Utility Week

utILItY WeeK | 24th - 30th June 2016 | 27 Sponsored report: CGI energy flexibility Five ways tO bOOst eNergy stOrage DevelOpmeNt 1. Remove balancing charge Removing the need for storage to contribute twice to the £1 billion system charge payment that larger loads and generators pay every year for balancing the system would remove a significant barrier. Storage is caught twice by the payment, once for charging and again for discharging. 2. Make it a separate licenced activity The current classification of storage as generation is simply an "accident of history" from how the market was split during privatisation, but prevent distribution network operators (DNOs) from owning and operating storage. DNOs are arguably best placed to fully optimise storage assets, but a network company is not allowed to simultane- ously hold a generation licence. Ofgem dashed industry hopes that an imminent change could be on the horizon when partner Andy Burgess, associate partner, energy systems, told MPs: "Our prin- ciple is network companies shouldn't own or operate storage… if you want competi- tive markets to develop, you need to keep regulated monopolies out of them." 3. Allow it to secure a CfD Partnering with renewable energy is a good approach for energy storage business models, but storage is unable to secure a contract for difference (CfD), and neither is a developer able to secure for a whole site, just the renewable generation element of it. 4. Remove end user classification In another apparent accident, storage has been defined as an "end user". Energy storage operators are hit with a charge for the climate change levy as it goes into the device, meaning the charge is collected twice because the actual end final end user also ends up paying out. 5. Remove artificial licencing limits Pumped hydro, such as Dinorwig, in North Wales is a form of energy storage already at technical maturity and the only one capable of delivering high-capacity storage. However, it is unlikely that the UK will see any more pumped hydro built at the scale of Dinorwig because of the "very long investment timeframe" and difficulty securing planning, on top of the obvious geographical restrictions that apply to a project of this nature. There is potential for more pumped storage in the UK, particularly in the conversion of hydro-electric to pumped hydro, but companies developing such projects are sticking below 100MW because if the generation licence criteria. Decc is soon to publish a call for evidence on smart systems that will cover the barriers to energy storage deployment. how woulD you rate your confiDence that these technologies will hAve reAcheD mAturity anD mass penetration by 2030? Average rating out of 10, where 10 is extremely important n Demand-side storage n Grid-connected storage n Electrification of heat n Microgeneration n Electrification of transport overall Dno Aggregator energy company 5.9 7.7 mAture respondents' score for the likelihood that demand-side storage will be mature by 2030 immAture equivalent score for electrification of heat Brought to you in association with 7.7 7.5 5.9 7.6 6.7 7.7 7.8 5.8 8.3 7.1 78 7.3 7.2 6.7 6.7 7.5 7.2 5.4 7.2 6.4 the UK needs a more flexible power system. This view is fast becoming the orthodoxy, with the recent NIC report, Smart Power, suggesting that enhanced flexibility could save as much as £8 billion a year by 2030." What is clear from the survey is the recognition across all sectors of the degree by which flexibility in the system will need to increase by 2030 and how it will grow in strategic significance, particularly for DNOs. with the greatest barriers to flexibility in the power system tending to arise from the policy and regulatory status quo, the onus is on government and stakeholders such as Ofgem to create a more supportive framework… the means to do so have been spelt out by industry in a number or reports. Although responses varied by business type, the sector overall views three drivers of equal importance: constraints management, new business opportunities and balancing the system. " " " " Illustrative quotes: anonymised quotes from the report's contributors " " " "

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