Roland Berger Energy Storage Final
Roland Berger Energy Storage Final
Roland Berger Energy Storage Final
Management summary
While energy storage has been around for a long time, With energy storage becoming an im-
only now is its role becoming crucial for the energy sys-
portant element in the energy system,
tem. With the rise of intermittent renewables, energy
storage is needed to maintain balance between demand each player in this field needs to prepare
and supply. With a changing role for storage in the ener- now and experiment and develop new
gy system, new business opportunities for energy stor-
age will arise and players are preparing to seize these
business models in storage. They need
new business opportunities. to understand the key success factors
of future market leaders and reinforce
Energy storage should address the needs of players in the
system, which may vary per time unit and per step in the those in the next five years to contribute
value chain. Storage might be needed only for a few sec- value to storage and the overall system.
onds, or to bridge demand and supply over the seasons.
Contents
1. Introduction ...................................................................................................... 4
Energy storage has the potential to disrupt business models.
3. Cases .................................................................................................................. 14
First applications of energy storage show potential new business models.
4. Implications ...................................................................................................... 20
The advent of new energy storage business models will affect all players
in the energy value chain.
5. Recommendations .......................................................................................... 26
Energy stakeholders need to prepare today to capture the business
opportunities in energy storage and develop their own business models.
6. Conclusions ...................................................................................................... 28
Energy storage will become a new business line in the energy world.
Cover photo: iStockphoto / rusm
4 Roland Berger Focus – Business models in energy storage
Section 1:
Introduction
Energy storage has the potential to disrupt
business models.
Business models in energy storage – Roland Berger Focus 5
Energy storage has been around for a long time. Ales- nology is not yet mature and storage technology still
sandro Volta invented the battery in 1800. Even earlier, needs to conquer its space in the energy world, where
in 1749, Benjamin Franklin had conducted the first ex- alternatives can still address the needs of the energy sys-
periments. And the first pumped hydro storage facili- tem at lower costs.
ties (PHS) were built in Italy and Switzerland in 1890. Nevertheless, the first experiments with storage busi-
Their first intended use was not only to generate power, ness are being conducted. Now is indeed the time for
but also to better manage the water resources. PHS fa- experimenting with business models in energy storage.
cilities were mainly built in the 1960s, where they sup- The lessons and insights obtained now will position the
ported the rollout of nuclear power plants that deliv- players well to benefit from energy storage in the future.
ered stable output not in line with demand fluctuations Energy storage is about maintaining balance between
over the day. supply and demand – a core activity of the traditional
Until recently, the role of energy storage has been bene- utility. Energy storage may therefore bring utilities back
ficial but secondary to our daily life. Batteries provide into the game.
power at those locations where no grid connection is In this report, we highlight the various needs for energy
present, like for starter motors in cars, mobile phones, storage. We will also examine the first cases in deploying
laptops and other electronic devices or for emergency energy storage. We will sketch outlines of the future
power for computer servers. In addition, large energy business models that may arise and draw recommenda-
storage facilities, like PHS, still play a modest and sup- tions for the players in the energy value chain.
portive role to utilities.
This modest role for energy storage will end. Energy
storage will become a crucial element in our uninter-
rupted energy supply. The ongoing transition with high-
er shares of renewable and intermittent energy sources
and distributed generation applications requires ways to
store and release energy when needed. New energy stor-
age technology can deliver this.
Energy storage holds a large promise for the future. The
equipment used in energy storage has to be manufac-
tured, installed and operated. And new service models
will arise. Storage solutions will create new connections
between power generation and energy users, and be-
tween producing/consuming players ("pro-sumers") as
well. Trading and arbitrage over time will create new
business opportunities for the existing and new players
in the energy field.
