Releasing the potential of energy storage

Energy storage will play a central role in our future power system. It enables electricity that is generated at times when supply exceeds demand to be stored, and consumed later at peak demand. It’s one of a suite of ‘smart’ technologies that help to balance the grid, which include interconnection and demand-side response.

The benefits of energy storage

Demand for electricity varies significantly throughout the day. At some times, total UK electricity demand can be below 30GW. At other times, it can be just below 60GW. A lot of this variation can be managed through turning up or down power stations, but this can be difficult, particularly with an increasing number of renewables on the grid. Energy storage can help to even out that profile. It obviates the need to build new generating assets in order to meet peak demand. This can save consumers money, because they do not have to pay for expensive new energy infrastructure through their bills.

Energy storage also tackles the intermittent supply of power from renewables, making our energy supply more secure. Because the wind doesn’t always blow and the sun doesn’t always shine, the supply of electricity from renewables is inconsistent. This makes it hard to ensure that electricity supply and demand are always in balance. There are costs associated with balancing the grid, which can prevent renewables from competing with other forms of ‘baseload’ power generation such as nuclear or gas. Storage, therefore, is an important part of successfully integrating renewables into the electricity grid.

Carbon Trust recently produced a report on energy storage in which they quantified the benefit to consumers of further uptake of storage technologies. They found potential for £2.4 billion per year of savings by 2030, which could translate into a £50 annual reduction in household bills. This fall in energy costs comes from optimising existing generation capacity, and from avoiding building new infrastructure.

Different technologies

There are many different technologies that can provide energy storage. On the one hand, there are mature technologies, such as pumped hydroelectricity, which was first developed in the 1920s. The UK already has 2.8GW of pumped hydroelectricity capacity. It works by pumping water from a lower reservoir to a higher one at times of low demand, and releasing the water through the turbines when demand is high.

On the other hand, there are new technologies, such as lithium-ion batteries, like those found in smart phones. The potential growth of these new storage technologies is significant. Analysis from Citi has found that the price of lithium-ion batteries (per kWh) has fallen from $3,185 in 1995 to $320 in 2011, with further decreases projected.

A number of innovative new schemes have recently been announced that show how companies developing this technology in the UK. Nissan this year launched a new vehicle-to-grid scheme for their pure-electric vehicle, the Nissan Leaf. It will enable owners of a Leaf to sell the electricity that is stored in their car’s battery back to the grid at times of peak demand. Statoil has confirmed that they will build a major storage plant, called ‘Batwind’, next to their planned floating offshore wind farm in Aberdeenshire. It will help to optimise the electricity produced at the site and overcome the problems of intermittency.

Growth in energy storage

The market for storage is growing. Last year, when the National Grid invited expressions of interest for 200MW of grid balancing capacity. Bids from electricity storage alone would have surpassed the quota more than four times over. Bloomberg New Energy Finance predicts that by 2040 there will be a 75% fall in the cost of commercial and residential storage systems and the size of the global market will grow to around $250 billion.

But further measures are needed to unleash the true potential of energy storage. The National Infrastructure Committee recently called for a removal of regulatory barriers to storage to ensure it can compete on a level playing field with electricity generation assets. They identify storage as an area in which the UK can become a global leader. Not only can this be done without subsidies, they claim, but it can have a net positive benefit on consumer bills.

The Energy and Climate Change Committee in the House of Commons today published a report echoing calls for regulatory reform. For instance, energy storage is currently ‘double charged’, once for consuming the energy it stores, and again for supplying that energy back to the grid.

Finally, last year, Bright Blue called for the Government to invest in research and development of new electricity storage technologies. And in our latest report, we call for between 5GW and 6GW of storage capacity to be brought online by 2030 to ensure security of supply during the coal phase-out.

The potential for energy storage is great: government and industry now need to release it.