UK energy storage market – separating fact from fiction
Energy storage continues to attract growing interest and growth prospects are very strong – although care has to be taken to get behind the announcements and separate fact from fiction. That’s what we have done in our recently published UK energy storage report, now available to our subscribers.
Giving an immensely promising signal that the UK’s energy storage industry is primed and ready to go, the National Grid’s (the UK’s Transmission System Operator) Enhanced Frequency Response Tender (EFR) had a staggering 1,137 MW worth of applications pre-qualify. At the same time there have been connection requests to DNOs totalling more than 3 GW of energy storage – almost equivalent to the generating capacity of the planned Hinckley Point C nuclear power plant.
National Grid’s EFR tender is driving market growth
While only 200 MW will be procured through the EFR tender, it does demonstrate the industry’s appetite for success, as well as the various storage technologies' versatility and readiness for deployment.
Incentives of course help new technologies with real benefits into market – but ‘subsidy schemes’ are almost impossible to predict and control. Many of the developers we speak to just ask for stable policy, rather than juicy new subsidies that are here one year and gone the next.
While a large majority of energy storage projects in the UK will be driven by the EFR tender, it is unlikely that the income from this alone will make the projects profitable. A lot of work will need to be done on the commercial proposition and how the business model can really extract all the potential value that there is to be had.
Residential PV + battery, a segment not to be overlooked
I recently attended the UK Electricity Storage Network’s annual meeting. I was struck that the residential battery segment remained a mere bystander as large scale solutions vied for the audience’s attention. However, we think it’s a very interesting segment and our forecast is that by 2020 the cumulative installed (battery) storage capacity in the residential sector could exceed 100 MWh. This growth will be driven by:
- Early innovators and pilot projects adopting energy storage
- Falling prices for battery storage systems
Growing customer awareness and new value propositions for behind-the-meter applications being able to unlock a multitude of values for both the end-customer and the electricity system will also be crucial for driving uptake. This is highlighted by Moixa’s new GridShare model in the UK. Overall, it seems some developers are trying to make a ‘land grab’ for the market, almost adopting a dot-com approach: “get the capacity deployed and we’ll work out how to make money later.”
We’ve been looking in detail at the new commercial propositions for energy storage, developing a database of more than 30 case studies of new and innovative business models as part of the Delta-ee Energy Storage Research Service. This will help our subscribers separate fact from fiction. To find out more, please contact Julian Jansen (Julian.Jansen@delta-ee.com).