Energy storage sector calls for grid contracts clarity to ignite ‘smart power revolution’
The business case for energy storage is being undermined by many uncertainties within the burgeoning sector, such as limited revenue streams and grid services contract availability, according to new research from renewable energy purchaser and supplier SmartestEnergy.
The ‘Making the case for battery storage‘ survey consulted 45 battery storage innovators exploring the barriers they face to commercialisation in the build-up to the National Grid’s first 200MW Enhanced Frequency Response (EFR) auction this week.
The biggest challenges for respondents were the limited revenue streams currently available to secure the battery capacity required for the “smart power revolution”, and the length of grid services contracts available which are currently deemed too short to meet lender requirements.
SmartestEnergy suggested that National Grid should reassure developers by increasing the availability of contracts in order to exploit substantial amounts of storage capacity.
SmartestEnergy’s demand side management vice president Robert Owens said: “It’s clear that the current EFR capacity in isolation will not be enough to unlock the full potential of batteries, so developers need to know what’s next for the projects that won’t win an EFR contract in this auction.
“National Grid need to reassure these pioneers that there will be more revenue streams available for them in order to secure the battery capacity we need for the ‘smart power revolution’ and decentralised energy supply.”
Almost 70% of the battery innovators indicated that the biggest revenue opportunity they were looking to employ would come from grid services such as EFR contracts. However, more than half of the survey’s respondents stated that these contracts are limited and at a maximum of four years, fall short of the 5-10 year payback timeline expected.
National Grid EFR senior account manager Adam Sims said the organisation recognises the “potential for storage to support our aim of developing a flexible balancing system”.
Sims said: “It is vital, however, that we take the time to understand any barriers to participation from the industry and that is why we have been working closely with the Energy Storage Network and made the development of this market a key commitment at our Power Responsive conference in June.”
Smart power revolution
Energy storage is one of the three key innovations identified by the National Infrastructure Commission as being able to drive a UK “smart power revolution”, along with demand side response and interconnection to other countries. The Carbon Trust has previously claimed that the implementation of energy storage systems could contribute £2.4bn to UK electricity system savings by 2030, but only if a range of ‘necessary regulatory reforms’ are introduced.
Japanese carmaker and leading electric vehicle (EV) producer Nissan is one of the businesses leading the way in this area; “turning science fiction into science fact” with a ground-breaking new scheme that will turn allow consumers to sell energy stored by Nissan Leaf cars back to the National Grid.
The London Borough of Hounslow recently installed a £2m solar array which is the first of its kind in the UK to adopt energy storage.
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