[In my opinion, this addition of battery storage to the grid is the
reason we will not see significant adoption of vehicle to grid (V2G -
where electricity stored in parked EVs can power the grid at peak demand
times) schemes. If the utility owns the battery, they will know they
can count on it to be available when needed and not stuck in traffic.
There are other issues - e.g. potential for harm due to backfeeding,
metering the energy supplied from an intermittent and mobile source and
the biggest one still: the accounting and reconciliation effort
associated with paying for the power based on how much the car says it
supplied vs. how much the grid says it received - for low economic value
transactions available only when the grid seeks the energy.
It will interesting to see how utilities use this new storage option for
managing their supply vs. the customer demand. If they do this well,
there is reason to believe it will stabilize wholesale prices from
generators (shaving the peaks which carry the highest marginal rates).
If the utilities don't pass that cost advantage along to customers, then
the customers will have the option of buying their own local storage
(e.g. Tesla PowerWall or competitors), obtaining the same price benefits
(assumes time-of-use or interval pricing is in place), plus back-up
power when their grid connection fails.]
Progress for UK Battery Energy Storage with Capacity Market Auction Success
December 28, 2016
By William Steel
Promising steps for the integration of battery energy storage into the
UK electricity system are to be found in outcomes of the nation’s latest
capacity market auction.
Some 500 MW of new-build battery storage won agreements through the
auctions. Altogether, some six percent (3.2 GW) of the total auctioned
capacity went to energy storage capacity.
Falling below forecasts, the auction closed with a clearing price of GBP
22.50 (US$28.3/EUR 26.8) per kWh.
On conclusion of the auction, UK Business and Energy Secretary (BEIS)
Greg Clark said: “Technological innovation, as part of our low carbon
future, will create jobs and opportunities across the UK. We are
rebuilding an archaic energy system, bringing forward brand new gas
power and innovative low-carbon capacity like battery storage to upgrade
our energy mix.”
A spokesperson of the National Grid — the UK transmission system
operator and body that ran the capacity auctions — told Renewable Energy
World: “As system operator, we see an increasing role for storage to
optimize value for consumers. Storage can provide more cost-effective
system balancing services and offer opportunities to optimize network
They continued: “The benefit of using storage in our ancillary services
is how much cheaper it is for the consumer by providing an alternative
to costlier technology, and in reducing the need for additional network
Frank Gordon, senior policy analyst and energy storage lead at the UK
industry body the Renewable Energy Association, told Renewable Energy
World: “This is an encouraging result, and it is positive to see the
continued growth of energy storage in the UK market.”
However, he observed of the 3.2 GW energy storage, “much of this is
existing, pumped hydro storage capacity, which has been successful in
the previous auctions as well, so not too much can be read into the
majority of the contracts awarded to storage.”
What has changed, Gordon added, is contracts being won by the first new
build battery storage projects, which he called “encouraging.”
Low Carbon Storage Investment Company Limited (Low Carbon) won such
contracts with projects featuring lithium-ion battery storage technologies.
Quentin Scott, marketing director for Low Carbon, told Renewable Energy
World: “Low Carbon is delighted to have secured two energy storage
contracts. The projects at Cleator and Glassenbury, with a total
capacity of 50 MW, were also successful in National Grid's recent
[enhanced frequency response (EFR)] tender, where we were the only
company to be awarded two contracts.”
Describing a shifting energy landscape in the UK, Scott said that
storage in the UK is a reality.
“With storage projects winning contracts in the National Grid EFR tender
and the capacity market auction, it is clear that we are at an important
turning point for storage in the UK,” Scott said.
REA’s Gordon was slightly more cautious, noting that “it is not the
breakthrough moment yet.”
Expanding on this, Gordon explained that all of the new-build battery
storage projects awarded capacity market contracts have previously been
awarded contracts through the UK’s EFR auction that concluded in August.
Winning contracts on both EFR and capacity markets “points to the fact
that it is still not possible to finance a storage project purely on the
basis of the capacity market,” he said.
Competing on both the EFR and capacity markets — as Low Carbon did —
provides means to “stack” multiple revenue streams, and thereby assure
financial viability of projects, according to Gordon.
Stacking in this way is seen as an important route to deployment for
energy storage providers — a point that must be held in mind as
effective regulations for energy storage evolve.
On this matter, the National Grid’s spokesperson said: “National Grid’s
system operator is proactively exploring changes in the commercial
framework, which will allow storage to provide greater ancillary and
balancing services, on a level playing field with other flexibility tools.”
Such developments, common throughout Europe and indeed electricity
markets the world over, would be especially welcome by developers like
“While more needs to be done to ensure clarity and stability in the
policy environment for storage, with the right level of support we
expect to see UK large-scale storage services flourishing with increased
investment in the near future,” Scott said.
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