Author: Energy Storage News

‘Value of flexibility’ will get UK energy storage through the financing crossroads

A refocus on volatility trading and honesty with investors will help strengthen the business case of energy storage as it strives to go mainstream without the help of subsidies, according to financiers gathered at this week’s Energy Storage Summit.

“There’s an absolute need for flexibility and volatility services in the market and on that basis, we think we’ll give investors the return we believe they’re looking for. We just don’t know what that is – as long as we can be honest and don’t promise too much,” said Ed Simpson, investment director at asset manager Gresham House, as he addressed the two-day London event.

It would be lovely if we had long-term contracts but that’s not going to happen. Let’s make sure our investors understand this, that they know they’re not getting into a project along the lines of wind or solar. [Otherwise] they’ll get upset, and there could be a fallout,” Simpson added.

Fellow panellist Mark Simon, managing director of Eel Power, which builds, owns and operates energy storage as infrastructure, stressed that energy storage “has not been subsidised and won’t be”. He said the industry is inherently “more profitable” than renewables but must learn to monetise its ability to trade not just power, but volatility.

The potential to provide arbitrage is “vital” as renewable capacity goes online, Simon argued. “If we’re adding gigawatts of solar and wind to the UK then we simply need to have gigawatts of battery storage flexibility against that. We just have to figure out what the model is,” he added.

‘PPAs won’t save you’

PV solar, energy storage’s more seasoned travel fellow in a subsidy-free era, is increasingly turning to PPAs as a source of long-term revenue stability. Some in the summit doubted these structures are as good a fit with storage, however. “PPAs come from a different part of the jungle. They tie you up in ways that the battery business model doesn’t allow you to,” is how Eel Power’s Simon put it.

If not through PPAs, how else to achieve revenue visibility? Roberto Castiglioni, senior investment director at Ingenious, shared his experience managing behind-the-meter (BTM) projects.

“On our side, we’re securing long-term contracts with customers, with the revenue visibility over decades that investors are looking for. For front-of-meter, contracted revenues would be the best solution,” he commented. “We need to start thinking outside the box, looking at structures that accommodate the cost of capital and risk appetite of those investing in energy infrastructure.”

Judging by Castiglioni’s words, BTM’s long-term contracts do not spare the segment from potentially tricky interactions with customers. “Grasping the revenue structure is easy for them, but having the confidence to let someone install something between them and the grid – that’s harder,” he said.” The key is for them to understand that battery storage has been used plenty of times, and makes things easier.”    

A new normal of merchant risks

Despite the talk of challenges, the panel of financiers appeared categorical in their belief that energy storage’s business case can only strengthen going forward.

“As soon as people start putting batteries in their homes, they’ll put them elsewhere,” said Darren Riva, director at Capitas Finance. The upcoming EV boom will open a chance for energy storage to play a more prominent role, he said, adding: “I think 2019 will create good opportunities.”

Gresham House’s Simpson, who in the past has worked on energy projects with football managers, said demand could easily come from sports venues to replace diesel generators with batteries. “It’s almost a case of, why wouldn’t you?,” he said.

Whether or not they succeed in catering to the mounting demand, those financing energy storage projects cannot escape uncertainty, or so was the impression of panellists.

“I think investors in renewables just got lazy, got used to the easy life of knowing exactly what they were buying into,” said Simpson. “In the 1990s, people funded independent power plants without a contract, on a merchant basis. Rather than today being abnormal, we’re finally back to normal.”

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Energy Storage Summit: What you’ll see in London this February

Now in its fourth year, the Energy Storage Summit has been supporting the deployment of this world-changing set of technologies in the UK and beyond since it began and it returns in just a few weeks’ time for the 2019 edition.

The 2018 event saw the industry come together in London and our editorial team was able to report a huge amount of exclusive news and commentary that emerged. That’ll happen again this year, but if you really want to hear the latest insights first-hand and meet many of the names and faces behind the stories and projects that make the news, the only way to do that will be by attending the show.

It takes place on 26 and 27 February 2019, once again at Victoria Park Plaza in the centre of England’s capital. We expect a similar number of attendees to last year, when more than 350 delegates were welcomed over two days.

It’s fair to say the scope of the event is changing each year, as the market itself changes. The Energy Storage Summit programme is designed to both respond to the market’s dynamics as well as itself helping set the agenda with forward-thinking technology sessions and case studies.

There’s been a growth in importance of behind-the-meter energy storage, not just in the UK but in many parts of the developed world. That is to say, there’s been widespread recognition that there’s a lot more potential in energy storage systems deployed to benefit individual households or businesses than we often recognise. Companies working to deploy and connect these systems, or to aggregate them together to unleash their full capabilities such as Kiwi Power and Pivot Power will be on-hand to talk about these topics.

There’s also been a wave of finance activity – although in all honesty there remains a lot of work to be done to get the finance community on-board and au fait with energy storage. Again, the likes of Wermuth Asset Management, Ingenious Capital and First Imagine will be representing that community. There’s no doubt there’ll be a lively two-way flow of information and views with the energy storage industry there.

