Battery storage will remain hamstrung unless National Grid, Ofgem and government make the changes outlined in its new report, says Scottish Renewables
The lobby group called for National Grid to be allowed by Ofgem to give longer contracts to providers of flexibility services and to set out how and when Triads – the transmissions system peak charging methodology – will change. Adding just one year to enhanced frequency response (EFR) contracts (currently four years) would make a positive impact, argues the report.
The system operator should also better align its tenders for various flexibility services to enable storage developers to ‘stack’ several revenue streams together, thereby making battery storage a more attractive prospect to investors.
The report also calls for policymakers to explore a ‘cap and floor’ regime for developers of larger battery storage projects. This regulatory model essentially limits their exposure to up- and downsides of investment – but also sets a ceiling on revenues.
Meanwhile, Scottish Renewables urged Decc and Ofgem to stick to the timelines set out by the National Infrastructure Commission (NIC) in clarifying the legal and regulatory status of storage within the electricity market. Storage is currently classified both as generation and as storage, meaning it is subject to double charging. The NIC wants that cleared up by next spring.
Because battery storage can play a significant role in balancing distribution networks, the report also urges Ofgem to look at the way DNOs are incentivised for using batteries and storage more innovatively. Ofgem has set up funding schemes for DNOs in this regard but the knowledge is not always shared as well as it should be with the wider market. If DNOs can create new revenue streams for battery storage operators to work into their ’stacks’, investment will follow, reasons Scottish Renewables.
The report also sets out 14 potential revenue streams for battery storage operators and how these might interact, spanning transmission system balancing services through voltage optimisation and black start to arbitrage.
Download it here.
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