However, we are not there yet. Despite this apparently
bright future for energy storage, no convincing business
models have yet been established. Except for PHS, tech-
6 Roland Berger Focus – Business models in energy storage
Section 2:
18
16
14
12
Production from intermittent 10
sources in TenneT area, Germany,
June 19-21, 2016 [GW] 8
6
4
2
0
June 19 June 21
-11%
90% 525
499
469
74%
58%
Solar and wind capacity
Fossil and nuclear
on July 19, 2016 pm as
power capacity in
share of peak demand in
ENTSO-E area [GW]
ENTSO-E area [MW %]
Maintain
voltage
Seconds to minutes level
Maintain
frequency Backup
Black start
Correction power
Peak
Quarter to hour of forecast
shaving
inaccuracy
Network
CHP output Retail
Follow load reinforce-
optimiza- markets
ment
tion arbitrage
deferral
Daily
Avoid
spilling
energy
Renewable
Wholesale energy
arbitrage self-con-
Week to month
sumption Off-grid
Seasonal
Need exacerbated by rise of renewables Existing need not affected by new trends
grades may be higher than of building energy storage, initially foreseen with the outlay of the grid. Energy stor-
which can absorb peak demand on the network as well. age may prevent or defer some refurbishment and net-
Especially in congested urban environments, these net- work reinforcement investments.
work upgrade costs can be high. Trading on wholesale markets and fulfilling the portfo-
lio management function of utilities also gives rise to
Storage needs differ over time and per type of player new energy storage needs resulting from the energy
Players active in the energy market will have different transition. The ability to make accurate predictions
types of needs related to the more predictable or unpre- about renewable energy output is needed for trading.
dictable imbalance between demand and supply over Any deviations from the predictions would require on-
various time horizons. The underlying needs differ per the-spot sourcing of more electricity or selling of addi-
time unit and per step of the value chain. B tional volumes. But longer term, energy storage enables
In the electricity generation step, power storage can more arbitrage. Major fluctuations in output will lead to
support in black starts and in the optimization of the larger price differences. Storage provides the means to
output of combined heat power plants. Those needs are take advantage of those differences. For instance, it will
not new. They existed well before the energy transition. enable players to store energy in the summer at low pric-
Avoidance of spilling energy will be a new need brought es and sell in the winter at higher prices.
by the transition. Without storage, excess power gener- Finally, new needs have also arisen at the level of the end
ated by onshore and offshore wind could be dumped in user. Using storage as a source of backup power has al-
the absence of demand. Current negative electricity ways been around. Hospitals and server rooms for in-
prices on wholesale markets already show that supply stance have long relied on this. With storage, end users
is often in excess of demand. Those energy storage can now better manage their peak demand as well. In
needs, or cycles, have a duration of a quarter of an hour some cases, the energy bill depends on the total peak
to a week at most. demand and significant savings can be made. Other op-
System operators have needs of short duration. Operat- portunities for storage include arbitrage on retail mar-
ing the grid and maintaining balance between intermit- kets – using and selling privately generated power or
tency may lead to frequency deviations and voltage re- power from the grid.
ductions. On a slightly longer time frame, load following
is also becoming more important, where sudden chang- Different needs require different storage technologies –
es in energy output from renewables cannot be matched Most technologies are not mature yet
as quickly by scaling up or down conventional genera- There are many energy storage technologies in existence.
tion output. When it comes to meeting the needs described above, one
Network operators (those who are responsible for the size does not fit all – the characteristics of the technolo-
assets themselves) may see new load points in new plac- gies and their fit with the needs or applications, as de-
es in the grid with sudden changes in output. In addi- scribed by discharge duration or power requirement, vary
tion, the increase in decentralized energy generation considerably. A variety of energy storage technologies will
with solar PV rooftops and other renewable generation serve specific applications. C
capacity attached to the local distribution grid may Most of these storage technologies are not yet mature.
cause the power flows to go in different directions than Some technologies are not fully developed and the tech-
Business models in energy storage – Roland Berger Focus 11
10 GW
Power requirement
Seasonal
storage
Inter-seasonal
storage
1 GW Pumped hydro
Arbitrage
(CAES)
Black start
Load following
Frequency regulation
Voltage regulation
10 MW
Supercapacitors
System/network
1 MW
operator
Flywheels
Off-
scale/
end- End user
1 kW user
self-
cons.
0 kW
Day
Day
Hour
Hour
Week
Week
Micro-second
Second
Minute
Season
Micro-second
Second
Minute
Season
Discharge duration
D: Costs of storage.
Levelized costs of storage, 2015 vs. 2030 [EUR/MWh, 2014 price level].