The Energy Storage Summit 2019 will be a huge gathering from across the industry, from heavyweights, utilities and big generators to nimble start-ups and upstarts with new ideas. Download the programme now or make an enquiry with our sales team, who will be delighted to help you choose the best delegate ticket deal or sponsorship package. But act now, because as with the previous editions, we expect it to be a sell-out show!    

Energy Storage Summit 2019 takes place at Victoria Park Plaza, London on 26-27 February 2019. Visit the website for more information and to download the agenda.

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VIDEO: Fluence’s Marek Kubik on solar firming and decarbonisation with energy storage

There is a perception that “batteries cannot be long life assets”, but it depends very much on how they are designed and used, Dr Marek Kubik of Fluence has said.

Kubik, responsible for strategic and market direction at the energy storage technology and financing solutions provider which was formed as a joint venture (JV) between AES Energy Storage and Siemens, spoke with Energy-Storage.News at the Energy Storage Summit in London last month.

Having blogged for the site recently on how energy storage can provide ‘digital inertia’ to grids, based on a real-world case study from AES’ Kilroot project in Northern Ireland, thereby reducing the need for thermal generation and aiding decarbonisation, we asked Kubik for his views on a range of topics.

This year at the Summit, the principle of ‘revenue stacking’, providing multiple services from a single battery system, was at the forefront of the agenda moreso than in previous years. Kubik said that in the UK so far, we have mostly seen “short duration, short life systems, often built around one single service,” but that expected changes in the way National Grid, the transmission operator, procures grid services could pave the way for providing “different services at different times”.

Multiple application use and scheduling of system tasks can also have a bearing on the lifetime of storage system assets, although according to Kubik, “people get hung up on the idea of degradation, thinking batteries cannot be long life assets”.

“There are ways of countering that and getting the performance for as long as you need it,” Kubik said.

Providing tech to clients that include developers, utilities or behind-the-meter customers, Fluence launched an energy storage platform, Sunflex, which is specifically designed for solar-plus-storage applications. While the value this can provide is still mostly to be found in solar-rich markets with strong incentives for right-time-of-day solar PV generation such as California and the Caribbean Islands, Kubik said solar firming is one of the “directions of travel [for the industry] that is clear and compelling.

In the interview, Fluence’s Marek Kubik discusses topics including:

  • The arrival of revenue stacking as a commonly-talked about aspect of storage project development.   
  • Why solar firming with energy storage is part of the market’s natural “direction of travel” and when we can expect dispatchable solar to become a mainstream proposition.
  • How energy storage can squeeze some thermal generation, particularly combined cycle gas turbines (CCGT), from being needed to balance the grid with response times of “hundreds of milliseconds”
  • The ways in which this provision of ‘digital inertia’ can aid decarbonisation

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VIDEO: Batteries can help UPS customers ‘do something proactive’, says Vertiv’s Emiliano Cevenini

Energy storage can be an extensive value enabler for existing customers of UPS systems, while attracting new commercial and industrial (C&I) users into the space, a spokesman for Vertiv has said.

Formerly known as Emerson Network Power until its acquisition in 2016 by investment group Platinum Equity, the company has specialised in providing electricity for critical infrastructure and uninterrupted power systems (UPS) to businesses, building on decades of prior experience.

At this year’s Energy Storage Summit in London, many eyes were on the ‘usual suspects’ of system integrators and technology providers that the industry has long been familiar with, but newer names in the context of the battery energy storage industry including Vertiv were also showcasing their solutions and product offerings.

Energy-Storage.News spoke with Vertiv’s vice president for sales, AC power and business development for Europe, the Middle East and Africa, Emiliano Cevenini at the event in the video interview you can watch below.

According to Cevenini, Vertiv’s background in UPS, including work at data centres and other ‘critical users’, has set the company up well to diversify into battery energy storage. Many have invested in UPS solutions, but find that power resiliency is not really a concern, to give one set of examples. For these customers, Cevenini said, that are “literally waiting for something bad to happen” that most likely will not happen, there are opportunities for their batteries “to do more”. Adding services, whether behind-the-meter or front-of-meter, adds to the overall business case.

These customers, Cevenini, who also spoke onstage at the event, said, want batteries not only for back-up, but also “for something proactive”. Conversely, Cevenini said, adding services and therefore potential revenue streams makes battery energy storage an option for ‘non-critical’ customers that might not have considered it previously.

