Scotland the 'prime candidate' to implement energy storage systems
The UK should look to Scotland to implement new revenue streams that account for a "modernised" grid system, which should have energy storage at its heart, in order to unlock £2.4bn in savings.
That is the call to action from Scottish Renewables and consultants Everoze, which have produced a report calling on the UK Government to de-risk investment opportunities for energy storage systems.
Scottish Renewables’ director of policy Jenny Hogan said: “Energy storage is an essential part of the transition to a cleaner energy mix, for delivering an energy system for the 21st century and for reaching our climate change targets.
“While batteries today are 94% cheaper than they were in 1990, and a range of pumped storage projects are ‘shovel-ready’ or in the planning process, the current market arrangements are at risk of favouring more expensive sources of flexibility for our network. A whole series of changes are needed if we are to ensure that the cheapest and most efficient technologies provide the services that a modern clean electricity system requires.”
The report notes that in order to “level the playing field” for energy storage, historical revenue streams that are tailored towards conventional generation methods would have to be “cracked” and re-established.
In order to do so, the report calls for revenue streams to be designed with investors and consumers in mind, to reflect the difference in financial characteristics. Everoze states storage plant costs usually occur upfront, compared to more opex-heavy structures, and are therefore viewed as a risky investment.
The report calls on revenue streams to operate with longer contract lengths, possibly including a cap-and-floor regime for larger projects, in order to incentivise investors. Currently, storage operators can’t monetise the full range of services that the plant can deliver compared to conventional plants.
According to the report, Scotland should be viewed as a “prime candidate” to accelerate the integration of energy storage due to its rich heritage in hydropower. The report also alludes to Scotland’s academic willingness to embrace innovative and pioneering concepts as another contributing factor.
The report was launched a day before the National Grid’s tender for a 200MW of “Enhance Frequency Response” closes. So far 60 companies have submitted applications, offering six times more than the advertised capacity. Energy storage has been deemed the most popular response method, with the companies bidding 888MW of battery storage.
The National Grid has recently warned that advances in decarbonisation of the power sector will be unable to make up for slow progress on heat and transport in regards to renewable targets.
The efforts to decarbonise the power sector has already seen the UK's fastest energy storage system connect to grid. Previously, the University of East Anglia (UEA) echoed the sentiments of Scottish Renewables in calling on the government to incentivise storage systems, which could contribute £2.4bn to UK electricity system savings by 2030.