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UTILITY WEEK | 7Th - 13Th FEbrUarY 2014 | 15 Policy & Regulation Dorothy Thompson, chief executive of biomass generator Drax Ambitions and reality "Just as we have thrown money at wind and just as we have thrown money at CCS, maybe there is some loose change lying around for storage" Mike Wilks, Poyry "We are not asking for subsidies, but I will tell you what: the way you treat other technologies makes it damned hard for us to raise money" Peter Taylor, Quarry Battery Company "Our feeling in Decc is that the capacity market is a necessary tool for storage but maybe not sufficient" Jane Ellaway, Decc £100 million investment sought for Quarry Battery Company's 600MWh Glyn Rhonwy pumped hydro scheme 2GW Electricity Storage Network deployment goal for 2020 3% peak electricity demand that could be met by storage in 2020 projects, with a fourth to be announced soon. When operating in the market, there are no subsidies targeted at storage. Instead, operators must cobble together an income from various sources. Their service has a value to the grid balancing system operator, the distribution networks and the supplier. It has yet to be established who should pay. Peter Taylor is executive chairman of the Quarry Battery Company, which boldly aims to build a 600MWh pumped hydro station in Wales. It will be the first such plant since privatisation. He says: "We are not asking for subsidies, but I will tell you what: the way you treat other technologies makes it damned hard for us to raise money." Storage operators can bid into the capacity market, which is designed to promote security of supply by paying generators to be availa- ble. However, the market makes no allowance for the fact that storage runs out. Those con- tracted into the market face penalties if they are not available at four hours' notice to pro- vide capacity during "stress events". There is no limit to the length of such events; there is a limit to the amount of electricity stored. And storage providers would typically already be generating before a stress event peaked. By guaranteeing a certain level of over- supply, the capacity market is expected to dampen peak wholesale prices. If storage developers cannot take part, they will dou- bly lose: no capacity payment and no high peak prices. Simon Lord, head of transmis- sion services at First Hydro, says: "If you end up with storage operators not being able to take part, it does put us on a different finan- cial footing to, say, gas generators." Jane Ellaway, design lead on security of electricity supply at Decc, says: "The capac- ity market is a necessary tool for storage but maybe not sufficient." There was also a plea for Ofgem to encourage distribution network operators, through the RIIO price control, to favour stor- age trials. Dora Guzeleva, head of networks policy at Ofgem, says: "We want the DNOs to do the most efficient thing… in practice, it is very difficult to single out one solution." What the ESN would really like to see is some kind of target that would give inves- tors the confidence to pony up. This has hap- pened elsewhere: California is aiming for 1,300MW by 2020 and has been swamped with bidders. However, Decc has not even put a number on how much storage it expects to be deployed, let alone set out a strategy. Storage is expensive now and it will not get any cheaper unless people are able to test the technology commercially. If policy does not get a grip on this, 10, 15 or 20 years down the line there could be headaches. 3GW current storage capacity, nearly all from pumped hydro £17 million funds available under Decc's Energy Storage Demonstration Competition Analysis