Peak Shaving & Load Shifting: Solar battery grants

Peak shaving: the strongest funding case where demand charges are eating your bill

If your electricity bill is dominated by non-commodity charges rather than the units themselves, peak shaving is where the funding and the savings line up most tightly. Non-commodity charges, the red-band DUoS, BSUoS, the Capacity Market and residual charges, now make up a large and rising share of most commercial bills, and they are hard to forecast. The end of the Triad regime and the move to banded DUoS charges mean the value now sits in avoiding the red-band half-hours and the capacity-based standing charges, and a battery that discharges across those windows cuts both. For a site looking at solar battery grants and reliefs, this is the configuration with the cleanest payback, because the saving is something you control directly rather than a volatile market income. The battery charges overnight on a cheap tariff or from surplus solar and discharges into your demand peaks and the red DUoS band, trimming the unit charges, the capacity charge, and your Capacity Market and residual-charge exposure in one move.

The reason this matters for funding is the same as everywhere else on this site: there is no cash grant for the battery, so the case rests on capital allowances against a saving that is large and predictable. A peak-shaving battery on a spiky, predictable load profile, such as a process plant, a refrigeration site, or an EV charging hub, captures a saving big enough that the Annual Investment Allowance position turns a solid case into a strong one. It is worth being clear about what peak shaving is not: the old Triad regime, three winter-peak half-hours that set transmission charges, has been replaced by fixed banded residual charges, so the classic Triad-avoidance play no longer exists in its old form. Many competitors still quote it; we model the current charging structure instead, which is one of the clearest content gaps in this market. This page sets out how we size the system to the red-band exposure, how the allowances apply, and how we model the saving from your real data rather than a generic figure.

How a battery saves on DUoS is worth spelling out, because the mechanism is what makes the funding case bankable. DUoS, the Distribution Use of System charge, varies by time-of-day band, and the red band, typically weekday late-afternoon and early-evening, is far more expensive per kWh than the green or amber bands. A battery charges in the cheap periods and discharges across the red band and your demand peaks, cutting both the unit charges and the capacity-based standing charges, and reducing your exposure to the Capacity Market and residual charges at the same time. Because that saving recurs every weekday throughout the year on a predictable schedule, it is exactly the kind of stable cash flow a finance team can underwrite against the capital allowance, which is why peak shaving tends to clear an investment committee more easily than configurations that lean on variable income.

What a typical install looks like and how we size it

A peak-shaving battery usually lands between 100 kW / 200 kWh and 1 MW / 2 MWh, sized by power to the peak you need to shave and by energy to how long that peak lasts. These are two different questions: power in kW is set by the demand spike you need to flatten, and energy in kWh is set by the duration of that spike. Most behind-the-meter commercial systems land at 1.5 to 2.5 hours of duration, which is why a 250 kW system is so often paired with 500 kWh of capacity. The sizing inputs are specific: we model the red-band DUoS half-hours and the capacity-market chargeable window against at least 12 months of half-hourly meter data and your current DUoS band schedule. A battery sized to the wrong duration either runs out part-way through the red band, leaving the tail of the peak unshaved, or carries unused capacity, and both waste the funding. The CO2 saving varies with how the battery is charged, since the headline benefit here is financial rather than carbon, but where the charging is from surplus solar the emissions saving stacks on top. This configuration is the best fit for sites with spiky, predictable demand profiles, and getting the power-to-energy ratio right against your actual peak shape is what separates a strong return from a mediocre one.

Costs, payback and tax relief

A peak-shaving project on this site typically falls between £120,000 and £1.4m, with a simple payback near 6.5 years, often faster where red-band DUoS exposure is high. As a 2026 rule of thumb, behind-the-meter systems land at roughly £400 to £700 per kWh of usable capacity, falling toward £250 to £400 per kWh at multi-MWh scale, so a 250 kW / 500 kWh system is broadly £150,000 to £300,000 and a 1 MW / 2 MWh system £600,000 to £1.2m, with the exact figure driven by the power-to-energy ratio, chemistry, switchgear and any grid-connection works. The funding lever is the capital allowance position. As special-rate plant, the battery draws 100 per cent Annual Investment Allowance on the first £1m of qualifying spend and a 50 per cent first-year allowance on the balance, which for a limited company can be worth up to around a quarter of the project value back as tax saved in year one, depending on how the spend sits against the £1m cap. Because the saving here is demand-charge avoidance rather than export income, the return is driven by avoided cost, which is the better position to be in than relying on a market price. The Smart Export Guarantee still applies to any surplus, and our cost guide works through the payback at the common 250 kW / 500 kWh and 1 MW / 2 MWh sizes.

