The report reveals that current installed capacity of battery storage in the UK stands at 24MW, the majority of which is ‘proof of concept’ projects funded by DECC or Ofgem. However, the growing challenges brought about by increased deployment of distributed generation, coupled with changes to the way we are using electricity, is driving the need for increased flexibility within our electricity network.
Eunomia believes storage technologies can play a major role in meeting this need, particularly batteries which are easy to deploy and already of scale and degree of commercialisation that makes them attractive to investors. Eunomia forecasts significant growth in the sector in the next five years. Deployment looks set to take a major step forward in 2017 as National Grid’s Enhanced Frequency Response contracts, intended to help maintain grid frequency within an acceptable range, come on line. Subsequently, as technology and installation costs fall in response to greater deployment, exponential year-on-year growth is predicted, with the total installed capacity exceeding 1.6 GW in 2020.
Eunomia’s analysis suggest that ‘behind the meter’ applications, installed by energy users are the most attractive investment proposition, given growing differences between peak and off peak retail prices, coupled with increasing charges from the distribution and transmissions operators. With minor regulatory changes, however, the installation of batteries into the distribution network could also become a major contributor to increased grid flexibility, whilst also increasing capacity for more renewable generation.
But Eunomia claim that, while electricity storage is currently put forward as a solution to the intermittency of renewables, integrating batteries with solar PV or wind farms is perhaps less attractive than other applications due to the relatively small differential between peak and off-peak retail prices paid for power supply.
Lead author, Adam Baddeley, says: “Energy storage is an exciting technological development that looks set to play a dramatically larger role in the UK electricity market, but only by understanding the market in depth will investors be able to identify the right opportunities. Our techno-economic modelling of different applications has shown that behind the meter solutions are already proving an attractive proposition and we are even beginning to see energy suppliers offering to install storage at the sites of energy intensive customers.”