In the interview, Vertiv’s Emiliano Cevenini discusses:

  • Macro-drivers for energy storage: how they vary around the world and how the bankability of lithium-ion drives the industry forward at present
  • How Vertiv’s background in UPS and solutions delivery means they have a large installed base of customers potentially ready for batteries, and further opportunities to acquire customers through as the value of energy storage grows in recognition.
  • Why it’s understandable that energy procurement professionals for C&I customers are intrigued, but wary of “disrupting” the existing status quo when it comes to trying new options for saving money or energy.
  •  How the technology in a traditional UPS system can be a good fit for delivering both front-of-meter and behind-the-meter energy storage applications and why the customer should not notice any difference in day-to-day operations.
  • How advanced lithium-ion could “potentially” be revolutionary for Vertiv’s overall business case.
  • Why some regions including much of Europe are more open to “independently funded system integrators” taking on energy storage projects, while other regions appear to be putting the future more in the hands of utilities.

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Forget Brexit: Europe and Britain can unite in energy storage and climate change goals

Already this year we’ve been able to learn directly about the energy storage market in Europe from the Energy Storage Summit in London at the end of February and Energy Storage Europe in Dusseldorf, which just took place last week. Andy Colthorpe summarises what he’s seen and heard. 

The obvious main difference, is that one (the Summit) basically focuses mainly on one national market, the UK, while of course Energy Storage Europe is a little more open. It is quite a lot more nuanced than that of course, but in London we heard a lot about business cases for specific applications, barriers and opportunities for energy storage, while in Europe, there was still more focus on the drivers for adoption and debate around various technologies and their potential.

Future of European business models is still opaque

Energy Storage Europe’s biggest topics, to my mind, were the relevance of ‘sector coupling’ and the potential for energy storage technologies besides lithium batteries to play effective roles in the global energy transition.

There wasn’t a huge amount of focus on business models, which more than one source told me was something they had hoped to see more of. Perhaps the closest we really got was the announcement that system integrator Younicos has spied a niche in providing energy storage ‘as-a-service’ and will effectively begin renting battery energy storage systems out to commercial and industrial (C&I) entities. This echoes the strategies – examined at length by this site and our journal PV Tech Power – of the US’ leading C&I players in energy storage and also solar PV, the ‘as-a-service’ model.

It’s perhaps unclear if the development of business models is still at such an early stage in Europe that they are not yet discussed, or perhaps if some players were to some extent avoiding making their future strategies public at this stage.

Certainly the view was that the recent RWE-E.On swap deal for shares in RWE’s renewable energy company Innogy is a huge sea change for the paradigm of utility participation in the Energiewende (‘Energy Transition’). The ripples will be felt no doubt across Europe and some that I spoke to at the show said it could point the way forward for the power sector’s big players as they migrate gradually from the central asset ownership model to a more nimble, service-based one.

Tech, sector coupling in focus in Europe

In his keynote address, Thorsten Herdan of Germany’s Ministry for Economic Affairs and Energy (BMWI), told the audience that while he – an energy and utilities sector engineer and businessman for 21 years before a move into politics – was impressed by the energy storage technologies he knew about, he still felt there is some way to go in development and commercialisation.

Although we had seen it on a lesser scale in previous years, while still dominated by system integrators, technology suppliers and of course battery makers most familiar to the lithium space, the exhibitors looked to be at least a third hydrogen, flywheels, power-to-x, ultracapacitors, thermal energy storage and other technologies, competing, or for the most part complementing, the role of lithium-ion batteries. Energy-Storage Europe’s conference strands meanwhile included a whole day of power-to-gas and power-to-x discussion, having been spoken of in previous years as a potential way to enable monthly or even seasonal energy storage durations.

I spoke to the likes of ultracapacitor maker Skeleton Technologies’ CEO Taavi Madiberk and representatives from Hydrogenics, who spoke at length of the complimentary nature of different energy storage technologies. In the latter’s case, the niche of long range and fleet vehicle electrification with hydrogen and the integration of renewable energy as a counterpart to electric vehicles and batteries, really caught the zeitgeist of the show’s recurring theme of the importance of sector coupling with energy in heat and transport.

One surprise was that with a few exceptions, such as American iron flow battery maker ESS Inc, which scored two 440kWh projects for partner and investor BASF there were not a lot of non-lithium electrochemical batteries. Not a huge presence from redox flow energy storage companies, which for the most part are busy concentrating on their chosen niches and delivering ongoing projects, rather than seeking new opportunities, it would seem. 

Business as usual for the UK despite Brexit

At the Energy Storage Summit in London, conversely, business models for both front-of-meter and behind-the-meter energy storage were under discussion almost throughout.

Our UK editorial team reported back from the conference’s sessions while I took a turn at chairing some case studies. My Solar Media colleagues Liam Stoker and David Pratt bagged a range of news lines from the panels sessions and one-to-one discussions, including a view that three main risks are holding energy storage back in the UK: non-battery costs aren’t falling as fast as they could be, ‘mis-selling’ could throw the market off course, and lithium batteries as an asset class still carry a perceived safety hazard.

We also heard that the Capacity Market, Britain’s mechanism for ensuring security of consumer power supplies in winter months is “rapidly becoming outdated”, according to one panellist, while the question of grid connection capacity, in terms of cost and access, remains a hot topic.

