Sun, Storage & Savings: Benefits of Behind-the-Meter Solar & Batteries for Large Energy Users

The installation of rooftop and other on-site solar is experiencing strong growth in GB (and Europe).

Buoyed by falling capital expenditure (capex) costs and power prices remaining high. The majority of this solar is being deployed on a standalone basis, but there is an increasing appetite – particularly amongst larger energy consumers – to co-locate on-site or private wire solar with battery storage.

Whilst capex and uncertainty on payback are still barriers to taking up behind-the-meter (BtM) generation, there are significant cost savings available from reduced reliance on grid imports. The addition of BtM battery energy storage systems (BESS) can improve the security of supply for a site, as well as lowering costs by reducing the need to import power during peak periods.

Here, we explore the cost benefits that BtM generation and storage can provide for corporate end users through avoided costs, alongside the impacts from commercial and ownership structures for these assets. We present the relative size of these avoided costs but for more information on the absolute costs and what the savings could look like for your business, or businesses you work with, please get in touch below.

Cost Savings for BtM Solar and Storage

The commercials for typical BtM arrangements are fundamentally different from the traditional energy supply arrangements for most corporates, with the value based on the avoided costs from reducing how much power is imported from the public network or altering the timing of those imports. The commercials for BtM generation and storage assets are the balance between the cost savings (Figure 1) and the costs of constructing and maintaining the assets and any necessary associated network infrastructure.

Figure 1: Relative importance of revenue streams for BtM solar and BESS

Source: Cornwall Insight

For BtM solar generation, the vast majority of value comes from avoiding imports at the site. Because wholesale costs only account for around 40-50% of the total import costs, using the BtM solar generation to reduce imports is more valuable than exporting it. However, depending on the exact commercial and ownership model for the asset, there could still be the potential to sell any excess power during periods when more is being generated than the business requires.

There are various other revenue streams that could be accessed with a BtM solar asset but that tend to contribute fairly minimally to the overall value stack. These include:

• The sale of green certificates
• Participation in the Capacity Market (CM)
• Providing balancing or grid services

For BtM BESS assets there are multiple components in the cost saving stack (Figure 1). Organisations can use the BESS to import power during periods when wholesale costs and time-sensitive network charges are low and then store that power to use during periods when those costs are higher, reducing imports during the higher price periods.

This provides cost savings through:

• Lower average wholesale prices
• Reduced network charges
• Lower CM levy costs
• Reductions in some supplier costs (e.g. balancing and hedging)

There is also the potential, again depending on the commercial and ownership structure, for the asset can also export excess power to the grid during high price periods and gain export wholesale revenues and potentially network credits. Additionally, BESS assets can participate in the CM or the provision of balancing and grid services, although the latter would need to be balanced against the need to ensure business activities are not disrupted.

Commercial and Ownership Structures

The revenue streams available for BtM solar and BESS assets, and the level of cost savings unlocked, will vary depending on the commercial and ownership structure employed. Traditionally, the typical route for businesses to access BtM assets has been through purchase or hire-purchase. Whilst this delivers the cost savings already outlined, it can also be a capital-intensive option. Alongside the growing interest in BtM opportunities, there has also been a proliferation in more innovative business models in the space. These include options such as the corporate receiving a fixed and discounted cost for their electricity supply in return for a partner getting control of the asset(s) to optimise and dispatch and retain the revenues from.

Behind-the-meter Arrangements

When setting up BtM arrangements some of the fundamental negotiating areas will be around the how the cost savings, asset revenues, capex, and maintenance costs are shared between the operator and the end user. There is no one-size-fits-all approach for these agreements, with BtM contracts bespoke to factors like the business and sector’s operating practises, site conditions, and requirements for green certificates.

Overall, businesses can access potentially significant cost savings from the installation of BtM generation and storage assets, especially with non-commodity costs set to rise substantially in the coming years. However, the magnitude of these savings is bespoke and dependent on a range of business- and site-specific factors. Understanding current and future energy costs is crucial to assessing the cost benefits of BtM assets as well as for negotiating an appropriate arrangement for the offtake from those assets.

Savings from BtM assets for your business

This is particularly prescient given the near-term upward trends in non-commodity charges, as discussed in our Insight Paper, “It All Adds Up - Getting to Grips with Business Energy Costs”. These increases include both new policy costs for funding nuclear and carbon capture, usage and storage projects, and the rise in network charges. NESO’s latest Five-Year View of Transmission Network Use of System (TNUoS) Tariffs suggests that TNUoS fixed tariffs could nearly double for many users in April 2026 and continue to rise by >10% per year out to 2030-31.

If you would more information on the what the savings from BtM assets could look like for your business, understand and forecast site- and portfolio-specific energy costs, or assess and manage your energy procurement process, please get in touch via this form.