REA: Energy storage already financially viable for grid and homes
Domestic and grid-scale energy storage projects in the UK are already economically viable in certain circumstance as technology costs continue to fall, a new report from KPMG has found.
The report, commissioned by the Renewable Energy Association (REA), claims that energy storage has fast-become a valuable asset in the transition to a decentralised, low carbon energy system.
Substantial reductions in the cost of storage technologies have brought forward the anticipated timeframe for their deployment, the report points out.
It finds that grid-scale projects, such as those recently announced by RES or completed by AES are already economic, but facing significant regulatory issues, including short contract lengths for balancing services and ‘discriminatory’ charges' for grid connection. These could be relatively easily solved by more effective Government regulation, the report says.
The research also found that energy storage can already be economic for domestic homes with solar PV panels installed and Feed-in Tarriff subsidies.
However, businesses may have to wait another two years before energy storage makes sense financially, due in part to lower FIT rates.
The report states: “We estimate that for those firms seeking to invest in storage to enhance their environmental or corporate responsibility credentials, investing in distributed generation in the form of solar PV plus storage will be an attractive investment from around 2018/19.
“For those firms seeking to make a financial return from their investment, distributed generation with storage is likely to become an attractive investment in the mid-2020’s.”
The report also details the benefits that increased deployment of decentralised generation and storage would have for the national energy system, including lower overall energy costs as the risk of potentially high peak energy prices is reduced; better balancing of supply and demand, helping reduce stress on the grid and increased contribution to decarbonisation by enabling greater penetration of renewable generation.
REA chief executive Nina Skorupska said: "2016 is going to be the breakthrough year for energy storage and the growth of decentralised energy. The industry must draw a line under the turbulence of the past year and look to the future.
"This report shows that storage is already upon us and whilst traditional fuels like nuclear and gas are needing increasing help from the government, the cost of renewable technologies are coming down and many companies are looking forward to the post-subsidy business model.
“Companies like RES and AES have already announced advanced grid-scale storage projects in this field, and with Tesla and other storage companies entering the UK this year we have a lot to be hopeful about.
“We are not asking government for subsidies, what we need is a stable policy environment that has been so lacking in the past year, coupled with a common sense approach to regulation and the ability to fully participate in the electricity market.”
The UK's energy storage capacity could reach 1.6GW by 2020 according to a recent report from environmental consultancy Eunomia, up from around 24MW currently.