Utility Week

18 | MARCH 2022 | UTILITY WEEK Generation Analysis Generation outlook: The battery boom Utility Week speaks to Mark Futyan, chief executive at solar and storage developer Anesco, about the current state of the market for grid-scale batteries. T he UK's first grid-scale battery – a 6MW/10MWh facility at Leighton Buz- zard – was opened by UK Power Net- works (UKPN) in April 2014 as part of an Ofgem-funded innovation project. Since then, the market has expanded exponentially, with batteries getting their real breakthrough moment in 2016 when more than 200MW won contracts in National Grid Electricity System Operator's (ESO's) trial of a new sub-second Enhanced Fre- quency Response (EFR) service and then later that year 500MW secured agreements in the four-year-ahead Capacity Market auction. Their progress was slowed slightly by the subsequent introduction of lower Capacity Market de-rating factors for shorter duration batteries but has been bolstered by a series key policy and regulatory changes that have clarified their position within the energy system. These include a ban on ownership by Dis- tribution Network Operators (DNOs) – UKPN put the Leighton Buzzard facility up for sale a couple of years ago; the classification of storage as a form of generation; the end- ing of double charging of storage network, balancing and other levies on both import and export; and the removal of the 50MW threshold above which storage projects were previously subject to the Nationally Signifi- cant Infrastructure Project (NSIP) planning regime. The rise of batteries has also been driven by market developments such as the open- ing of local flexibility markets by DNOs, the ESO's ongoing overhaul of balancing and ancillary services, and of course, the growth of intermittent renewables, which are ulti- mately creating the need for the capabilities they provide. As of February 2021, Renewable UK put the total pipeline of battery storage at 16.1GW, consisting of 1.1GW of operational capacity, 0.6GW under construction, 8.3GW consented, 1.6GW in the planning system and 4.5GW at an early stage of development. Only two years earlier the figure stood at 10.5GW. Underpinning all of this has been the rap- idly falling cost of lithium-ion batteries as the technology matures with the rise of electric vehicles (EVs). According to BloombergNEF's latest global price survey in November, aver- age battery pack prices fell almost tenfold over the previous decade from more than $1,200/kWh in 2010 to $132/kWh in 2021. However, Mark Futyan chief executive of Anesco, says surging demand for EVs and constraints on supply have put the brakes on this downward trend over the past year. "The real root of it is lithium carbonate prices, which is the first raw material at the very beginning of the whole manufacturing chain," he says. "This time a year ago the price was 50,000 Chinese yuan [£5,795] per

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