800
700
600
500
400
300
200
100
0
Redox flow
Compressed air
Sodium-sulfur
Pumped
hydro storage
energy storage
Lithium
Lead
Supercapacitors
Flywheels
Power-to-gas H2
Power-to-gas SNG
Batteries
2015 2030
nologies need to be further improved to become more time under current market prices. Indeed, current mar-
reliable and secure. For other technologies, technologi- ket prices deter large-scale deployment of energy stor-
cal improvements are needed to make them cost com- age. Daily and seasonal variations are insufficient to de-
petitive with other solutions for storage needs. At cur- ploy storage technology for time arbitrage.
rent costs (well above EUR 100/MWh) most storage Despite these current adverse market conditions for en-
technologies cannot yet compete with conventional gen- ergy storage, the first pilot projects in energy storage are
eration capacity, like gas-fired peaker power plants. The taking place in view of the clear potential of energy stor-
outlook for the cost competitiveness of energy storage is age. Because of the unknown future economics of stor-
positive. Technological advances, economies of scale age, no clear business cases or business models have yet
and improvements in production processes are driving been developed, however. Current activities seem to fo-
costs down. Operations and maintenance (O&M) and cus on identifying those and testing their applicability.
charging costs will fall as well, contributing to lower lev- Similar to the development of the internet, business
elized costs of storage. models in storage are being set up, implemented and
The levelized costs of storage (LCOS) enables compari- challenged, and will evolve into a sustainable business
son between different types of storage technologies in in time.
terms of average cost per produced or stored kWh. The
LCOS of energy storage technology is still high as depict-
ed by the costs of various technologies calculated by the
World Energy Council. D These levelized costs depend
greatly on the intended use of the technology, which de-
termines key variables like number of storage cycles,
charging costs, etc.
It is important to note that storage technologies are
competing with other solutions for dealing with the
needs in the power system during the transition. Gener-
ally, the energy system is robust and other solutions that
deal with intermittent renewable energy, decentralized
energy or fluctuations in demand already exist. Basically,
there are three main alternatives: flexible power genera-
tion, more (inter)connection capacity and demand-side
management techniques. It is only at lower LCOS that
new energy storage technologies can compete with these
alternatives and their adoption will accelerate.
While the energy storage needs are there, alternatives to
storage are still meeting these needs. Energy storage
technology is not yet mature and its deployment is still
often unprofitable. Indeed, existing PHS facilities are
being used, but no new ones have been built for a long
14 Roland Berger Focus – Business models in energy storage
Section 3:
Cases
First applications of energy storage show potential
new business models.
Business models in energy storage – Roland Berger Focus 15
In anticipation of a bright future, the first projects with ally to support the energy system, where large amounts
energy storage are being set up. We have analyzed some of baseload capacity cannot deliver enough flexibility to
of these cases and clustered them according to their po- respond to changes in demand during the day. Now,
sition in the energy value chain and the type of revenues these large energy storage systems deliver the flexibility
associated with the business model. E to respond to the intermittency of renewable energy
Though the business models are not yet fully developed, sources. For instance, in northern Chile a proposed proj-
the cases indicate some initial trends for energy storage ect for a 300 MW PHS will ensure a continuous power
technology. Energy storage is becoming an independent supply to mining companies from a 600 MW solar PV
asset class in the energy system; it is neither part of plant. Thanks to the low costs of PHS and solar PV, the
transmission and distribution, nor generation. We see system can run without subsidies.
four key lessons emerging from the cases. In Northern Ireland a proposed CAES facility will exploit
several revenue streams and support the full energy sys-
Role of mature energy storage technologies adapts tem. Intermittent wind energy in Northern Ireland re-
and shifts from balancing demand variation to en- quires substantial balancing efforts, as the grid is not
abling intermittent supply well-connected to other regions. CAES will help reduce
PHS has been installed in France, Japan and other re- the current high overall system costs – so reliance on
gions to compensate for the inertia of nuclear reactors. costly gas-fired backup capacity will be reduced – and it
Nuclear-powered reactors from the 1970s and 1980s will provide ancillary services. Revenues will come from
have only a limited ability to modulate their power out- the spread on wholesale markets and ancillary services
put. Hence, PHS has taken over this role and the reve- market.
