National Grid is considering moving away from one and two year contracts within its grid balancing tenders, which according to the system operator’s UK director do not reflect the transition needed within the energy system in the future.
Speaking at this week’s Energy Storage and Connected Systems conference, Cordi O’Hara suggested that the current financing durations for storage and other balancing technologies such as demand side response are limited by the short term contracts.
“At the moment the system operator is incentivised largely by one or two year schemes by the regulator to balance the network. Beyond that there is no understanding of how we will be held to account for economic and [efficiency] test as a system operator.
“There are arguments to suggest we should move away from one and two year incentivisation timelines that don’t necessarily reflect the transition that we’re going to face on the network and the need to build the new flexibility tools of the future,” she said.
O’Hara pointed to the National Grid’s recent four year Enhanced Frequency Response (EFR) tender, which saw battery storage projects win nearly all of the 200MW capacity, as an example of when the contract “landed on a fair and reasonable duration for that point in time.”
“But there’s more work to be done and where those contract durations sit within the various markets needs to be explored.
“This is a difficult area that we are trying to work through at the moment, be assured I am having the right conversations about duration of contracts in the longer term of the system operator,” she added.
A number of short term contracts have been awarded to storage projects in recent auctions, with only four projects winning 15 year contracts within the 500MW of battery storage capacity contracted in the T-4 2016 auction in December.
The lack of long term security for large scale storage projects has been identified repeatedly as a barrier for the investment community when considering a move into the battery market. Many consider that without longer-term incentives, investors will remain sceptical of the technology’s financial viability as long as prices remain high.
Speaking at last week’s Solar Finance and Investment Europe conference, Ancala Partners’ director Lee Mellor said: “In terms of the revenue streams, there’s quite a good visibility up to four years but after that…there’s no certainty of what the revenue profile will look like.”
With the ancillary services market rapidly developing as National Grid commits to further tenders for frequency control, industry will be looking to the SO to provide greater long term certainty over financing.
METKA EGN has announced EPC contract wins for 75MW of new UK projects, the largest being a 20MW storage project, as the company restates its commitment to the UK market.
The contractor is working on six solar PV projects for Lightsource and Canadian Solar which are scheduled to be completed in time for the 31 March 1.2 ROC deadline.
Speaking to Solar Power Portal about the company’s ongoing work in the UK, METKA EGN director Lefteris Pliakos explained that the projects represented a continuation of the company’s loyalty to the UK.
“It is the third year that we are based in the UK and every year we are delivering a significant number of projects. We are dedicated to the UK market. We are not here to go, we are here to stay – and chase any opportunities that can come up in [upcoming] years,” he said.
As well as the solar PV developments, an energy storage project will be completed for Hazel Capital, which will see 40 LG Chem batteries installed alongside gas/diesel generation assets in Newcastle-under-Lyme.
The project, named Noriker Power Staunch, won a two year firm frequency response (FFR) contract with National Grid, which is expected to deliver c. £2.6 million in revenues for each of the two years contracted.
The FFR contract is estimated to represent about 70% of total revenues in each of the first two years of the project’s life.
In the December 2015 T-4 auction it also won a 15-year capacity market contract, which will begin in 2019. The contract price is £18,000/MW per year at 2014/15 prices and is therefore subject to be inflated by RPI for the intervening period.
Further revenues will be accrued from Triad payments, where the installation will be used to avoid peak transmission network use charges, and electricity sales generated effectively as a by-product of creating the revenues from FFR and Triads.
This energy storage project follows the successful completion of a larger development in Puerto Rico, where METKA EGN delivered a 57.65MWp solar farm alongside 20MW storage capacity. According to Pliakos, building on this experience will be a key focus for the company’s activity in the UK post-subsidy, as well as chasing opportunities for private power purchase agreements.
“Generally our strategy is to look for projects even after 31 March. We are looking into two directions [private PPA and storage], it doesn’t seem to fully work immediately after 31 March but we are confident enough that projects like this will come up in the next year,” he said.
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Green energy firm Anesco has entered into a partnership with Green Hedge Energy UK which will see the two collaborate on the development of the latter’s Energy Barns concept.
The Energy Barns – essentially utility-scale storage installations – will be developed at four key sites in England, have a combined capacity of 40MW and be constructed over the coming months.
All four were successful in last month’s Capacity Market auction and will benefit from 15-year grid stabilising contracts.
Green Hedge Energy UK commercial director Tim Marsters said the firm was delighted to partner with Anesco to realise the Energy Barns concept having taken the projects through planning, grid connection agreements and Capacity Market pre-qualification.