Again, the case studies and presentations from the likes of ABB on microgrids, Narada Power and Nidec SI on utility-scale and NEC ES did not shy away from discussion of what business as usual is going to mean for the energy storage industry in future. NEC ES’ Steve Fludder stressed the importance of increased connectivity and better IT systems, ABB’s Britta Buchholz spoke about the commercial case for diesel replacement in Africa and Narada Power’s Allen Xiang and Nidec SI’s Matteo Rizzi focused on the challenges of delivering utility-scale energy storage and solar-plus-storage projects cost-effectively.

The question of Britain’s exit from the EU still leaves many questions and much uncertainty hanging over the market, although in the short term arguably no more so than other winds that have buffeted international trade and industry. Germany’s representatives that I spoke to in Dusseldorf, for their part, expressed the same sadness at the UK’s decision that I am becoming accustomed to hearing.

A more positive note of ‘uncertainty’ for the UK comes in the general tone that while the short term, low-hanging fruit of front-of-meter grid services as the market stands is being taken up quicker than it can appear, the case for C&I energy storage is immediate for many market participants. Medium to long term, the grid services market is expected to change, and electricity rate structures for businesses with it. The key point speakers at the Summit and across the industry that I’ve spoken to agree on, is that there will always remain a value attached to the services batteries can provide, be it TRIAD payment (peak demand) avoidance or ancillary services. Indeed, nearly all of the companies I spoke to at the Germany show said the UK remains an important market and the UK industry important partners for the continent and the rest of the world. 

Back in London we heard from Asif Rafique of Swiss-headquartered investment group SUSI Partners that it is not “afraid of merchant risk” in UK energy storage, as part of a diversified strategy of investing in clean energy and sustainability ventures across different markets, including Canada’s fast-growing C&I energy storage space. Ulrika Wising of Macquarie Capital, one of the world’s biggest infrastructure investors, said that in bankability terms, banks need to hire more people with energy industry backgrounds.

Part of the challenge, Wising said, is that “a lot of [coming] changes to the market will include upsides that we don’t see yet. How do we build that into the business cases [for energy storage]?”

Commercial sustainability, environmental sustainability

It’s essential that business models push forward and equally vital that the industry can be sustainable in more ways than one. Used wisely, energy storage can be a powerful tool for decarbonising the global energy mix. Of course, it remains an unavoidable pity that storage of renewable energy for long periods remains elusive on a mainstream scale, from a cost perspective.

Despite some breakthroughs and a lot of interesting projects and products, neither mainland Europe nor Britain is really able to generate big returns for investors or households from pairing solar with storage for arbitrage. At the moment, the opportunities seem to be spoken about with most enthusiasm in the C&I space, which in itself could drive more opportunities for solar and wind.

The speculation over materials in the supply chain continues, sometimes from an ethical and corporate transparency standpoint, and despite some initiatives such as the 2nd life repurposing of EV batteries, there does not appear to have been a huge amount of progress on recycling or end of life planning for the lithium battery supply chain.

Nonetheless, Dr Simone Peter, head of German Federal renewable energy association BEE and former head of the Green Party, who says we have to act now to avoid the worst consequences, remains convinced the industry is committed to changing the climate change status quo for the better. And while Brexit might loom, at a time when “we need global and international solutions”, Peter also says that she sees Britain continuing to be a willing partner in these discussions, including around CO2 pricing.

“What I hear here [at Energy Storage Europe] is that the ecological aspect is important for the energy storage industry and we learned that the renewable energy sector is the most important factor of climate protection.

“Even if it’s not the [main] focus [of an industry] we see that prices for the cost of PV and wind is so low now it’s cheaper than new coal power plants. It’s in the market so I’m optimistic that we will break through and continue the Energiewende and transform energy from fossils and nuclear to renewables.”

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Scottish Power proposes de-rating for UK demand side response

Vertically integrated energy company Scottish Power has submitted a proposal to extend recently introduced battery de-rating factors in Britain’s Capacity Market to storage included in demand side response bids in what has been described as a latest attack on the battery market.

The utility submitted the proposal on 13 March, which would create DSR technology classes with different minimum durations, and apply the extended performance testing to these newly created groups.

Among these would be a ‘Storage DSR’ class, which National Grid’s electricity market reform delivery body would be obligated to consult on applying the lower de-rating factors to.

Scottish Power argues that under current market rules if a DSR CMU (Capacity Market Unit – “a unit of electricity generation capacity or electricity demand reduction that can then be put forward in a future Capacity Market auction” according to the government definition), consisting of energy storage, is located behind the meter (BTM) it will not be subject to duration de-rating.

“This risks over-rewarding such storage and increasing costs to consumers. It is also contrary to the CM policy of technology neutrality and unfair to other market participants,” the company stated.

It adds that without such a change, storage developers are able to bypass the extended performance tests which are applied to capacity storage generating technology classes by going behind the meter.

The proposal suggests that each applicant for an unproven DSR CMU “must include details of any known intention to use a generating unit that is categorised as a DSR storage technology class”, a suggestion that has been refuted by those offering behind the meter battery services for DSR.

