Energy storage is an interesting area.

The UK’s energy transition has come a long way. Government data indicate that in the second quarter of 2019, the UK’s coal power plants accounted for a record low 0.7% of electricity generation while renewables generated 28.8%, the later representing an impressive 12% rise over the same period last year, boosted by strong growth from wind sources.

However, as carbon-intensive power sources come offline, the grid must learn to cope with new challenges and sources of uncertainty from renewables. The UK economy is digitalising rapidly, with infrastructures more reliant than ever on secure and consistent power. The blackouts experienced in the UK in August only highlighted how costly and disruptive sudden power outages can be. 

The renewables boom is great news for the UK and those who’ve invested in its growth. Supporting the grid’s stability and resilience is a critical part of that process.

That’s why we need to talk about battery storage. Understanding the important role it plays today, and will continue to play in the decades to come, is vital for anyone investing in the UK’s journey to a renewable power future.

The story of on-site storage

In the UK, energy storage via batteries already plays a major role in the complex supply and demand balancing act. It enables a more flexible and resilient grid system without unreasonable cost. The UK’s total spend on frequency response currently sits at around £170m per year.

During the August blackout, within seconds of a sudden and dramatic drop in grid frequency, scores of batteries across the UK were tapped to support the grid and prevent the blackout’s impact from hitting at a far wider scale. This brought into clear focus the value of the energy exchange market, but also how much farther it may need to be developed.

For the largest energy consumers, on-site storage is already an attractive option to insulate against variation in availability or price of energy. Technology has now fundamentally changed the cost-calculation for on-site storage, however, and is redefining the meaning of ‘energy independence.’

Batteries are among the best ‘behind-the-meter’ assets for managing costs in both drawing from and supplying to the grid. Intelligent, responsive controls which can handle complex variations and multiple assets have revolutionised their appeal. For instance, a solar photovoltaic (PV) array on an industrial site that also has a storage battery can be managed such that both assets dramatically reduce network costs and ensure reliability.

In another example, Arsenal stadium recently became the first UK football club to have, on site, a 2MW battery. This battery was further optimised through Open Energi’s AI-powered Dynamic Demand 2.0, a fully automated platform that optimises battery productivity and demand flexibility.

The battery storage system (BSS) now supports the grid by charging at times of renewable surplus (when energy is cheapest) and discharging when during supply shortages or national demand spikes (when energy prices are highest). Arsenal is saving money on their electricity bill and even generating revenue by bidding excess power to supply dynamic Firm Frequency Response.

Storage on the move

It’s wrong to only think of batteries as only existing in the form of large, single site storage assets. The storage revolution is also experiencing significant growth with adoption of electric vehicles (EVs) and the associated deployment of smart charging platforms. Vehicle-to-grid technologies are set to revolutionise the amount of available storage across the country.

In 2017, Open Energi analysed the potential to manage EV electricity demand using smart charging. Using the National Grid’s forecast of 10 million EV cars in the UK by 2030, we were able to estimate a potential 12GW of flexibility which can be unlocked. The National Grid’s most optimistic 2030 forecast of total (stationary) electricity storage capacity is only 9GW.

In the not at all distant future, fleets of commercial and consumer vehicles are set to become valuable behind-the-meter energy storage assets, with idle vehicles displacing site consumption during the peak times and recharging when prices fall. Open Energi’s analysis suggests that this kind of demand optimisation could be worth up to anything from £800- £1,500 per vehicle per year.

Reality check

Despite their proven track record and huge potential for growth, the storage market is still underrepresented as a renewables opportunity. 

Key regulatory issues (requiring methodical due process) take time to progress; for example, Ofgem only recently clarified that storage assets should not pay taxes levied on final consumers or that batteries can be placed on site with solar PV sites. Also, despite much progress by National Grid some grid services easily provided by storage remain only available to large power stations creating an uneven playing field with competing technologies.

Markets which have been opened to distributed storage (such as Firm Frequency Response or the Capacity Market) have quickly become saturated, and exhibited price crashes as a surplus of providers compete for tenders. Meanwhile, changes to network charging is set to remove one of the dominant revenue streams for distributed storage by 2023. All these effects have combined to create a very stop/start feel for investors as business cases emerge then quickly disappear. Long term, the fundamentals are strong though. Renewables will continue to be deployed (mainly in the North Sea) and as existing fossil plant retires and reduces the supply of flexible capacity, non-linearities will appear. 

Our view for opportunity in storage market is optimistic. The proven value of on-site supply, technology enabling more flexible and responsive exchange with the grid and the incredible cost of energy supply risk all indicate the importance of battery storage today and long into the UK’s future.

Businesses across the country have already developed 1GW of batteries capable of providing rapid response. All that awaits is coordination and investment that will allow them to direct their capacity to wherever the need is greatest. 

By David Hill of Open Energi