nues are based on storing power when prices are low
during baseload periods at night and selling power when Power-to-gas and to other liquids are still in a pilot
prices are high during the day. In addition, the only two phase and will primarily target fuel production for
compressed air energy storage (CAES) plants in the the chemical industries and mobility
world play the same role – supporting baseload power Power-to-gas can deliver seasonal storage, supporting
plants to meet variable demand. the general energy system when there is limited solar
At the time of construction, these storage facilities were PV production in winter and less wind in summer. So
part of a system controlled by a single player. For instance, far, the power-to-gas pilot projects have not yet deliv-
Electricité de France operated the full system, from nucle- ered a convincing business case, as costs of power-to-
ar power plants, transmission grid and PHS to distribu- gas are still too high. With more than 20 pilot projects,
tion and could fully internalize the benefits of the PHS. Germany is the country leading the pack. First applica-
Now, PHS and CAES depend on the transparent price sig- tions are not purely focused on energy storage, howev-
nals provided by the wholesale markets. These plants cur- er. While power-to-gas will convert excess electricity
rently participate in the wholesale market, though prices into hydrogen or other gases (like methane), these gas-
on the European continent are not yet offering sufficient es likely will be used as a fuel in mobility, industry or
incentives for the construction of new ones. households. Consequently, utilities, car manufacturers
The business models for large energy storage systems and chemical companies are all involved in these pilot
like PHS and CAES are changing. Their role is tradition- projects. Power-to-gas installations will run when
16 Roland Berger Focus – Business models in energy storage
No revenues DE
Pilots with
power-to-gas to develop
seasonal storage
Revenues dependent US DE
on subsidies Ancillary services as Raising solar PV
a pilot self-consumption
Single revenue US CL UK
stream Peak demand support in PHS to complement Frequency response to
urban areas solar PV production at address intermittency in
night the UK's isolated network
IT
NaS batteries to
relieve congestion in
North-South grid
US
A CAES system provides ancillary services and
complements a coal-fired and nuclear power plant
by storing excess production for later peak demand
Multiple revenue UK DE
streams Balance demand and Connecting batteries in a virtual network to provide
supply with high amount ancillary services and enable power trading between
of wind energy prosumers at prices between FiT and retail price
US US
Battery and solar system to provide ancillary Support batteries
services, T&D investment deferral and peak demand when power demand
shaving for local community (tariffs are highest) suddenly jumps
wholesale prices are low or even negative. The aim of Therefore, new business models are being developed to
the German Energy Agency is to make power-to-gas an make better use of the battery. Sonnen and Lichtblick
economically viable solution by 2022. Given that petrol are developing peer-to-peer networks where consumers
and hydrogen are relatively more expensive than elec- can share their solar PV production and battery capacity.
tricity, first applications of power-to-gas will target fuel Trade in power between consumers is feasible at low-
production. er-than-retail tariffs, but higher than the feed-in tariff. In
addition, the community of batteries can be used to pro-
Batteries mainly address a single purpose, but will vide ancillary services to the grid, tapping into addition-
increasingly be used for many different goals to al revenue streams.
optimize their value Likewise, larger systems of batteries are mainly used to
The areas of application for batteries are wider. Batteries provide grid support functions and target a single reve-
can be used to support consumption, to support the grid nue source. Application today is mainly in grids charac-
by provision of ancillary services or to complement pow- terized by bottlenecks or those that are not well-connect-
er supply. The sizes of battery systems thus differ. Small- ed to other regions. The revenues are highly dependent
scale batteries are deployed at the place of consumption. on rules and regulations.
Larger-scale systems are connected to the grid. The ap- For instance in Italy, sodium-sulfur (NaS) batteries have
plicable rules and regulations and the market system been deployed to resolve bottlenecks in the grid caused
determine the revenues to a great extent. by oversupply of solar PV in the south that needs to be
First battery applications focus on single revenue transported to the north. The batteries provide ancillary
streams, for instance on raising self-consumption for services. The national grid operator Terna received per-
owners of solar PV panels. In addition, regulation could mission to own and operate the batteries, as energy stor-
force owners of batteries to address only a single revenue age is generally considered to be generation capacity
stream. The value of batteries can be better monetized that transmission system operators (TSOs) are not al-
when several revenue streams are targeted, especially lowed to own under unbundling. The value of the batter-
when the various storage needs are not concurrent. ies is therefore included in the regulated asset base of
However, regulation of ownership should enable this; it Terna, and Terna receives the regulated return via the
will also give rise to new business models on the owner- fees it charges to the grid users.
