This article is the first part of our series on the basics of energy storage. In our upcoming articles, we will delve into the operation of battery energy storage systems.
In recent years, more and more consumers and businesses have switched to market-based electricity pricing, making the price fluctuations of electricity familiar.
Storing electricity enables the optimization of electricity consumption, which can lead to a smaller, or in the best case, even negative electricity bill.
Below, we will discuss what storing energy means in practice, who benefits most from it, and the best solutions for storing electricity.
Energy storage refers to capturing energy and storing it in energy reserves, such as battery storage systems. The stored energy can later be released when needed.
In the context of electricity, which is the main focus of our article, energy is stored when production exceeds demand and released during times of limited or halted production, such as during power outages.
From a financial perspective, energy storage enables capturing electricity when it is cheap and using the stored energy when electricity prices are high.
Energy storage allows you to:
There are many different solutions for energy storage, and the most suitable one depends on the application and scale.
Between large-scale infrastructure supporting society’s functions and individual homes storing excess solar energy production, we focus on the middle ground: businesses and organizations.
The easiest way to store energy is by charging it into batteries. Batteries allow you to store energy in an easily accessible form, which can be converted as needed.
While other storage methods have their place, especially in long-term, large-scale projects, the advantage of batteries lies in their flexibility and versatility:
In market-based electricity pricing, the price is determined hourly based on supply and demand.
When electricity is produced beyond the need, it is cheap. Sometimes, excess production is so high that consumers and businesses are even paid to use it. On the other hand, when supply struggles to meet demand, market prices can surge.
Market price fluctuations are typically brief. Besides supply, demand also influences the price: electricity consumption is high during the day and lower at night, which is often reflected in the prices.
By storing electricity, you can shift consumption from expensive hours to cheaper ones.
Many businesses and households already produce part of their electricity needs themselves. By investing in solar panels, for example, dependence on the national grid can be reduced, which also lowers electricity bills.
With energy storage, you can capture your own renewable energy production for later use.
Often, the energy is consumed directly for heating, operating devices, or charging electric vehicles. But when the building is already warm and the car batteries are fully charged, excess electricity may not be optimally managed.
Traditionally, the excess energy is sold back to the market. However, both the electricity and grid companies may take a share. It’s often more efficient to use the produced electricity yourself.
By storing locally produced solar power, you can use it later as needed.
Transmission system operators are responsible for maintaining the stability of the electrical grids. In the Nordics, national transmission system operators maintain the balance of supply and demand by purchasing flexibility from the ancillary service markets, including electricity production and consumption.
Certain battery energy solutions, such as Cactos, enable their customers to participate in these markets automatically.
Participating energy storage systems charge batteries from the national grid and discharge back as needed based on the transmission system operator’s frequency control requirements. In Finland, for instance, Fingrid compensates participation.
Participation in the ancillary service markets require a minimum capacity, so participation usually occurs as part of a larger pool, thus achieving economies of scale that individual systems cannot offer.
Consumers and businesses can enter into contracts with almost any energy company. However, when it comes to electricity distribution, local grid companies have a geographic monopoly. In Finland, for example, there are about 80 distribution companies, and while their operations are strictly regulated, each sets its own criteria for distribution pricing.
For consumers, the monthly fee is often fixed, and an additional charge is applied per kilowatt-hour. For businesses, the price often includes a component called demand charge, based on the highest peak usage during the billing period.
While pricing structures vary, a useful rule of thumb is: the more “peaky” your consumption, the higher the distribution fee.
Battery energy storage helps smooth out consumption peaks. By storing cheap electricity either from your own production or from low-cost hours, you can avoid purchasing unnecessary power from the grid during peak times.
Even though the total energy consumption remains the same, energy storage helps flatten the consumption curve, reducing the peak that defines your demand charges. This feature is called "peak shaving."
In the Nordics, electricity has been sufficient even during extreme winter temperatures, and power outages, such as rolling blackouts, have not been necessary, even during peak demand. However, the topic is frequently discussed, especially during the coldest periods, like the winter of 2024.
For households and businesses far from power plants, infrastructure vulnerabilities are a greater concern. Fallen trees on power lines are a yearly problem, sometimes leaving thousands without electricity during major storms.
During power outages, many businesses face operational disruptions, potentially causing equipment failures.
Although individual power outages cannot be predicted, you can prepare for them. By storing electricity, you ensure a power supply even when your neighbors are without.
With properly sized batteries, you can keep your operations running even during power cuts.
A smart battery energy storage system (BESS) is a versatile way to optimize electricity use for businesses.
A battery storage system is composed of batteries sized according to the application. The system’s intelligence comes from cloud-based software that automatically controls battery charging and discharging. It helps to charge batteries when electricity is cheap and discharge when prices are high, maximizing economic benefit from each kilowatt-hour.
An example of such a solution is the Cactos battery energy storage system.
In the past, energy storage has been a large-scale operation. However, as technology advances, current energy storage solutions are adaptable for a variety of businesses and organizations. They all share a need to cope with fluctuations in renewable energy production and the price and availability changes it causes.
By storing electricity, businesses can:
Below, we showcase a couple of challenges that our customers have successfully overcome with smart battery energy storage solutions.
Oulun Baari, a forerunner in fast electric vehicle charging, wanted to shift electricity consumption from expensive hours. The service station already had over 1,000 square meters of solar panels on the roof. However, they needed a way to store the energy for charging electric vehicles during cloudy days.
With Cactos’ battery storage system and control software, Oulun Baari has managed to smooth out the consumption peaks caused by fast charging. When their customer plugs in their car, part of the power comes from the battery. This helps keep the demand charges under control.
Logitri, which purchased Finland’s first electric truck, wanted to ensure its charging even during power outages. One of Finland's largest logistics centers, Logitri had been charging its vehicles mostly at night and noticed a significant peak in consumption in the evenings. They wanted to spread this consumption more evenly throughout the day to keep the peak power usage under control.
To address this, Cactos provided a 2.5 MWh battery storage system. This allows Logitri to continue operations even during electricity distribution disruptions. It also optimizes the use of solar energy generated at Logitri’s logistics center and allows excess energy to be sold back to the grid when it is more profitable.
In addition to charging batteries, electricity surplus can be stored for later use in various ways:
However, compared to batteries, these methods have a key drawback: energy efficiency.
When stored in batteries, nearly the same amount of energy can be retrieved later. However, when electricity is converted to another form, such as motion, heat, or fuel, some energy is always lost. For instance, the efficiency of the latest pumped hydro storage technology is roughly 80%, while hydrogen storage efficiency is only around 70%.
As renewable energy sources grow their share, the electricity production system becomes more susceptible to weather fluctuations.
When the sun isn’t shining and the wind isn’t blowing, renewable sources provide no electricity to the grid. This leads to significant fluctuations in spot electricity prices, which can be mitigated with stored energy. Therefore, the need for energy storage is not disappearing; rather, it’s increasing.
By efficiently storing self-produced solar and wind energy, shifting consumption from expensive hours to cheaper ones, and participating in ancillary service markets, a properly sized energy storage system can help businesses save on energy costs. Additionally, it ensures preparedness for power outages: when the batteries are full, critical operations can continue.
