Policy needed to solve the ‘Rubik’s cube’ of energy storage
EXCLUSIVE: Regulatory frameworks need to act as a "steady hand" to grow the business case for energy storage solutions, with expert delegates from UK Power Networks (UKPN) and energy not-for-profit Regen SW likening the market to a Rubik's cube that was almost aligned.
During a panel discussion on the Energy Innovation Theatre on day one of edie Live, UKPN’s head of innovation Ian Cameron outlined how the UK’s largest electricity distributor was transitioning to a new service-based model to help operators and energy consumers trial and integrate energy storage solutions.
Cameron noted that UKPN, which delivers electricity to 18 million people in London, had more than 1GW of energy storage offers accepted for deployment. However, the organisation has had 1,000 formal enquiries since July 2015 equating to 18GW of potential energy storage capacity.
Acting as the chair for the session, Cameron noted the need to define the roles that energy storage can play on the grid to open up new business cases.
“The market needs stacking,” he said. “The days where you create the business case on one application alone are gone…investors aren’t interested. Our challenge in the next five years or so is to bring many more flexible products to the market so that others can chose which are needed. It gives optionality for the business case.”
UKPN is transitioning from a Distribution Network Operator (DNO) that manages a network to a Distribution System Operator (DSO) as part of its vision to help deliver a smart, flexible energy system.
An £18.4m grid-scale battery system in Bedfordshire operated by UK Power Networks proved the technical and commercial viability of energy storage in Britain following an extensive two-year trial, but Cameron noted the need for DSOs to create a variety of storage solutions – ranging from vehicle-to-grid to local co-generation – to “stack” the business case.
Indeed, Bloomberg New Energy Finance (BNEF) has predicted that the global energy storage market will double six times by 2030 as end-user businesses increasingly turn to battery technologies to boost energy resilience.
Next wave solutions
Also speaking on the panel was Regen SW’s senior project manager Ray Arrell. The not-for-profit has released various reports outlining the potential of the battery storage market, the latest of which was the Next Wave report.
According to Arrell and the report, the energy storage market is akin to a Rubik’s cube, with various factors all needing to line up in order to incentivise the business case.
“We refer to the storage market as a rubix cube, where the colours represent technology, policy, timescales and I think a lot is in place and the markets are probably ready,” Arrell said. “But the hand of policy and the hand of regulation is what’s going to line them all up. We need a stable regulatory framework.”
According to the Next Wave report, the “removal of Triad ‘credits’ to distributed generation” removed incentives from the market, while a proposal to de-rate storage capacity in the Capacity Market – as it is viewed as a short-term capacity supply – had negatively impacted investor views on the technology.
Arrell and Cameron both noted that localised grids where storage solutions provided for substations struggling with capacity could act as a catalyst in forming the business case but admitted there was no “silver bullet” that would make the technology market ready. With no silver bullet in place, Cameron highlighted the importance of “innovative finance” in overcoming current policy hurdles.
“My iteration [of the Rubik’s cube] is that the capital hurdle should start to develop,” Cameron added. “We see some capital hurdles that business models are struggling to cover, we need to look at innovative finance – we innovative the markets and the technology, so why not the finance as well?”
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