ship and management of batteries. In the United Kingdom, a different ownership model is
Residential battery storage at homes enhances self-con- in place. Being on an island, the UK network is not
sumption from solar PV. Dependent on the regulatory well-connected to other countries and significant shares
environment and the electricity and network tariffs in a of wind and solar energy are causing significant imbal-
country, a battery could raise the overall value of the so- ances between demand and supply. National Grid in the
lar PV system. By raising self-consumption, the house- UK has contracted 200 MW in battery capacity from an
hold saves the electricity that it obtains at the higher independent owner for its enhanced frequency response
retail price and does not sell the self-generated solar PV over a four-year term. Though the owners will use the
at the lower feed-in tariffs. Using a battery for this pur- batteries for these ancillary services only, it is expected
pose only is not yet profitable and the German govern- that the batteries will also serve other applications in the
ment is currently subsidizing this. future, given the very low prices offered in the tender.
18 Roland Berger Focus – Business models in energy storage
with the island's energy grid. A flywheel was needed to Lock-in of alternative solutions
support the operation of two electric cranes in the port, Energy storage technologies compete with other solu-
whose power demands could destabilize the grid. Fur- tions to deliver or absorb power when needed. Existing
thermore, the flywheel as the first provider of ancillary solutions, like grid expansion or more interconnections,
services would reduce the stress on the battery system the establishment of a capacity market for gas-fired pow-
and enhance its lifetime. er plants or strategic reserves, still receive a great deal of
attention from policy makers, regulators and system op-
The cases above illustrate the observations made in sec- erators. Energy storage solutions are not yet included in
tion 2 on maturity and costs. They also show that the their tool box, given that this requires a cultural shift as
business models for energy storage are still marked by well.
uncertainty. Energy storage is not yet fully adopted, ex-
cept for PHS. There are several reasons for this: Immature policy stifling business opportunities
The value of energy storage depends to a great extent on
Immature technology rules and regulations that determine the revenue base.
Most technologies are not yet mature. Technological ad- Current policies for the energy system do not yet ac-
vances are still required to increase efficiency, extend the knowledge the specific role of storage and they are often
lifetime of the technologies and reduce safety issues. seen as generation-only. Today's tariff structures, capac-
The high costs are in part a result of these technologies ity and consumption fees for grids and taxation deter-
not yet being fully developed. mine the revenue base of storage to a great extent and
may not always lead to optimal outcomes. Also, in un-
High costs of storage bundled systems, rules on the ownership of the storage
Related to the immature technology, the costs of energy may prevent optimal application of storage assets, espe-
storage are still too high. Further optimization of the cially when a storage solution could provide several ser-
technology and production processes, and the exploita- vices. In addition, the market for ancillary services is not
tion of economies of scale are needed to enable large- yet fully developed and many different pricing models
scale commercial deployment. The high costs are caused exist in the European Union. Finally, not all of the bene-
by the considerable capital expenditures required, the fits of storage are currently priced.
O&M costs and the low efficiency of a store and recharge
cycle.
Section 4:
Implications
The advent of new energy storage business models
will affect all players in the energy value chain.
Business models in energy storage – Roland Berger Focus 21
No definite views on business models for energy storage a system operator only procures the ancillary services,
have crystallized yet. Given the large expected cost de- the system operator might not have sufficient operation-
clines, changes in revenue sources, adjustments in rules al control to guarantee security of supply.
and regulations and reshaping of the power generation
assets, only the outlines of the future business cases can Implications
be seen, indicating which developments will be critical A single storage asset can and should be used to serve
to watch. many different purposes and optimize its value. In an
unbundled system, the owning and operating of these
SUPPORTING THE GRID WITH ENERGY STORAGE assets by system operators may lead to difficulties if the
WILL BECOME A NEW ENERGY MARKET SEGMENT system operator were, for instance, to operate the tech-
System operators and utilities need to find the right nology to enable arbitrage on wholesale markets. System
legal and business conditions to capture revenue operators and regulators should make sure that a regu-
streams from several storage applications at the same latory framework is designed that takes into account the
time to reduce system costs specific nature of storage, distinct from normal genera-
Energy storage is already being deployed to provide an- tion capacity.
cillary services to the grid. Deployment is so far limited, System operators should thus define a strategy on how
as existing power plants can still provide most of the re- to optimally use the services from energy storage. They
quired services. The cases have shown that energy stor- can own and operate the storage assets, or procure the
age is only needed in regions with limited interconnec- services over the long or even short term. Criteria on
tion capacity and higher shares of intermittent availability, quality and costs should lead to a policy that
renewables to maintain balance in the system. optimizes the management of the total grid. It is impor-
With increasing shares of intermittent renewables and tant to exploit all revenue streams available to the energy
interconnection capacity not keeping pace, the need for storage asset in order to lower costs.
