Energy Storage: a review from Berlin.

I am glad to find myself in Berlin this week to attend the 8th International Conference on Renewable Energy Storage. This is the core European research and industry event on energy storage. There is a balance of excellent academic and industry speakers but at any instance anyone can notice that this event is dominated by German activity. The German academia and German industry are serious about energy storage... Storage for electricity grid stability, for industrial energy management, for households, for off-grid isolated consumers and on-grid consumers and most importantly storage for vehicles.

Norwich Business School is part of the event with 2 studies. A first one on the "Utility-scale energy storage for the regulation of wholesale electricity prices" and a second one on "The multiple role of energy storage in the industrial sector". The first study is a detailed examination of the arbitrage value of electricity storage for the Greek electricity market. The core theme of this work is currently developed through an institutional innovation framework for the UK electricity market by our NBS team.

The second study is the result of a collaboration with our colleagues in the Technological Education Institute of Piraeus in Greece and the Institute of Power electronics and Electrical Drives of RWTH Aachen. Nevertheless, this project would have never taken place without the contribution of our industrial partners Systems Sunlight SA in Greece and AEG in Germany. We looked into the potential revenue streams for the development of demand management and energy storage for energy intensive industries. For the first time commercialisation analytics were combined energy billing savings, participation in the spot market and a lookout for potential governmental subsidies that the value of storage is worth for.

In fact this second study has inspired our research group for further discussions for the development of a larger consortium that will enable us to apply at the forthcoming EU Horizon 2020 funding competition. Being at this conference is really the right place to explore the dynamics of possible collaborations. Simply put, most of the potential industry and academic partners we would wish for are already here. Clearly the contribution of NBS in an engineering intensive consortium is essential. Our partners do not expect us to develop technological R&D. They do however, expect us to develop innovative architectural and institutional business models that will enable mainstreaming of energy storage. They also expect us to inform policy making and inform governments about the financial and utility value of energy storage.  

Following from that last issue, our German colleagues and the panellists at the conference's sessions discuss quite extensively that funding for energy storage should not for much longer be directed to R&D but to market implementation. They are looking for direct subsidies similar to those that started-up the markets for wind energy and PV-panels. Perhaps the UK's subsidy for electric vehicles is already doing that?

Capacity market and strike prices

Earlier this summer the UK Government issued a press release about the new energy infrastructure investment and reforms vital to “keeping the lights on and emissions and bills down”. In more detail, the Government expects to unlock £110 bn of investment and secure 250,000 jobs until 2020; it expects to achieve this with two main policies. The first is the Strike Prices for renewable technologies, which aims to reduce exposure of renewable generators to volatile energy prices. The second is the introduction of a capacity market, which the Government hopes will incentivise a new generation of gas plants that will be needed to support the increased role of intermittent sources.

These policies supplement the Electricity Market Reform which introduced the Contracts for Difference (CfDs) and is part of the more comprehensive Energy Bill. The strike prices for renewable energy recommended by the Government will shield investors from volatile wholesale electricity prices and in this way encourage investment. The strike price for offshore wind is £155/MWh for 2014/15 declining gradually to £135/MWh in 2018/19 while the respective figures for onshore wind are £100/MWh and £95/MWh. Solar PV projects are set to receive £125/MWh declining to £110/MWh for the same period. There are strike prices for most types of renewable sources apart from tidal range, which, according to the Government, will be further considered by DECC.

A certain degree of number-crunching is required to compare the CfDs with the existing RO and FiTs, but the Government claims that the support given by CfDs is in line with that offered by the existing schemes. The main advantage now is protection against wholesale price volatility. Price volatility and uncertainty over climate change and renewable energy targets have been blamed for deterring investment worth billions of pounds in the UK. This is not a UK specific issue, but is reported across the EU, where slow economic recovery has made governments hesitant to commit to new targets. It can therefore be assumed that if the financial support offered by the UK Government removes uncertainty in addition to being similar to existing schemes, the results will be positive.

The predicted increase in renewable energy in the UK's electricity fuel mix has forced the Government to introduce a capacity market, whereby certain generators are paid for the essential service of stand-by operation. The increased role of intermittent generation makes this auxiliary service particularly valuable for the system operator, and the introduction of the capacity market acknowledges that. Quite disappointingly, Davey was fast to name gas-fired power plants as the main benefactors of the capacity market. Plants that could use renewable energy to offer capacity services have not been mentioned and they will be examined on a case by case basis by DECC. Unfortunately, that means that there is no news for medium/large-scale hydro and tidal range plants. Their dual role of renewable energy generation and storage has been overlooked in favour of gas (and the Government's ambitions for a shale gas sector boom in the UK).