Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
Issue link: https://fhpublishing.uberflip.com/i/842661
The Topic: Flexibility UTILITY WEEK | 30TH JUNE - 6TH JULY 2017 | 11 STORAGE Power storage is already operating as a market, providing viable investment opportunities. Speaking at Utility Week Live, Dr Ben Irons of Aurora Energy Research predicted that batteries would be the sole provider of frequency response services to the grid by 2030. However, he also said that oversupply would be likely to depress prices, suggesting that they could halve within two years. The upcoming T4 capacity auction was likely to see batteries hold their value, he said, but that could be the "last chance for a little while". Q&A: Basil Scarsella, chief executive, UKPN Utility Week spoke with UKPN chief executive Basil Scarsella at Utility Week Live about what challenges and barriers the energy sector faces as we move towards a more flexible future. Q: What is the biggest chal- lenge facing the sector today? A: Making sure the sector does not get in the way as we move towards a flexible, low carbon economy. The sector has a major responsibility in facilitating the shi to low carbon, so we need to make sure the networks, generators and the whole supply chain adapts. Q: What are the main barriers to innovation and increased flexibility? A: There are none. What we need to do is understand what customers are looking for and deliver for the customers as we move towards a low carbon economy. That means we need to decarbonise electricity, transport and heat. Customers want flex- ibility, and the regulation needs to change and adapt as customer expectations change. The barri- ers aren't there, it's just under- standing what customers want and responding accordingly. Q: What do you need to do to give your organisation the ability to meet change and uncertainty with flexibility? A: There are so many tech- nologies and so many changes taking place. Examples include the move to smart meters, the deployment of electric vehicles, and renewables – whether domestic or industrial. All those things will impact on the sector and how it operates. We need to make sure we are flexible and that we facilitate the implementation of those technolo- gies. Therefore, we need to continue to innovate as those technologies come to the market. Report sponsored by: SOME 600MW OF BATTERY PROJECTS HAVE COME FORWARD IN THE PAST YEAR, MOST FOCUSED ON FREQUENCY RESPONSE AURORA EXPECTS BATTERIES WILL QUICKLY COME TO DOMINATE FREQUENCY RESPONSE MARKETS, EVEN PUSHING OUT PUMPED HYDRO BY 2015 FALLING BATTERY PRICES AND AN OVERSUPPLY OF PROJECTS ARE LIKELY TO RAPIDLY DEPRESS PRICES, ADDING TO THE CHALLENGE OF SHORT CONTRACT LENGTH Source: National Grid GB battery capacity(MW) Weighted by duration (MW) £/MW/h, real 2016 600 500 600 300 200 100 0 Anesco Centrica UKPR InfraRed Pre-existing EFR-procured Capacity market, not EFR Total 2016 2020 2025 2030 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 200MW online by Q1 2018 360MW online by 2020 c30MW 450 620 800 1,220 590MW Element power RES EDF Low Carbon Average FFR (dynamic, low response 1 ) holding volume Average FFR (dynamic) clearing price 1 1,500 1,000 500 0 20 15 10 5 0 1 System requirements are larger for low (primary and secondary) response than high response. As providers in FFR bundle low and high response together, National Grid may over-procure in high response to meet its needs for low response. 1 FFR price is interpreted as the availability payment for the maximum of primary, secondary and high response capacity Other CCGT Battery Pumped storage Historic Forecast range Source: Aurora Energy Research Source: Aurora Energy Research FFR price could halve within two years