Lee Adams, sales director at Anesco, added: “Since installing the UK’s first utility-sized battery over two years ago, and the dozen more that followed, we have remained the driving force behind the growth of energy storage in this country.
“The potential – and indeed need – for energy storage to support the grid is now starting to be fully recognised and we are seeing a huge growth of interest in this area. We currently have over 100MW of batteries ordered for delivery during 2017.“
The deal comes just a week after Green Hedge split its operations into two, effectively selling its O&M division Green Hedge Operational Services to German energy firm BayWa r.e.
A new trial beginning this month will test the potential of batteries to shave the peak output of domestic solar installations to increase the capacity of the electricity network and reduce the need for costly improvements to the local grid.
Smart batteries from Moixa have been selected by distributor Northern Powergrid to be installed in 40 homes and linked in a virtual power plant. The trial will use 30 homes fitted with solar through the Energise Barnsley community energy initiative and will test how the solution can reduce peak solar output onto the electricity networks when there is low local demand.
Simon Daniel, chief executive of Moixa, said: “By managing clusters of home batteries in a virtual power plant and allowing homeowners to use more of their solar energy, thereby exporting less, we believe we can significantly reduce peak solar generation output onto the network. This will allow more homes to go solar without imposing new costs on network operators.
“We are working closely with Northern Powergrid and this project will deliver insights to develop incentives which we hope will allow us to roll out solar plus storage to tens of thousands of homes in their region, by creating a business case for homeowners to invest and also by increasing the number of solar connections allowed on each substation.”
If successful, the project would enable panels to be installed on more homes using existing substations and cable networks.
Northern Powergrid, which is funding the £250,000 project, believes UK network operators could save millions for customers by reducing the need to upgrade infrastructure, which will help ensure network-related charges on customers’ electricity bills remain good value.
Andrew Spencer, system planning manager for Northern Powergrid, said: “Batteries will play a key role in the smart energy system of the future, keeping costs down for customers whilst allowing the power network to support greater concentrations of solar power. This innovative project will provide valuable data on how the inclusion of batteries in solar schemes can enable our designers to connect more PV panels before further network reinforcement is required.”
This would help projects like Energise Barnsley, which has rolled out solar to homes in the area but came up against some network constraints in the village which meant that five houses could not be connected within the timescales of the project.
If proven successful, the project is also expected to help ensure network-related charges on customers’ electricity bills remain good value.
The first batteries of the two year project are due to be installed at the end of January and will be managed by Moixa which will manage the cluster of batteries to reduce peak generation output onto Northern Powergrid’s local electricity network.
Speaking to Solar Power Portal Jim Cardwell, head of trading and innovation at Northern Powergrid, said: “What matters for us is to get a good variation but also we also want to get a bit of clustering. From a local power grid perspective we can always model the effects of individual properties and what might happen when they’re all bundled together however there’s nothing like observing things in action.
“We can do desktop modelling we can do analysis away from the real network but there’s no substitute sometimes for working with real customers, real networks [and] real everyday circumstances.”
For residents, Moixa will be able to aggregate the capacity stored on its batteries using its smart GridShare platform to provide network services and distribute a share of the income to the participating homes.
In addition, the batteries are expected to add to the energy cost savings already provided by solar, which Moixa has said typically provide a 30% reduction to bills. These additional savings are of particular interest to social housing providers like Berneslai Homes which is providing some of the homes for the trial.
Stephen Davis, Director of Assets, Regeneration and Construction, for Berneslai Homes, said: “We are keen to explore the savings potential that battery storage can bring to our tenants’ energy bills. Our tenants face ever increasing energy costs from the energy suppliers they buy their electricity from and solar panels coupled with battery technology have the potential to ease some of that cost.”
The UK energy storage industry is ready to deliver smart technologies for a clean energy system but requires the government to remove all barriers to deployment, the Solar Trade Association (STA) has said.
Following the closure a joint call for evidence by the Department of Business, Energy and Industrial Strategy (BEIS) and Ofgem, the STA has published its response to the document on delivering a smart, flexible energy system.
Within its comprehensive response, the association urged government to firstly address the lack of regulatory definition for storage, which is known to lead to severe issues affecting the nascent market such as double charging on energy consumption levies.
This was one of the first issues identified in the call for evidence for which the STA commended both BEIS and Ofgem. However, it has stressed that action must be taken “as a matter of urgency”.
The STA is pressing for improvements to the storage market due to the perceived impact it could have on the solar industry, which has struggled following drastic cuts to support for both residential and utility scale deployment.
