermore, the government and relevant departments should strengthen support and guidance for commercial and industrial energy storage projects, providing a favorable revenue environment for energy storage systems by improving the policy system and increasing the marketization of electricity prices. At the same time, they should also strengthen research and development and promotion of energy storage technologies to improve the performance and efficiency of energy storage systems and reduce their costs, thereby promoting the widespread application and sustainable development of commercial and industrial energy storage projects.