Funding routes in detail

The funding routes for a peak-shaving battery are reliefs and income streams rather than grants. The primary route is the Plant and Machinery Capital Allowances: 100 per cent AIA on the first £1m, then 50 per cent first-year allowance on the balance, applied to the battery and switchgear as special-rate assets. The Smart Export Guarantee is a secondary stream where the site exports surplus and the battery times it into higher-priced windows. For larger behind-the-meter assets, NESO grid services, including Dynamic Containment, Moderation and Regulation, the Balancing Mechanism and the Capacity Market, can add income, with revenue stacking across Dynamic Containment and the Balancing Mechanism now permitted, but frequency-response prices have become volatile and saturated, so we treat that strictly as upside and never as the foundation of the case. A business case that leans on frequency-response income alone is fragile, and we will not build one. Where a site sits inside an eligible industrial SIC code and the battery forms part of a wider qualifying decarbonisation project, the Industrial Energy Transformation Fund may apply, though it is for broad packages at a 30 to 50 per cent intervention rate, typically £100,000 to £30m per project, rather than standalone batteries, and you should check the current DESNZ competition window before relying on it. We model capital, asset finance, lease and shared-savings routes side by side so the funding fits your balance sheet.

Compliance and sector considerations

A peak-shaving battery needs a G99 connection agreement, and any demand-side response participation may require additional metering. G99 is required for storage above 16 A per phase, around 3.68 kW single-phase, which covers most commercial systems, with G98 reserved for small-scale connections. Where the battery sits near hazardous zones, DSEAR and ATEX considerations apply, and the battery room or enclosure needs fire separation built on PAS 63100 principles and to your insurer's requirements. Across the site level, that fits within the wider standards framework: BS EN 62619 for cell safety, BS EN 62933 for system safety, NICEIC or NAPIT electrical registration, BS 7671 for the installation, and CDM 2015 where the work exceeds 30 person-days. Behind-the-meter enclosures on an existing commercial site are often permitted development or a minor application, subject to size, siting, and listed-building or conservation-area constraints, with separation distances, firefighting access and noise to consider. We confirm the planning and separation route in the feasibility study so there are no surprises late in the programme.

How we approach this kind of project

We model the red-band DUoS half-hours and the capacity-market window from your half-hourly meter data and your current band schedule, because a peak-shaving case quoted from a generic rule of thumb is worthless and boards have rightly stopped trusting them. We size power to the peak and energy to its duration, then size for self-consumption where surplus solar is available to charge the battery. We carry out roof and plant-room checks, including asbestos checks on older buildings, before we quote rather than on the day. We submit the G99 application and engage the DNO on day one so the connection clock starts immediately, since the DNO study is almost always the longest pole. You receive a fixed-price proposal with the warranted cycle count, throughput and degradation curve stated, backed by a 10-year insurance-backed workmanship warranty, and we share the full model so your finance team can stress-test it. If your profile is flat with low peaks, we will tell you a battery is not justified rather than sell you one.

An illustrative example

As an illustrative composite based on typical UK peak-shaving projects, and not a real named client or real project: a Midlands precision-engineering plant with a sharp weekday late-afternoon peak that overlapped the red DUoS band, plus an existing 300 kW rooftop array, carried an annual electricity bill near £420,000 with non-commodity charges a growing share. A 250 kW / 500 kWh lithium-iron-phosphate battery, charged overnight and from solar surplus, discharged across the red band and the demand peak, cutting red-band import by around 85 per cent on peak days and lifting solar self-consumption alongside, for an indicative annual saving near £71,000 and a payback close to 6.4 years. The model was built from 12 months of half-hourly data and stress-tested by the client's finance director, with frequency-response income left out as unmodelled upside. The figures are illustrative and depend on your demand profile, DUoS bands and tariff.

If your priority is lifting self-consumption from existing solar rather than cutting demand charges, see solar-plus-storage, and if a constrained connection is your real blocker, see battery storage as a grid connection enabler. When you are ready, read the cost and payback guide, review the funding routes, request a feasibility from your meter data, or work through the battery storage FAQs.