Research commissioned by the STA last year found that storage could drastically improve the intermittency impacts of solar on the grid, even providing a net benefit to the future energy system.
Leonie Greene, head of external affairs at the STA, said: “Solar power has turned the grid on its head, it provides unique opportunities for energy consumers of all types to take control of their bills and produce their own energy, sitting at the heart of a smart, flexible energy system.
“Storage has a multiplier effect for renewable energy: whether it’s helping a homeowner get the most efficient use of their solar panels, or a solar farm match its output with demand, storage will benefit the whole system.”
However, the STA used its evidence document to highlight a number of steps needed to realise this potential, particularly clarity over Ofgem’s ongoing review of the charges paid for use of the distribution network, also known as embedded benefits.
It argued that this exercise is dampening the price signals that storage developers depend upon to profitably shift energy during times of high demand. This is thought to reduce the business case for providers of new flexible solutions such as storage, to the benefit of large, centralised generators and according to the STA is “is in direct conflict with the smart energy transition”.
Ofgem’s ongoing review of charging arrangements is being carried out separately from the call for evidence with BEIS and so was largely absent from the 104 page document, despite the cross over in eventual policy.
As well as potentially discouraging storage providers, the STA added that it did not believe distribution network operators are sufficiently incentivised to purchase storage and other flexible solutions when balancing or reinforcing their networks.
Nick Wood, STA policy analyst, said: “This is an exciting call for evidence and a step in the right direction. However we do not believe that network operators are sufficiently empowered to take up the ‘system operator’ roles envisioned in the document, and the day to day experience of our members on the networks can be frustrating.
“We need more open markets for flexibility services at distribution level, stronger buy-in from network operators and stronger direction from government in implementing these. Then we’ll start to see the benefits of a smart system that the industry is ready to deliver.”
The call for evidence closed last week (12 January) on the day that BEIS announced plans to create a more independent system operator within the National Grid group in an effort to create greater opportunities within the energy system for smart solutions.
Sonnen has partnered with CCL Components which will distribute its domestic and commercial battery systems as the German manufacturer seeks to expand its reach in the UK.
Solar Power Portal understands that the partnership has been under negotiation for the last three months, with the sonnenbatterie eco 8 unit going on sale from CCL in mid-December.
As well as this modular system used predominantly in households, CCL will also take on the commercial ‘pro’ system when it is released in the UK, currently thought to be at the start of Q2 2017.
According to CCL’s operations director Paul Brooks Jnr, a number of units have already been sold despite the small size of the market. He added that the sonnen unit offered “a completely different beast to most of the things that are out in the market” due to its additional features.
The storage system has an integrated smart energy manager and bi-directional inverter as well as its high performance lithium ion phosphate battery modules which can be scaled up from 2kWh to 16kWh depending on the project or over time.
Paul R Brooks, director at CCL Components, said: “Our new partnership with sonnen will provide our customers with a perfect energy storage solution which is expandable over time depending on the customer’s budget or energy requirements. We believe this is a perfect solution for the UK domestic market and some smaller scale commercial applications.”
The intelligent energy management evaluates the consumption data of the user and incorporates weather data to determine the optimal time periods for loading and unloading of the battery. In addition, electrical appliances or heating devices can be controlled to optimise the consumption of self-generated solar power in the home.
Martin Allman, sonnen’s UK country director, said: “We are investing heavily in the emerging UK battery storage market and are delighted to be working with CCL as our first UK distributor. CCL’s extensive experience in offering battery storage solutions makes them an ideal partner as we develop our position as the market leaders in behind-the-meter energy storage solutions.”
To further cement the new partnership, CCL and sonnen are to hold a series of training sessions for UK installers throughout the country, with the first three dates as follows:
A number of companies within the UK storage market have remarked in recent months on a perceived lack of knowledge among installers when it comes to batteries.
Speaking to SPP at last October’s Clean Energy Live Laura Gooden, director of PV Kits Direct, said: “It’s going to be the future but not enough people understand it. We’ve got to help the installer go out and sell the product with or without PV because at the moment I think that’s what the problem is.”
“A lot of installers have done various training but there’s always a lot of learning when it comes to batteries. People forget sometimes that they’re wiring up a very intricate piece of kit, this is a much more in-depth install and I think from the training point of view, I don’t think we’re not anywhere near all the UK installers being up to speed and knowing exactly what they’re doing,” Paul Brooks Jnr.
“It’s about understanding batteries and knowing that we can offer training. If you buy from someone like CCL there’s a technical capability within our companies to be able to help and assist with these things which may not be the case with every distributor.”