Energy Storage and Connected Systems Conference, 6-7 Feb 2018, London

Marc Smeed was presenting at this year’s Energy Storage and Connected Systems conference, London – sharing his insights on the future for storage and flexibility.

Thanks again to REA for hosting the ESCS conference this year.  Similar to last year, it was a really interesting opportunity to discuss all things storage and flexibility.  The outlook for storage has changed a fair bit since last year’s conference.  There have been several regulatory/policy developments, most notably:

  • NGET has published its SNAPS document setting out the forward path for balancing services – the likely scale of market opportunity, what services are going to be needed and how it plans to procure these.
  • Ofgem has published clarifications regarding the treatment of storage with regard to network charges (treat it like a generator), supplier levies (get a licence) and how it should be integrated with existing FiT/RO sites (meter it properly).
  • Ofgem made its decision on triad avoidance payments (CMP264/265), albeit this decision is currently being contested in the courts.  See my earlier blog entry on this.

There have also been very significant developments in the market.

  • Prices secured in FFR market tenders have plunged around 75% in recent months (reflective of the relatively small size of the market), severely limiting the potential revenue stream from this all important service.
  • The new capacity market rules have introduced significant derating factors for battery storage facilities, which has significantly reduced the level of revenue that can be achieved for sites with less than 4hr duration.

These system shocks (pun intended) to the revenue stack for energy storage facilities are being compounded by the uncertainty surrounding regulatory changes promised by Ofgem’s Charging Futures Forum and Targeted Charging Review.  These are both likely to introduce yet further shifts in the potential value that storage and flexibility can bring in relation to network use of system charges.

So, the 12 months since Feb 2017 have definitely held mixed fortunes for those seeking to build new energy storage, DSR and other flexibility services.  But looking forward, there are some really exciting opportunities on the horizon too.  The sessions at this year’s ESCS conference this week highlighted the potential of opportunities to provide services to DNOs as well as increased value from the wholesale markets (arbitrage), settlement processes (NIV chasing) and the balancing mechanism (constraint management).

There is no doubting the need for more flexibility across the whole electricity system as intermittent renewables continue to make up more and more of our supplies.  There is also no doubt that the networks cannot realistically manage large volumes of EV (and heat pump) uptake without significant network investment and/or some clever thinking around network use and customer flexibility.  So the opportunities for storage going forward are tantalising.