Peak-shaving with Li-ion batteries

“Peak-shaving”, peak management and “energy shifting” are all techniques used to cut peak consumption with an end user. It is desirable both for the power supplier and grid owner to reduce the extremes in end consumption and is often reflected in the customer's contract.

Peak-shaving is not a new idea; techniques to reduce power consumption peaks has been utilized for many decades. In some cases, the power supplier controls the systems, referred to as “load management” or “demand-side management”. Systems like these may i.e. enable the supplier to shut down high consumption equipment at peak hours. When the responsibility of reducing peaks in power consumption lies with the consumer, it is often referred to as “peak-shaving”.

Controlling when high consuming equipment and systems are used, is a common way of reducing peaks in power consumption. Planning production like this works well under certain conditions, but sometimes it is impossible to anticipate or plan for this over-consumption. However, the development of cheaper and better Li-ion batteries opens up new and appealing opportunities; peak-shaving being one of the most exciting ones.

Lithium Ion Batteries

After Sony produced the first commercial Li-ion battery in 1991, the technology has seen an incredible development. Li-ion batteries were first used in portable devices such as video- and photo- cameras, tools, computers and cell phones. In the last couple of years, the popularity of electric vehicles has propelled development in price, capacity and lifetime. The same can be said about renewable energy sources such as PV and wind with its unpredictable production rates, necessitating viable ways of storing energy.

Compared to old lead batteries, the energy density of Li-ion batteries is close to 300% higher and can sustain up to twenty times as many charging cycles. These batteries are also more environmentally friendly and are practically maintenance-free.

The price per kWh stored has decreased dramatically over the last couple of years, roughly a 90% reduction in the last decade, and lifetime has over the same time period seen a considerable increase. These improvements have significant implications on the most important number, namely the price per kWh per charge cycle.

As the technology has matured, Li-ion batteries have been adapted to fit a wide range of applications. Variations and optimization in anode and cathode material, as well as the electrolyte, gives rise to variations in charging times, capacity and energy density. Subsequently, choosing the right Li-ion battery is crucial in taking advantage of the technology.


Most major power suppliers provide customers with a contract where consumption peaks make up a considerable part of the power cost. In examples obtained by Staubo AS, consumption peaks may easily contribute to 30-50% of the total cost. At this rate, any medium size consumer may finance a relatively large peak-shaving plant. Calculations we have done show that such plants become economically viable when cost of peak consumption surpasses 1.25 NOK/kWh.

In a modern battery, one can expect 6000-10000 charge cycles; life expectancy of such batteries, used to cut i.e. two consumption peaks a day, are approximately fifteen years.

Battery plants like this can also be used as a backup- and emergency- power supply, further reducing the total cost.

Other factors also contribute to making now the perfect time to invest in a peak-shaving system. Electricity cost is expected to slowly increase in the next couple of years, and more unstable power sources are connected to the grid, adding to the financial gain of a peak-shaving system in the years to come. Read more on the environmental aspects further down.

Let us help you with the calculations

The plant

A Li-ion based peak-shaving plant is comprised of several components: the battery pack itself, the inverter and a control unit. The battery packs are dimensioned to handle all, or parts, of the difference in normal- and peak- consumption. If a facility normally operates at 2MW, but experiences peaks in consumption at 3MW over a period of one hour or more, the plant is dimensioned to provide at least 1MWh, making sure sufficient power is at hand during periods of high demand. In addition, the control unit will make sure the batteries never discharge completely, and subsequently, the plant should always be slightly over-dimensioned.

These battery packs are well suited for de-centralization, and may well be installed at different locations in a facility.

The battery pack itself amount to approximately 75% of the total cost in a peak-shaving plant, the remaining 25% constitutes inverters, AC/DC converters, and the control unit. The control unit is often referred to as BMS (Battery Monitoring System). It is also cost-effective to make sure that the inverter and control unit are scaled for both present and future needs.

A plant like in the example given would roughly occupy the size of a shipping container.

Solar Cells

A peak-shaving plant are, of course, easily combined with a PV system. As of today, the payback time for PV systems are off-putting for most, but may offer additional benefits to businesses, such as having an enhanced environmental profile. Unused electricity may be sold to the grid, but it usually makes more sense to store the electricity on site in battery packs for later use. By over-dimensioning the battery pack, a combined solar and peak-shaving system are readily obtained. Let us help you calculate your project

Environmental factors

There are several environmental benefits to a well-built peak-shaving plant; first and foremost, the ability to replace inefficient and polluting generators.

Plants like these may also enable the provider to dimension the grid differently and avoid having to build new infrastructure to meet future needs.

Facilities that rely on diesel generators as emergency- and backup- power should consider a battery pack to cover these needs. A properly dimensioned battery pack can function as a peak-shaving plant, as well as an emergency power backup.

Li-ion batteries are recyclable.