Energy Storage Systems

On 3 August, the government published the outcome of its July 2021 call for evidence on Facilitating the deployment of energy storage systems and large-scale and long-duration electricity storage (LLES).

Having reviewed the responses, and externally commissioned analysis, it set out several conclusions that have been reached in relation to the energy storage systems – LLES.

This includes that it has an important role to play in achieving net zero, as it will help to integrate renewables, maximising their use and contribution to security of supply. It will also help to manage constraints in certain areas.

The consultation outcome adds that it also provides low carbon flexibility, replacing some unabated gas generation. In addition, it will diversify the technology mix and support meeting the 2035 decarbonation power sector targets.

It also highlighted barriers to energy storage systems deployment citing the current market framework due to their high upfront costs and a lack of forecastable revenue streams.

As such, the government confirmed that it will ensure the deployment of sufficient LLES to balance the overall system by developing appropriate policy to enable investment by 2024.

While most respondents identified a cap and floor type mechanism as the most suitable to enable investment in LLES, the government said that detailed design work is needed to assess the benefits and interactions of such a scheme with the energy system.

It added that it will carry out further analysis on the costs and benefits of intervention in the market for LLES, including its contribution to energy security and possible market distortions.

It will also consider options including a cap and floor, and an optimised Capacity Market in addition to wider flexibility operational signal sharpening being considered under the Review of Electricity Market Arrangements (REMA).

In addition, it will work with Ofgem to develop an appropriate policy to enable investment in energy storage systems.

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The business case for energy storage systems UK has strengthened considerably as battery costs have fallen and grid flexibility payments have risen. Behind-the-meter battery storage now offers UK businesses three simultaneous revenue streams: peak shaving to reduce Triad and DUoS charges, arbitrage buying cheap overnight power for use at peak periods, and grid services revenue through frequency response and demand flexibility contracts.

Installed capacity of energy storage systems UK has grown rapidly, with commercial and industrial sites of all sizes now viable candidates. A typical 100kW/200kWh battery installation, funded through a third-party finance model, can generate net savings of 15,000 to 30,000 GBP per year depending on site profile and grid connection type. Payback periods for owned energy storage systems typically range from five to eight years at current incentive levels.

Catalyst Digital Energy assesses whether energy storage systems are right for your site, models the financial case and manages the procurement process. To explore whether energy storage systems UK could work for your business, speak to one of our energy consultants today.