Setting ‘a dangerous precedent’ for DSR

“It’s a bit of a non-starter because the whole point of DSR is that it is there for any flexibility assets,” Johnathan Ainley, head of public affairs & UK programme manager at aggregator KiWi Power, told our UK sister site Clean Energy News.

“When you’re bidding with unproven DSR CMU the whole point of it is that you don’t necessarily know what the composition of that CMU is going to be at the time that you’re going to bid it in. How can they possibly apply a different de-rating factor to a portion of that CMU?”

“In terms of this proposal it’s not one we would support at all. I think it could potentially set a dangerous precedent more generally around DSR,” he added.

Origami Energy, another aggregator which won contracts in both the recent auctions using DSR without storage included, said if the proposal was enacted, it would reconsider the use of battery storage for DSR in the capacity market in the future.

“We do behind the meter storage development and we were expecting to be able at some stage to put some storage assets into DSR capacity market contracts. We’d need to look again at the economics, it’s certainly a detrimental impact on a purely financial basis as it was for the new build which at the time of pre-qualification was attracting the fuller de-rating,” said Nick Heyward, head of energy storage at Origami.

Scottish Power has defended its proposal by claiming it would merely extend the decision to cut de-rating of battery projects by as much as 80% in the recent CM auctions depending on their discharge duration.

A spokesperson for the company told CEN: “Generally speaking, we think that the same duration de-rating should apply to batteries whether they are behind or in front of the meter. In the longer term, if other forms of DSR can only deliver for periods less than that of a typical system stress event, then it should be de-rated accordingly so as to ensure that security of supply is maintained.”

Heyward added that while the move would be detrimental to energy storage and getting them financed, it would fall in line with the original intentions of the CM to secure security of supply.

“At the time a lot of this legislation got put in place, there was no such thing as energy storage on a commercial scale so all of these mechanisms and rules around the CM, and it’s very similar in the ancillary services market, are designed with generation in mind.

“So a lot of these tweaks and policy changes are starting to correct that and the unfortunate thing to date is actually quite a few of those have been corrections that are detrimental to storage,” he said.

However, the decision to cut these factors for large scale in front of the meter batteries from the government and Ofgem was largely seen as a response to industry pressure from incumbents using competing technologies.

Following the decision, many have viewed the business case and certainty offered by a 15 year contract within the T-4 auctions as under threat from reduced revenues.

However, DSR is only able to secure one year contracts in the CM and so Scottish Power’s proposal to effectively pursue cuts to available revenues for storage acting as DSR may only impact a small amount of the entire revenue stack of a behind the meter storage facility.

Moving beyond the Capacity Market

Flexitricity, which won several one-year contracts in both the T-1 and T-1 auctions held in January, told CEN that opportunities for greater revenues lie outside of the CM mechanism.

Chief executive Ron Ramage said: “The DSR community will continue to make a significant contribution towards the security of supply.

“Whilst we recognise the importance of secure bankable revenue streams, it should be recognised that DSR can only secure a one-year Capacity Market Agreement at auction and the total income is a relatively small part of the revenue stack available for these assets. Battery storage as a technology is flexible and can access far more valuable revenue streams than the Capacity Market, with dynamic frequency response and DUoS/TNUoS avoidance amongst the mainstream options.”

Having recently secured a gas and electricity supply licence, promising to unlock revenues within the Balancing Mechanism, Ramage added: “There is also a significant opportunity for these assets to be traded in the Balancing Mechanism, securing revenues post-gate closure; you may remember that the ‘Beast from the East’ (recent severe cold weather snap) led to Balancing Mechanism prices that reached £900/MWh (US$1264.6/MWh); there is no reason why behind-the-meter storage can’t participate here, it’s just a question of market access, something that Flexitricity will be able to provide from this autumn.”

Heyward added that there was “definitely a possibility” that storage developers could move away from the CM if revenues continue to be cut.

“For the new build assets where those de-rating factors already applied, it became such an insignificant part that actually your pricing behaviour in the auction becomes a bit irrational because it barely moves the needle. So I think the same could happen.

“There’s quite a big administrative and legal overhead in just going through the CM process and certainly for a one year contract if it did have such limited value I would question whether people would even go to the effort of going through the process if it was the same level of de-rating,” he said.

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Three major risks hold UK battery storage back from reaching potential, expert panel says

Mis-selling, insurance risk and the failure of associated costs to fall alongside sell prices could hold back greater battery storage deployment in Britain, a panel discussion has revealed.

Last week’s Energy Storage Summit in London, England, organised by our publisher Solar Media, brought together more than 350 representatives from the battery storage industry.

The opening day of the conference saw discussions on different deployment and co-location strategies and, in particular, what has been preventing more battery storage projects from being realised.  

