Q & A: TERRA FIRMA
Many businesses are feeling the impact of recent tariff increases. Why is battery arbitrage becoming such an important conversation? The introduction of time of use( ToU) tariffs by Eskom and many municipalities, means that for certain businesses the price of electricity is no longer fixed across the day. Instead, it varies depending on when they consume power – and there are clearly defined peak, standard and off-peak periods.
This gap between peak and off-peak pricing has changed the economics of energy. Under certain Eskom and municipal tariffs, for instance, winter peak electricity can exceed R11 per kilowatt hour, while off-peak rates may be closer to R1.50 to R2.00. For businesses with material consumption during peak hours, that difference has a direct and fairly significant impact on margins. Arbitrage allows businesses to manage that exposure by effectively changing when electricity is bought, even if operations can’ t change.
What exactly is battery energy arbitrage? Simply put, arbitrage means charging a battery when electricity is cheaper and using that stored energy later, when electricity prices are higher. A battery can be charged from on-site solar PV or from the grid during offpeak tariff windows. The stored energy is then discharged during peak periods, reducing the amount of high-cost grid electricity the business needs to buy. For businesses operating in areas where a meaningful ToU tariff is in place, arbitrage can offer strong commercial benefits.
Do businesses need solar PV to install a battery for arbitrage? No. A battery can deliver arbitrage value without solar power on site by charging from the grid during off-peak periods and discharging during peak periods. However, where solar PV is installed, storage can significantly enhance its value. Surplus solar can be stored and used during high-tariff windows, increasing self-consumption and improving overall returns.
What determines whether a business is a good candidate for battery arbitrage? Arbitrage delivers value if a business that is subject to ToU tariffs consumes electricity during high-priced
20 sabusinessintegrator. co. za