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Potential of Community-Scale Battery Storage in the Energy Transition: A South African Municipality Perspective

The increasing adoption of Distributed Energy Resources (DERs) and rising Eskom electricity prices are presenting a challenge to the traditional energy provision business model of South African municipalities. Finding a solution that balances the needs of the DER owners and the municipality has proven to be difficult, since current solutions that revolve around tariff design often worsen the business case for grid connected DERs as any excess energy they generate is not adequately valued by the municipality. Thus, the financial value of ancillary municipal business models, specifically operating a community-scale Battery Energy Storage System (BESS), is investigated. It is hypothesized that this business model can be financially viable to the municipality within a South African municipality. To prove this, an advanced financial feasibility model for a community-scale lithium-ion BESS is developed. The performance of this model is evaluated with a case study, which looks at the South African suburb of Dalsig within Stellenbosch municipality. From the case study, it was determined that the operation of a community-scale BESS by a South African municipality can be financially beneficial, since the BESS that provided the best financial returns in the case study provided the municipality with an internal rate of return of 5.77%, which is higher than their weighted average cost of capital. The main contribution of this paper is to highlight the potential of community-scale battery storage in supporting municipal financial viability and ultimately the energy transformation.