Steve Shine, chairman at energy efficiency solutions company Anesco, which has deployed a number of co-located or combined solar and storage sites and recently developed the UK’s first ‘subsidy-free’ solar farm at Clayhill, said that one issue that was currently preventing greater deployment of battery storage was the failure of associated costs to fall in line with technology costs.

While battery technology sell prices have declined sharply, Shine said this was not being supported by similar reductions in other costs associated with battery deployment, such as accompanying components like switchgears and labour costs. Shine remarked that the core battery components are now “not even one-third” of the total development cost in some projects.

The most recent Lazard Levelised Cost of Storage Analysis from November last year forecast that lithium-ion capital costs could fall by 36% over the next five years, but warned that further cost reduction efforts should be focused on balance of system, components and other costs such as planning and permitting.  

Talk amongst the panel quickly turned to the potential of mis-selling storage or incorrectly explaining system capabilities, something which there is a “huge opportunity” for in the industry’s early days, Matt Allen, chief executive at C&I storage developer Become Energy, said.

The mis-selling of storage, particularly in the context of residential systems, has been discussed at length. Last April the UK’s Renewable Energy Consumer Code (RECC), a quality assurance group set up by the national Renewable Energy Association (REA), revealed it was receiving around one consumer complaint surrounding battery storage each week and there are fears this number will grow in tandem with the market.

Allen said there was particular risk of battery storage systems being proposed with uninterrupted power supply (UPS) capabilities factored in for systems not suited or incapable of providing such power. He feared that “all it would take” would be for one incident involving a hospital relying on an inaccurately sold battery storage facility to provide UPS in the event of a blackout or power failure –an event that would “put lives at risk” – for the battery storage sector to be set back years.

It drew other members of the panel to discuss further and continuing problems convincing insurance companies to cover battery storage technologies.

Harry Vickers at Camborne Capital, a financier-turned project developer which installed the UK’s first 500kWh Tesla Powerpack, now providing frequency regulation and other services, remarked that insurance companies are still reticent to back battery storage following a widely recognised incident involving a lithium-ion battery at the Kahuku wind farm in Hawaii more than five years ago.

The 30MW wind farm was combined with a 15MW battery before it developed a fault, triggering a fire that was estimated to cause more than US$30 million worth of damage. Firefighters did not combat the fire until seven hours after the incident started due to concerns surrounding how to combat a fire involving the energy-dense technologies.

Such concerns have been popularised by problems Samsung experienced with its Galaxy Note 7 smartphone, a product line which was discontinued after just two weeks following numerous reports of battery fires, while a 2013 fire incident set back the rollout of Boeing’s 787 ‘Dreamliner’ in another high profile case.

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‘Devil is in the detail’: US wholesale markets open up but remain complex

The “devil is in the detail” when it comes to making regulatory changes in the US to open up wholesale markets for energy storage to participate in, a regional chief of regulator FERC has said.

In mid-February, FERC (Federal Energy Regulatory Commission), issued Order no.841, a Final Rule on a Notice of Proposed Rulemaking (NOPR) which was first tabled in late 2016. It ordered US regional transmission organisations (RTOs) and independent system operators (ISOs) – the operators of the US’ transmission grids – to explain in the coming months how they would reconfigure wholesale markets to accommodate energy storage resources in providing capacity, energy and ancillary services.

The rule has been commented on by trade groups as a positive step, with the Energy Storage Association’s policy director Jason Burwen, having been among contributors to the regulator’s information-gathering and consultation process.

RTOs and ISOs have about a year to issue their plans. At last week’s Energy Storage Summit, which took place in London, Nancy Bowler, a branch chief at FERC, spoke briefly about the wholesale market ruling.

According to Bowler, US energy markets are divided up between not just the Federal and state level but also between wholesale and retail. The rule is an attempt to bring the two worlds closer together, opening up the opportunity for energy storage to provide capacity resources, trade energy or provide ancillary services including frequency response. The regulator also created a definition of energy storage as it relates to the electricity network.

“In the FERC Order we defined storage as a resource capable of receiving electric energy from the grid and storing it for later injection of electric energy back into the grid and this is going to be technology agnostic, it could be located on the transmission system, meaning the wholesale market, but also the distribution system and behind-the-meter,” FERC’s Nancy Bowler said onstage at the London event.

“We put out this rulemaking and these six regional organisations in the US have to come back with actual tariff language that adheres to the sort of broad-based parameters that we’ve put in place,” Bowler said, explaining that the six main RTOs cover about two-thirds of the US.

According to Bowler, the opening up of those three market areas, capacity, energy and ancillary services “really expands the place where storage can play in the US, pretty dramatically”.

Five-minute pricing

A key component of the rulemaking is that existing hourly real-time energy markets will incorporate five-minute pricing, balancing and settling the markets on a five-minute basis, something Bowler said would add a lot of granularity and visibility to the market.

“Up until now most of the value [of energy storage] has been in frequency regulation but energy arbitrage could potentially become a bigger deal, now you have this five minute pricing, more granular pricing that’s taking place,” Bowler said, adding that a recent MIT study found energy arbitrage in hourly markets with five-minute pricing could triple the value energy storage resources could provide.

