Network

NETWORK / 9 / DECEMBER 2016/JANUARY 2017 O f all the emerging energy technologies, electricity storage stands to make the most immediate impact on the market. Britain has some of the best renewable energy resources. So the bene ts of storing it when the wind is blowing or when the sun is shining and releasing it at times of peak demand, are huge. Ofgem has encouraged distribution network operators to trial storage schemes. Some of these have looked at how using batteries can help networks ease supply and demand spikes at peak times, and how storage can be an alternative to network reinforcement. But storage isn't just something that electricity companies are interested in. Customers could bene t too. Some of the trials we have supported have o• ered households cheaper electricity at peak times if they use stored electricity. In other trials, owners of Nissan's Leaf electric vehicles could sell spare electricity back to the grid. Things like this help households get more out of new more exible technologies. Storage, alongside other forms of exibility such as demand-side response and interconnectors, will play an important role in helping networks manage supply and demand. Ofgem and the Department for Business, Energy, and Industrial Strategy (BEIS) have Far from being detrimental, ratings agency Moody's says DNOs will be among the key benefi ciaries of a storage boom, especially if the assets are third-party owned. See more on networks. online been working to deliver a smarter, more exible energy system. In our joint call for evidence we ask a number of questions about storage and other issues. We want to see competition thriving in provision of exibility services. So we don't think network companies have to own or operate storage because it might sti e competition. Instead they should buy storage output from the market when they need it. A number of other European regulators share this view. In recent months, over 19GW of applications have been made to connect storage. Not all of these projects will be built but this shows there is strong interest, so network companies must improve the connection process. Our call for evidence also discusses how storage ts into the legislative and regulatory framework. A key issue a• ecting storage is how it is designated in legislation and regulation. This in uences things such as planning, licensing and the charges storage pays for using the networks. We want to assess fully how arrangements may need to change to create a level playing eld for storage and other sources of exibility. Storage isn't a de ned activity in the Electricity Act, and is considered generation for licensing purposes. Options we are considering include amending the generation licence so it includes storage. Or storage could be de ned in legislation as an activity in its own right. Storage tends to be treated as non-intermittent generation because its power output is largely controllable. But this isn't written into charging rules, so some network operators could take a di• erent approach to charging. We want to see a consistent approach across GB. Progress on issues like this is needed so we will talk to industry parties to make sure this happens. We also think it is important that the contribution made by storage to network cost recovery and the impact of network charges on the competiveness of storage is considered in detail. Another issue that has to be addressed is how levies for environmental programmes such as feed-in tari• s and the Renewables Obligation are charged to storage. The costs of running these schemes are paid by consumers when they buy energy from their suppliers. When storage purchases energy from a supplier it pays these levies even though it is not an end consumer. Storage exports the energy (minus losses) and it is used a second time by a nal consumer. This consumer also faces these levies. BEIS estimates that such double charging could have added almost 20% to electricity costs for storage operators in 2014. DNOs must ensure they connect storage in areas where it can avoid the need to reinforce the grid. This could bene t others in the connection queue. DNOs have made some progress such as producing a standardised connection application form for storage developers. But they must clarify the connections process, such as 'heat maps' showing where connecting storage would be of most help. We want to hear from industry stakeholders so we can agree the right approach to regulation for storage, and quickly make any necessary changes to achieve it. ANDY BURGESS ASSOCIATE PARTNER "A lot of what we are proposing involves DNOs doing more to help storage developers through the connections process." E L E C T R I C I T Y S T O R A G E M A K I N G T H E M O S T O F W H AT W E S T O R E OFGEM

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