Smart policy moves could help the UK lead in energy flexibility

OPINION | Amid the headlines and the hype, the UK government needs to set the right regulatory framework to nurture batteries and demand-response, says Frank Gordon

It’s been a good seven days for batteries. Government proposals to increase electricity system flexibility, and the corresponding BBC News headlines, should help to support the establishment of a robust energy storage and demand-side response industry in Britain. These technologies are now at the forefront of low-carbon electricity innovation and costs have been rapidly falling for a range of systems. 

Unfortunately, government policy and regulation is severely constraining deployment, but an upgrading of the regulatory system would allow technologies from redox flow to lithium-ion batteries to take off nationwide.

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While certain elements of the government’s proposals, contained in its Upgrading our energy system: smart systems and flexibility plan, were already planned (eg, an end to double charging of grid levies for storage devices), others are new and are welcome — for example the move to introduce an energy storage licence for large-scale installations (which clarifies a longstanding uncertainty about how grids treat these assets).

While the document shows the government understands that we are moving towards a more decentralised energy system, what remains frustrating is that there is still a communications issue between different parts of government. Positive reforms proposed this week are muted by the cuts announced by the regulator earlier this summer to the Embedded Benefits system, which rewards decentralised on-site power generators for producing near the point of consumption, lowering distribution costs.

How the system could change

All this week’s news is underpinned by studies like the National Infrastructure Commission (NIC)’s Smart Power report in 2016 which indicated consumer savings of £8bn ($10.5bn) a year by 2030 from 4GW of new interconnection, demand-side flexibility, and storage capacity, in a high renewables electricity system.

Over time, the NIC anticipates that greater flexibility, including energy storage, will obviate the need for some of the new power generation that would otherwise need to be installed, largely gas. The need to build new power lines will also likely be reduced as storage can provide many of the same end results (recently demonstrated by a pilot site in the UK involving Younicos and UK Power Networks).

National Grid has already started the process of reforming its suite of ancillary balancing services markets to better incentivise and accommodate flexible capacity. So services currently provided by traditional capacity, such as coal and gas fired power stations, will start to be delivered by battery capacity and by turning up or down demand (large businesses and aggregated consumers changing their energy consumption pattern on notice). National Grid also held a world-leading frequency response tender for energy storage last summer.

"From India to Iran, and from China to Mexico, countries developing wind and solar will benefit from energy storage and flexibility technologies"

The success of electric vehicles and energy storage projects is intertwined. The affordability of storage units such as lithium-ion batteries is dramatically improving, largely as they are being manufactured en mass by the automotive sector. A number of new partnerships have arisen that highlight the links between these sectors — eg, between developer AES, Eaton, and Nissan that will sell commercial and domestic English-made batteries in the UK.

Combined, these various reforms should mean the overall goal of a decarbonised grid is achieved more quickly and at lower cost.

The economic potential of storage is bigger than reducing energy costs for households and businesses. An opportunity now exists for the UK to become a champion in technologies that every nation navigating the transition to a low-carbon energy sector will need. From India to Iran, and from China to Mexico, countries developing wind and solar will benefit from energy storage and flexibility technologies. We should be providing them. No single country holds a distinct lead internationally in energy storage research, development and deployment but many are positioning for leadership.

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Energy storage is not unique to the UK in any way, every other country has a need for the technologies and many are working fast to develop deployment and capability. For example, several US states have set specific targets for deployment, such as New York, and changed grid operator rules to encourage storage.

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Governments in other countries are trusting storage like never before. The famous leaks at the Aliso Canyon natural gas storage facility in California and its subsequent closure — which disturbed policy makers as it reduced state energy security — was offset with an electricity storage tender because batteries can be deployed fast enough to replace the lost capacity quickly. Germany has committed funds for storage and solar PV units, while the EU is discussing the final form of a package of measures that could boost the industry.

If the UK champions storage and other grid flexibility technologies, including the associated software, management, and control systems, then we will gain a valuable edge in developing projects in, say, India, which alone has a storage target of 35GW by 2032. We will additionally ensure continued vehicle manufacturing, as batteries are the crucial element in the success of a widespread EV fleet. It is imperative though that a domestic industry be nurtured first, to serve as a launchpad.

If we can develop a storage industry swiftly enough, then a wide range of countries abroad stand to benefit from UK expertise in the design, manufacturing, installation, financing, IP and software management of storage. 

We have an opportunity to champion decentralised energy generation across the world, we just hope domestic reforms come fast enough.

Frank Gordon is policy manager for the UK’s Renewable Energy Association