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Why co-location holds the key to energy storage and supply

6 min read time

Renewable energy has, in one form or another, been around for centuries.

We have evolved beyond standalone and single-purpose buildings (for example wind or watermills used to grind wheat) and now have networks of structures producing energy for as long as the sun shines and the wind blows. The next frontier is how to ensure a reliable and cost-effective supply when atmospheric conditions prove less than ideal.

Co-location of batteries with sources of renewable energy is one critical element of the solution. Not only does it mean the supply of energy is more consistent, it can also offer opportunities for investors in renewables.

What is co-location?

Co-location refers to the combination of battery storage and a form of intermittent energy generation, such as solar or wind. The two technologies share the same utility-scale grid connection point (often, but not always, within the same site).

How it works

Batteries co-located on energy generation sites (such as solar or wind) can either be charged directly by the energy produced, when the supply exceeds the grid’s capacity, or they can charge directly from the grid when prices are low. This energy can then be sold back to the grid during peak energy price windows when renewable energy production is lower. This is particularly applicable for solar projects as the periods of low / no energy production are determined by the hours of daylight.

Batteries can be co-located on both direct current (DC) coupled and alternating current (AC) coupled energy systems. The energy produced by solar panels, and the energy stored in batteries, is DC, whilst the energy used in homes and therefore on the national grid is AC.

The diagram below illustrates the cycle of energy production and release to the grid of a co-located solar and battery site1.

1. BESS (Battery Energy Storage System) dispatches to the grid when energy prices are high, before solar generation is possible (i.e. before dawn).

2. Solar dispatches to the grid during daylight hours. Power supplies are increased, contributing to lower prices.
a. BESS charges from the grid during this period while prices are low.
b. BESS could also charge from excess solar in a DC coupled system.

3. BESS dispatches to the grid at a period of peak energy prices and high demand, as solar generation falls off in the evening. A co-located model offers numerous advantages, from planning and development to sustainability and economic factors (all explained below)

Planning/development advantages

Maximise grid connection

BESS and power production technologies, such as wind or solar, can share a grid connection because they typically export power to the grid at different times of day. In the example above, the export of energy from solar is limited to daylight hours, leaving the grid connection otherwise unused during the hours of darkness. Locating the BESS on the same site allows for greater utilisation of the grid connection for a longer period, as well as spreading the cost across two revenue generating assets.
One of the key challenges facing developers and investors in energy in the UK is grid availability, sharing a connection point offers more opportunities to maximise the efficiency of the available infrastructure.


Making use of a solar or wind farm that has an existing grid connection can save on planning restrictions and transmission network costs at the development stage, as much of the work has already been done.
As the grid becomes increasingly congested with solar infrastructure, projects that are co-located from the outset may also be more likely to receive a grid offer, as the BESS can provide grid stability services (to keep the frequency and voltage of the grid stable) which may support the grid connection application where standalone solar or wind would be less appealing.


By sharing a site, co-location can reduce rent, insurance and security costs, as well as enable efficiencies in asset management and monitoring.

Financial/investor advantages

Maximising grid connection

As previously mentioned, locating the BESS on the same site as the energy generating infrastructure allows for greater utilisation of the grid connection and spreads the costs across two revenue generating assets. As the grid connection is itself an expensive asset, up to 20% of overall CAPEX, this can lead to a higher return for investors.

Benefit from power price volatility – energy arbitrage

In the example shown above, the BESS is able to profit from power price volatility by releasing stored energy into the grid when energy prices are high, rather than allowing that excess energy to be wasted. This example also demonstrates how BESS can take advantages of lower energy prices to charge.

Not only does this provide a financial advantage, but it also helps to reduce power price volatility caused by supply-demand issues.

Reduce energy price cannibalisation

Energy price cannibalisation occurs when growing numbers of renewable providers with the same generation profile (e.g. all solar farms in the same region will produce energy at the same time) trigger a drop in prices due to a surge in availability. These projects are therefore penalised by their own success, the more they produce the less they are being paid per MWh.
By making it possible to smooth out the release of energy into the grid, co-located projects can help keep energy prices more stable and therefore mitigate value erosion.

Diversification & downside protection

The ability to store excess energy and engage in energy arbitrage offers downside protection against solar and/or wind cannibalising power prices when there is a surplus (point 2 on the example above).

This offers some diversification of revenue streams compared to a wind or solar farm alone.

Sustainability / transition advantages

Efficiency & increased output

BESS (on a DC connection) can prevent clean renewable energy from being wasted during periods of high supply by storing it for use when needed.

Without storage, the grid system may have to limit generators that only intermittently produce power, such as solar and wind, and instead favour less clean sources of energy. Not only is this less sustainable, but it is also expensive. Reports suggest that the National Grid spent as much as £215 million in 2022 to curtail wind generation2.

Biodiversity net gain

One challenge of stand-alone BESS is achieving biodiversity net gain (BNG) on the sites, as they are generally smaller and potentially on industrial/ degraded land. With co-location it is much easier to include biodiversity enhancements due to their proximity to solar or wind sites, which allows for potential BNG sharing and makes more land available for such schemes.

Opportunity and challenges

Demand from the National Grid

Not only are there numerous planning, financial and sustainability-related advantages to co-located projects, there is also considerable demand. The National Grid is looking for c.20GW of BESS by 2030, and 35GW by 2050 to meet the best-case scenario for Net Zero3 . As of December 2023 the UK has 3.5GW of operational BESS capacity, with a further 3.8GW of capacity in projects under construction4.

Grid connection capacity

There is also a significant amount of grid connection capacity in the UK that is currently going unused, representing a big opportunity. A solar project makes use of around 12% of the grid connection available to it, with significant variation throughout the year as sunlight hours vary, leaving a lot of capacity that has already been allocated from the grid and paid for. Onshore wind uses slightly more of their available capacity (in February 2024, the capacity weighted average load factor was c.37%5), still leaving significant capacity available for utilisation.


The co-location of solar with BESS is a particularly good combination because of the predictability of the energy output of solar based on location and time of year, with “a daily cycle well-suited to giving storage two opportunities a day to discharge”6. Wind is viable, but presents more of a challenge as wind peaks and lulls are harder to predict and are not regulated by the same natural daily cycle.

AC vs DC coupled systems

As touched on in the diagram above, AC co-located systems are only able to take advantage of low energy prices to charge BESS from the grid, with the ability to sell that energy back to the grid when prices are higher. The advantage of the system is that BESS can be easily integrated into an existing solar or wind generating asset.

DC coupled systems, however, are able to charge the BESS from the excess produced by renewable energy generation. These are more complex systems than AC co-located set-ups as the energy generating asset and BESS are essentially one system that needs to be designed and constructed simultaneously.


1. Aurora Energy Research, “It takes two: Opportunities for renewable co-located business models”, October 2022

2. Britons paying hundreds of millions to turn off wind turbines as network can’t handle the power they make on the windiest days, Sky News

3. Future Energy Scenarios, Natural Gas

4. Pipeline of UK energy storage projects grows by two-thirds over last 12 months, Renewable UK

5. The load factor for solar plant utilisation was under 5% in winter 2023- 2024

6. Aurora GB Market Summary February 2024. Plant utilisation – load factors by plant for February

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