ancillary services provided by energy storage will increase The provision of ancillary services also adds an attractive
in more countries across the EU in the next 15 years. F revenue stream for operators of storage technology. These
Most energy technologies can provide ancillary services. operators should design models that enable the often
While the characteristics of flywheels make them ideal for short-term deployment of the storage assets for the pro-
the provision of these services, batteries, CAES and PHS vision of these services, while continuing the reliable de-
are able to deliver power with fast response times as well. livery of the storage services to other users. Ancillary ser-
These technologies have the added advantage that they vices could be a separate business line for utilities.
can also provide other services. As they can tap into more
revenue sources, they could outcompete flywheels. BATTERIES BECOMING THE LINKING PIN IN EN-
Uncertainty in the treatment of energy storage within ABLING SALES OF POWER BETWEEN PRO-SUMERS
the rules and regulations hampers the future deploy- Utilities and system operators need to offer battery
ment and appropriation of all value streams available to capacity so that they too play a role in the future
these assets. When a system operator (TSO and/or DSO) decentralized energy system
owns a storage device, commercialization of the revenue In the retail market, the adoption of batteries depends to
streams might not be feasible. On the other hand, when a great extent on rules and regulations. The reimburse-
22 Roland Berger Focus – Business models in energy storage
60
Ratio of interconnection capacity to total generation capacity [GW %]
DK
50
30
SE
CH SE
20 NL
NO NL
NO
BE
FR
10 FR DE1)
BE
UK UK
DE1)
0
0 10 20 30 40 50 60 70
Share of intermittent renewables in total generation capacity [GW %]
ment of non-self-consumed solar PV and the access fee to limit the use of car batteries to some extent. Still, car
the grid determine whether investing in a battery rep- batteries can be connected in a virtual network and de-
resents an optimal investment or not. In Germany, where liver ancillary services to the grid.
there is a large difference between the feed-in tariff and
high retail prices, promotion of self-consumption raises Implications
the value of the solar PV system. In countries with net Future business models for solar PV and battery systems
metering, or smaller differences between retail prices and are characterized by uncertainty. The revenue models
feed-in tariffs, energy storage delivers little value as bat- are dependent on regulation of the energy sector, the
teries still represent a substantial cost. prices and pricing models for grid access and retail en-
In the future, pure domestic solar PV + battery systems ergy, and the evolution of the technology, such as elec-
will not be a hardware-only solution. New services will tric vehicles, and digital tools like demand-side manage-
add value to the system. Remotely operating a network ment. Nevertheless, more and more solar panels will be
of batteries can provide ancillary services to the grid. installed and the needs of traditional energy clients will
The network of batteries also opens up the opportunity shift from buying electricity to procuring energy ser-
to store electricity in the batteries of others and to share vices.
and trade electricity between solar PV owners. Current Batteries will become a commodity, even more so than
network fees dependent on volume rather than capacity solar panels. To become a successful battery manufac-
could still impede this trade between consumers. How- turer, a company needs to have scale to optimize the pro-
ever, a switch towards a capacity tariff could enable bat- duction processes and produce at the lowest cost. Differ-
tery sharing on a larger scale. It is conceivable that bat- entiation will come from the provision of energy services
teries could one day be placed at central locations and and digital solutions.