Another panellist at the London event, a representative of UK aggregator Limejump said that such a scheme for pricing could give big generators incentives to manage their own frequency or balance their energy trading. Rob Sherwood, who is Limejump’s head of trading, said a five-minute rule in the UK could create “a much bigger market and much wider value”. From a technical standpoint, Sherwood said implementing this would merely be a question of creating a “suitable algorithm that could sort it out quite quickly”.  

Indeed, in April last year, the Australian Energy Market Commission (AEMC), which is responsible for rulemaking and market development in the National Electricity Market (NEM) covering eastern and southern Australia, said it is also considering a move to five-minute settlement.

According to Bowler, FERC itself came to something of an impasse on the question of allowing distributed and behind-the-meter (BTM) resources to play into those wholesale markets. Bowler said this part of the Order 841 rulemaking process had been tricky.

“That last piece, where we’re going to allow storage behind-the-meter and on the distribution system to participate in wholesale markets is going to be particularly difficult. As part of this rulemaking we were originally going to issue something on aggregated distributed energy resources, but we’ve kicked the can down the road and we’re going to have a technical session in early April to discuss how we might also allow those type of assets to participate in wholesale markets.”

On a regional level, the likes of California’s CAISO has started programmes to procure distributed and aggregated BTM resources like energy storage and demand side response, although this is on a small-scale and at its early stages.

Brattle Group puts numbers on value

A recent report from consultancy firm Brattle Group said half the total value of energy storage could come from the wholesale market, if Order 841 and other moves that remove barriers to wholesale market participation for energy storage continue as planned.

“FERC’s order is an important step in unlocking the value in wholesale energy, ancillary services, and capacity markets,” the group said.

“However, to fully realize the value of electricity storage, including benefits related to reduced T&D costs and reduced customer outages, the FERC wholesale market reforms will have to be matched with similar efforts at the state regulatory level.”

The combination of state and national efforts to capture all possible value streams, Brattle Group wrote, could increase the market value of energy storage three to five times over.

FERC’s Nancy Bowler concluded her appearance in London with an assertion of how transformative she believed the new rules could be.

“I’m very bullish on these markets,” Bowler said.

“There’s a lot of momentum in the right direction and maybe there’ll be some opportunities to bundle up some of these assets and trade around them for an enterprising person. The devil is in the details and how we develop these rules and tariffs and the details of it are going to be very important in making sure these markets form in the right way.”
   

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Finance, tech, AI and manufacturing: Trade groups talk about 2018’s most exciting developments

In a feature article from the latest volume of PV Tech Power, the editorial team at Energy-Storage.News canvassed the opinions of trade association chiefs from five key global regions.

Heads of the US national Energy Storage Association, Australia’s Smart Energy Council, the India Energy Storage Alliance, the UK’s Electricity Storage Network and the European Association for Storage of Energy (EASE), all responded to a series of survey questions on the energy storage industry in 2017 and 2018.

You will be able to read the full article in the journal which you can download from the site here, while some printed copies will be available at upcoming international trade shows including PV Expo in Tokyo.

Along with the four questions that each trade group was asked for the article, reflecting their experiences in 2017 and asking them their expectations in 2018, we also asked them what some of the most exciting developments in energy storage they expect to see in 2018 might be. These ranged from innovations and expected developments in technology to finance and business, to policy and regulation.

Here are the reponses:

Kelly Speakes-Backman, CEO, Energy Storage Association (USA)

One of the most exciting technological developments in distributed energy storage is the use of advanced controls and artificial intelligence (AI). Distributed storage promises enormous value to the electric system and to improving resilience, and the key to unlocking that value is the increasingly sophisticated and automated ways in which those assets can be operated, whether as a single smart asset to avoid a distribution line upgrade or as a virtual power plant of re-configurable aggregated assets.

And of course, the wild card in this discussion is vehicles as EV shares increase, a whole new set of mobile distributed storage assets will enter the grid and involve transportation system needs, not just electric system needs. Sophisticated control systems will be critical to optimizing all these storage assets coming online.

John Grimes, CEO, Smart Energy Council (Australia)

[One of the most exciting developments will be] giving the opportunity for laggards and sceptics to see the big South Australia battery in operation, which undercuts outdated arguments against energy storage. Educating the market of a multiple energy storage options available also puts energy storage firmly in the frame of regulators and market operators.

We are working hard to ensure we unlock the full value of energy storage, both behind the meter, and in aggregate as a virtual power plant.  The economics are already compelling in places like South Australia and in 2018 other states and territories also come into the frame. 

Dr Rahul Walawalkar, Executive director, India Energy Storage Alliance (IESA, INDIA)

With the rapid reduction of solar and wind energy costs, Indian grid now needs solutions for renewable energy integration. This transition is supported by a significant push for ‘Gigafactories’ for advanced energy storage technologies such as li-ion that is driving down the cost of energy storage at a pace even faster than the solar PV cost reductions witnessed in past decade.

