What does it mean to invest in a Battery for an organisation?

Communities can help organisations to progress energy projects by finding the upfront capital and arranging to be repaid over time. Solar projects are usually profitable and can provide extra income for both the investors and the organisation. Battery projects will rely on using surplus solar that would otherwise be wasted and discharging to provide premium energy, and will make a much smaller profit (if any).

Even though battery projects don't usually make money, an organisation and a community might value them for other reasons. For example, the opportunity to provide power when the grid has failed.

The investment can be made so that many community investors can be involved. It can be made by a community organisation or a revolving fund. In each case the organisation borrows the money and then makes repayments to the investor/s over time as the project recoups its investment with savings on energy bills.

Benefits of investing in a Battery for an organisation

• Better use of renewable energy. Batteries can charge with surplus renewable energy and discharge to displace fossil fuels.

• Taking a step toward the future. Even though batteries often don't make money, electricity prices will change with surplus renewables becoming cheaper and peak fossil energy use becoming more expensive. Batteries are part of this energy future and communities can benefit from getting started now.

• Creating a focus on use of surplus renewable energy. The cost of batteries helps highlight the benefits of using forms of storage to soak up surplus renewable energy. The cost of batteries highlights that using load flexibly and thermal storage (like changing the timing of hot water or ice production) is cheaper than batteries.

Some challenges of investing in a Battery for an organisation

• Batteries are relatively new technology. Installers and communities are still learning the best ways to design them, size them and install them.

• Understanding the assumptions in any feasibility study for the battery is essential because the project is unlikely to perform exactly as it has been modelled.

• Battery projects are less likely to be profitable so investors carry more risk than normal that the project will not perform as expected. This risk is shared with the organisation and needs to be managed well in the investment contract.

• Organising the funds or recruiting investors can be a challenge.

• Agreeing the governance of the loan and the benefit sharing between the investor/s and the organisation can take time if this is your first battery project.

• Batteries charge and discharge according to rules determined by the designer and the user. These settings might do one thing well and others poorly, such as reducing carbon emissions, maximising revenue or being available for backup power. You may need to negotiate how the battery will operate to fulfill your ambitions for the project.

• The battery feasibility will be based on the battery performance over its lifetime which is typically under warranty for 7 to 10 years. Some battery providers will no longer exist in 7 to 10 years so the investment comes with some risk.

When is investing in a Battery for an organisation a good choice?

• When an organisation has good reasons to install a battery but doesn't have the funds to act.

• When a community investment can help the organisation or the community to get a grant to assist the project, for example because it is a showcase of the technology and the collaboration.

• When your community has ample surplus solar and needs to start developing methods to ensure it is used.

Other guides and resources

BATTERY CALCULATORS AND EXAMPLES TO FOLLOW