The UK Energy Storage Market

This spring the UK government intends to make structural changes to the energy market, which will benefit energy storage.

The UK government contacted major players in the electricity industry last autumn, for suggestions on how to alter the power grid. If new legislation is enacted in the spring based on this information, many industry observers are expecting the country’s energy storage market to advance astronomically.

According to Simon Daniel, the CEO of energy storage developer Moixa, the UK looks to become “the world’s best market for scaling up storage”. Daniel went on to say that “There’s a perfect storm on its way” due to a combination of new government promotion programs, the UK’s deregulated electricity market and the high adoption of solar.

Once the government finishes reviewing the results of the recent industry consultation, A smart, flexible energy system: Call for evidence, the legislative changes should be implemented.

Joe Warren, managing director at Powervault, said the new laws will “focus on removing barriers and opening up access to electricity markets through smart tariffs and more stable network charging regimes.” Powervault, the company Warren works for, is an energy storage developer.

Officials in the UK government recently announced that they will be funding £9 million ($11 million) into energy storage projects. The announcement has made storage advocates hopeful that the government will utilise their suggestions in the upcoming market reform.

David Capper, the head of future electricity networks at the UK’s department of Business, Energy and Industrial Strategy or BEIS, has suggested that there is a need to encourage markets for flexibility services.

The removal of regulatory barriers for storage is a high priority for BEIS according to Capper. He went on to disclose that he believes developers should be permitted to stack revenues.

A few regulatory changes that boost the prospects for energy storage are already in motion. Ofgem, the regulator of these changes, is planning to separate management of the distribution system from National Grid’s management of the UK transmission system. The separation is intended to encourage competition and improve flexibility.

Adding the operator role to the new distribution system will allow for greater coordination with the regional network operators. This move will help speed up the grid connection process for new projects, according to the Renewable Energy Agency.

The growing demand for grid-connected balancing services will ultimately benefit the UK’s energy storage market, according to Powervault’s managing director, Warren.

“National Grid has predicted a doubling of spending on balancing services to approximately £2 billion ($2.5 billion) per year by 2020, and as an island nation we also have a significant need for flexible technologies to ensure our energy security,” Warren said. “We are therefore ideally placed to develop these technologies and to export our expertise internationally.”

The solar market is also favoring UK energy storage. Currently, over 858,000 homes have rooftop solar. “But…the sun doesn’t shine at the right time,” Moixa’s CEO, Daniel, claimed.

Akin to most of northern Europe, UK’s demand for electricity in the domestic sector peaks between 4 p.m. and 8 p.m. Daniel commented that this time frame “offers plenty of opportunity for behind-the-meter storage”.

Warren identified which areas he would like to see more action in: “First, the government needs to follow through on its commitment to ensure that all barriers to smart tariffs are removed. Second, more stable network charging regimes should be established that reward customers for the real value of home electricity storage. Finally, a commitment should be made to avoid burdening early-stage technologies with additional regulation.”