According to India Energy Storage Alliance (IESA) research estimates, by 2020 there will be at least three companies globally with 25GWh+ annual production capacity and another five companies with 10GWh+ annual production capacity for Li-Ion batteries. The new projected capacity for 2020 is now over 400GWh based on latest projections by IESA Research. India is targeting 5-10GWh of manufacturing by 2020. 1GWh cell manufacturing would need an investment of US$200-250 million. Looking at the potential India has to create 10GWh of capacity, India could attract investments to the tune of US$3 billion by 2020. And as this happens, ancillary development including module development, containers, transformers, inverters could need an equal amount of investment, taking the total potential to US$6 billion.

On the policy front there are number of key initiatives such as the development of a National Energy Storage Mission by MNRE (Ministry of New and Renewable Energy), launch of EV Policy framework by NITI Aayog (National Institution for Transforming India) and the introduction of ancillary services by CERC (Central Electricity Regulatory Commission), that can have significant positive impact on the energy storage and EV sectors.

Georgina Penfold, CEO, Electricity Storage Network (UK)

In technology, we need to remember that there are other types of batteries besides lithium batteries, and there are other types of storage besides batteries.

In finance, we need to remind investors that storage is long term activity with changing markets. Investing with a flexible attitude to services will bring rewards. In policy and regulation, the biggest impact would come from ensuring that all generators are responsible for their own balancing.

Patrick Clerens, Secretary General, EASE (European Association for Storage of Energy, EUROPE)

Policy and regulation is our main focus as EASE and will be an exciting area to follow these next few years. We are excited to see more and more initiatives recognising the fundamental importance of storage in the EU energy system. Whether it’s the Clean Energy for European Islands forum, the High-Level Battery Alliance, or the ETS (Emissions Trading System) Innovation fund, we see storage becoming more and more central to the EU’s policies in all areas.

More and more players are also realising that energy storage is the make or break technology for a decarbonised energy system by 2050. Since this technology is crucial, discussions are being held for a huge initiative on energy storage, which could propel Europe to the global forefront. Creating such a major initiative will impact energy storage in Europe profoundly.

Read the full article, featuring detailed responses to four survey questions from all five trade group heads, in the latest PV Tech Power (Vol.14), available for free download.

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Energy Storage Summit: What to expect at the London event

Regulators, policymakers, experts, developers, utilities, aggregators and of course, energy storage industry participants will fill out the Victoria Park Plaza in London next week to discuss everything impacting the deployment of energy storage.   

The third annual Energy Storage Summit takes place at the end of February (27-28 February 2018) in London, brought to you by our publisher Solar Media.

Names announced to attend include Nancy Bowker at the US’ main energy regulator, FERC (Federal Energy Regulatory Commission), which has just set out rules for enabling the participation of energy storage in wholesale markets.

You will also be able to hear from and meet folk from the likes of distribution network operator (DNO) Western Power Distribution and UK Power Reserve, financiers like Capitas, Investec, SUSI Partners and Triodos Bank, utilities like EDF and WGL, aggregators such as Limejump and UK and international energy storage tech providers and system integrators and developers including Viking Cold Solutions, ABB, Fluence, Nidec, REStore, NEC ES, Alfen and many more.

The programme promises a lively mix. National Grid is overhauling how it procures various grid services, the industry continues to lobby for regulatory definitions of energy storage and these issues, along with the technical, financial and legal aspects of the industry, from co-location with renewables to real-world case studies and project data, will engage visitors from the Chair’s Opening Remarks at 9am on Tuesday until the conference adjourns the following afternoon.  

“The UK Energy Storage Summit is an ideal opportunity to celebrate the explosive growth of storage over the past year and take stock of maximising its future potential. Energy storage is capable of far more than frequency regulation and the Summit is a good moment to reflect on the significant value it creates across the generation, network and behind-the-meter segments,” Dr Marek Kubik, market director at Fluence, said.

The London connection

While this is very much an international site, as you probably know by now, Energy-Storage.News’ offices are in London and our publisher Solar Media’s events staged around the world include the UK’s main national solar trade event (now known as Solar & Storage Live) in October, and, of course, the Energy Storage Summit.

This gives us an incredible visibility into what many analysts and industry figures have identified as one of the leading regions in the world for energy storage and related technologies. In just the past week, you could read Solar Media Market Research analyst Lauren Cook’s views on business models, technologies and current and predicted levels of deployment in the UK, in findings taken from her team’s newest report.

You could also have read two of our UK editorial team, Liam Stoker and David Pratt’s, almost-just-as-comprehensive looks at the energy storage industry in the country through policies, regulations, opportunities and interviews and commentaries from many of the leading players, politicians and other stakeholders.

All of these topics and more will leap from the pages of our sites and into the auditoriums and conference halls at the Victoria Park Plaza and we urge you to join us for an event that will help set the agenda for discussion across the industry this year.

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