Broad and numerous as the behind-the-meter storage systems are, so varied are the business model innovations that make them profitable. Our discussion shall cover:
When consumers own the assets but are not capturing market value, their main motivation is to optimise their electricity bill, for both network and energy charges. Depending on locally applied grid tariffs and potential arbitrage revenues, the revenues from storage could globally recover the costs of the system. The consumer can be assisted by a third party of the day-to-day operation optimisation.
Through aggregators, consumers that own the storage assets can capture the market value. In addition to optimising the electricity bill, the consumer has a contractual agreement to increase the arbitrage revenues. The aggregator takes the market operation responsibilities. This model strongly depends on a suitable aggregator which can bid on the market.
Distributors can own storage assets for network services, on the consumer’s premises. The storage systems is an embedded device of the distribution network, and are eligible for cost recovery through regulated revenues. In some cases, the consumers can also benefit from the storage system through its retail tariffs. Contrary to the previous cases, the distributor is in control of the distributed storage devices.
Finally, storage-as-a-service is when a third party owns the storage assets and captures the market value. The end consumers see no upfront costs and only a share of the savings. The third party seeks to optimise the consumer’s electricity bill, for both network charges and energy charges, and can act as an aggregator to increase revenue streams.
Of the four discussed models, storage-as-a-service is therefore expected to become the most attractive business model from the consumer point of view. This is because the consumers can benefit from storage services. They are not required to gain the expertise to manage and control the storage assets and they do not have to endure any upfront cost.
Join us again next week when we look at off-grid energy storage business models.
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