Energy flexibility for industrial businesses

Effective production scheduling and optimisation can significantly enhance both energy efficiency and flexibility in industrial processes, leading to reduced costs, improved productivity, and better responses to grid conditions. Strategies like digitalisation, advanced controls, and digital twinning can often unlock substantial gains in both energy efficiency and flexibility.

The energy use of many industrial processes can be adjusted by changing the rate and timing of production. The cost and feasibility of doing so can vary from low or even negative to extremely high. The extent to which production scheduling has been investigated and adopted by different companies varies widely.

Successful implementation requires expert knowledge of the relevant production processes and strong collaboration with production teams. To encourage broader adoption, energy suppliers can play a key role by providing clearer and stronger pricing signals.

Find out more about how the Ahuora Centre for Smart Energy Systems at Waikato University is developing digital twin technology to enhance energy flexibility and efficiency in industrial sites across New Zealand: Ahuora project(external link)(external link)  

Energy flexibility can be created by adding buffer storage to separate variable supply from variable demand. In practice, this often means storing energy in electrochemical batteries, hot or chilled water tanks, and ice slurry banks.

Many industrial sites have an amount of energy storage already integrated to provide operational continuity and safe shutdowns. Often, these flexibility measures are not being used beyond site-specific needs. For example, in some cases, a site could store chilled or hot water at a higher temperature (or lower for refrigeration buffers) than the standard operating level to enable load shifting.

However, achieving meaningful energy flexibility often requires significantly larger storage volume, which comes with challenges related to space, cost and system integration.

While the concept of energy storage is simple, its design, management and operation can be technically complex. Factors like storage state, non-linear refill/discharge rates, and seepage losses all add to this complexity.

Having a standby energy source is a default option for many critical applications, for example a standby generator to power a building. For businesses looking to switch away from a fossil fuel source, maintaining the existing fossil fuel plant can fill this role at relatively low cost.

Both product storage and interim ingredient storage can enhance production flexibility by allowing different parts of the process to operate independently.

Product storage enables businesses to produce goods in advance and store them until needed, separating the production process from delivery obligations.
Interim ingredient storage breaks the production process into smaller modular sections that can operate independently.
By storing semi-finished products, businesses can optimise scheduling, reduce downtime, and respond more effectively to demand fluctuations. The feasibility of these strategies is highly process- and industry-specific, with their effectiveness depending on product and ingredient longevity, storability, volumes and value. 

• Energy storage batteries offer valuable flexibility in industrial contexts and require tailored solutions rather than a ‘one size fits all’ or ‘plug-and-play’ approach.  
• Desktop modelling is crucial to optimise battery performance and ensure the best outcomes for energy storage and flexibility.
• Effective battery energy storage system design requires both energy system and battery design experts.
• A site’s load profile and predictability are important factors in economic deployment of battery storage. Shorter peaks and high predictability are favourable.  
• The economics of battery solutions vary by site, depending on energy profile and electricity pricing structure (energy and network). Sites with time-of-use energy pricing and demand charges can unlock greater benefits from flexibility. 

The cost effectiveness of battery solutions for businesses is highly context specific, depending on factors such as demand profiles, energy prices, production schedules, and installation costs.

• Managing long peak demand periods near network capacity may require larger batteries.  
• Long charge and discharge periods require bespoke battery system design and configuration.
• Rapid discharge requirements remain challenging for standard battery chemistries.
• Uncertainty in site load timing and quantity may require immediate battery refilling after discharge, leading to higher charging costs.

Our work to date has focused on lithium-ion battery technologies, and we recognise that other battery chemistries and technologies may be better suited for certain applications. 

The figure below shows how a battery energy storage system (BESS) helps keep electricity demand from exceeding the network’s capacity of 12.5 MW over a week. The orange line represents the network demand. The gold line is the energy demand of a process heat user with a 3.8 MW boiler, which sometimes exceeds the network capacity by nearly 1 MW. When this happens, the BESS discharges energy (purple line) to make up the difference. When the user’s demand drops to below the network limit, the BESS charges up again, preparing for the next high-demand period. While this set up theoretically works to keep demand within the network limits, it requires a large BESS capacity, which could be challenging to implement due to high costs, installation complexities, and maintenance requirements.

The table below highlights the impressive efficiency of using BESS to help meet the demand with a 3.8 MW boiler running as a constant baseload. The BESS achieves 94% utilisation of network capacity, but it requires a large battery that takes a long time to charge. Due to the unique demand pattern — often staying below network capacity and then spiking above or near it for long periods — the battery’s actual usage is only 8%. This pattern could be common for industrial businesses that dry products over long sequences. The challenge here is to find ways to smooth out these peaks to make BESS solutions much more cost-effective. The comparison of capital costs across different battery chemistries, including lithium-ion, sodium-ion, nickel-metal hydride, offers valuable insights for optimising these systems.  

BESS specification and results for adding 3.8MW boiler

The figure below shows different battery types and how much energy they can store by weight and volume. Batteries that can store more energy in less space are better. Other technologies that outperform today’s lithium-ion batteries include lithium-oxygen and solid-state batteries with lithium metal anodes. For industrial applications, these new technologies could improve commercial BESS. The higher energy density offers potential for more compact and efficient storage options, which could benefit industrial businesses needing reliable and flexible energy storage for on-demand use.

Graphic source: Emerging Battery Technologies, IEA 4E EDNA, 2022(external link)

As part of their role in accelerating deployment of energy innovation in New Zealand, Ara Ake had originally worked with Sapere to develop the BESS models that the EECA study is based on. This approach delivered high quality outputs in a shorter timeframe and at lower cost than if separate models had been developed.

Ara Ake’s modelling looked at hypothetical BESS applications and evaluated the likely financial and technical costs and benefits for these. This complements the EECA work which looked at specific use cases using detailed real-world data.

The key findings are summarised below and present aligned research outcomes to the EECA study:

• While BESS can provide multiple value streams, the modelling emphasised that detailed analysis is essential before deployment.
• Market revenue alone may be insufficient to justify investment in BESS due to revenue shortfalls and high capital costs.
• Stacking multiple value streams is essential to improve financial returns.
• BESS can create value when combined with demand management strategies to reduce peak durations and improve predictability.
• BESS can be a non-network alternative to costly infrastructure upgrades, though feasibility depends on site-specific factors such as space constraints and duty cycle requirements. 

Download BESS Value Stacking Report(external link)

Case Study: CentrePort BESS Value Stacking

CentrePort is installing EV chargers for heavy plant equipment, which could exceed their network capacity. Ara Ake has partnered with CentrePort to deploy a BESS facility that will:

• demonstrate the ability of BESS to reduce peak demand
• explore commercial energy innovation through a non-network solution
• provide insights into how battery storage can unlock value for multiple stakeholders, including Wellington Electricity in managing network constraints. 

Read more about the CentrePort project | Ara Ake(external link)

The model uses projected fuel prices to determine the most cost-effective way to dispatch the plant while considering key constraints such as:

• how often the plant can switch fuel source
• the efficiency of each heat source
• energy pricing assumptions, especially the cost of back-up fuel for low load factors.  

This analysis generates information such as the likely change in net costs from having multiple fuel sources, and the likely proportion of running on each fuel type.

We believe this information will be useful for companies considering this strategy, as a case-by-case approach is more useful than generalising results.

The graph below shows an example of the model output, comparing single-fuel gas and electric heat plant options. It also includes 3 different dual-fuel options, each based on a different permitted frequency of fuel switching. As can be seen, all 3 of the dual-fuel options have lower total cost than the single-fuel options. Results will differ for different input assumptions and use cases.