their capacity rented out to consumers. Utilities losing revenue from power generation as con-
The advent of these services is also an indication that an sumers produce more and more of their own electricity
autarkic future or grid defection is not likely. A grid con- can find new business opportunities in the provision of
nection is needed to profit from these services. Further- energy services. Batteries will become the linking pin in
more, an over-dimensioned solar PV array and battery offering services for decentralized energy supply. Batter-
system is needed to maintain sufficient security of sup- ies enable the trading and sharing of energy between
ply and also have electricity after several cloudy days in pro-sumers, demand-side management and the provi-
winter. However, such a large system will yield much sion of ancillary services. Access to consumers' batteries
more electricity during the year than needed. It would be can even be used for personal portfolio management
costly not to sell the excess electricity via the grid. and trading operations. Utilities can also experiment
Batteries in electric vehicles will also greatly expand the with the provision of virtual batteries to clients, or bat-
future business models in solar PV + batteries. Electric teries in the cloud, partially backed by more central bat-
vehicles can be charged when production of solar PV is teries in distribution grids. To open up the opportunities
highest. However, charging of electric vehicles depends of these future business models, utilities need to main-
on the network and tariff structure as to whether your tain access to customers in the face of many service pro-
own solar panels can charge the car parked at your work- viders and digital companies entering the market al-
place. Furthermore, the required driving range would ready. Integrated offers with solar PV, battery and
24 Roland Berger Focus – Business models in energy storage
Implications
Given the scale of the disruption that synthetic fuels could
create for the chemical industry, chemical companies need
to monitor the developments carefully. Though these syn-
thetic fuels are currently more expensive than fossil fuels,
declining costs and changing regulations and stricter CO2
emissions policies could lead to the adoption of these syn-
thetic fuels in the coming decades. Besides focusing on
production technology, these companies should reinforce
their capabilities to deal with power market trading. The
value of power-to-gas comes from sourcing electricity at
times when prices are low. Partnerships with utility compa-
nies could enable these capabilities to grow.
As a large part of the value of power-to-x comes from the
use and sale of the fuels, utilities need to develop new
competencies to operate these installations. Partner-
ships with chemical companies may add value as well.
Utilities can benefit from operating the power-to-gas in-
stallation to smooth out (unexpected) intermittency of
the renewable energy portfolio.
In the long term, energy traders may use power-to-x in-
stallations for their arbitrage trades on wholesale mar-
kets. And it may well suffice to have access to these in-
stallations, rather than owning them.
26 Roland Berger Focus – Business models in energy storage
Section 5:
Recommendations
Energy stakeholders need to prepare today to capture
the business opportunities in energy storage and
develop their own business models.
In the energy transition, new players offering intermittent power supply have disrupted the
old business models of utilities. The rise of storage technology will again lead to a shift in the
industry. New business models are being designed and their ultimate form will depend on many
technological, market and financial factors. Players need to prepare now to stay in the game
in the future. We have depicted a few of the key success factors for market leaders in energy
storage. Various players can already take steps to start building up a competitive edge
in this new market segment of the energy industry.
Business models in energy storage – Roland Berger Focus 27
DSOs and >>Provision of infrastructure for power and data flows >>Roll out smart grid technology
TSOs (IT, power lines and storage capacity) >>Prepare grid for role of storage in network
>>Use storage technology to optimize operations and >>Define ownership models for storage and/or procurement
lower costs of services
>>Set up technology watch function to systematically identify and
assess business potential and impacts of new storage solutions
Energy >>Integration of heat/power technologies >>Design integrated solar PV, batteries, heat pumps and
service to offer lowest energy costs demand-side management solutions
companies >>Optimization of equipment to serve internal needs >>Develop networks of ESCOs to develop additional services
and external (on-grid) needs, like ancillary services
Energy >>Optimization of energy trade between pro-sumers >>Build up a portfolio of storage technologies
suppliers/ >>Ability to provide large-scale capacity on demand >>Design new energy services/offer tailored solutions to pro-sumers
utilities
>>Absorption of excess power in markets or from >>Partnerships with large energy users of power-to-x facilities
clients (last resort)
>>Access to batteries
Chemical >>Low-cost fuel production with flexibility >>Develop partnerships with utilities for power-to-x facilities
companies >>New materials for energy storage technology >>Partner with OEMs for technology and supply of materials
>>Conduct R&D and pilot new technologies
Automotive >>Low lifetime costs of storage technology in vehicles >>Develop service models to integrate car batteries, fuel cells
companies >>Ability to harvest synergies between stationary or engine with the grid
batteries and energy storage (V2G) >>Develop innovative business models to integrate EV with
decentralized energy production at home and at work (buildings)
Section 6:
Conclusions
Energy storage will become a new business line
in the energy world.
Business models in energy storage – Roland Berger Focus 29
It is time to experiment,
scape. New players have entered the industry, operating
renewable energy generation capacity, while taking
build partnerships in
demand. System operators have to incorporate inter-
mittent supplies in their grid and major shifts in power
Imprint
AUTHORS CONTRIBUTORS
Charles Dirrig
Project Manager
+86 10 84400088-676
Charles.Dirrig@rolandberger.com
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