Canada: UK Electricity Storage - Call For Evidence Published

Last Updated: November 16 2016
Article by Gus Wood

For UK electricity storage, there have been some notable positives, particularly National Grid's successful Enhanced Frequency Response tender. However, progress in other areas has been slower than expected, and the uncertainty surrounding embedded benefits puts more pressure on developer revenue models.

We may now see some progress in respect of the regulatory regime though, as the Government has now published its long-awaited call for evidence.

Building on the success of the Energy Storage Masterclass that we hosted for the Solar Trade Association at the end of October 2016, this article analyses the call for evidence from the perspective of electricity storage.

The case for electricity storage

Globally, the case for electricity storage - particularly battery storage - continues to gather momentum, mostly driven by falling technology costs and perceived synergies with solar pv and electric vehicles.

Every market has its own particular opportunities and challenges though. In the UK, electricity storage has the opportunity to provide the flexible source of electricity and electricity balancing services that the UK needs (and is likely to increasingly need) to supplement renewable generation and to keep up with changing consumer behaviour.

However, as the Government recognises in its call for evidence, electricity storage is not the only means of addressing these needs. Electricity storage will need to compete with dispatch-able generation, demand-side response and interconnectors. Few (if any) are suggesting that electricity storage is given incentives over and above these other options, but there remain areas where electricity storage appears to be unfairly disadvantaged.

The call for evidence identifies the Government's aim of removing these unfair disadvantages, creating effective competition, and encouraging disruptive innovation.

Barriers to UK electricity storage

Many of the barriers identified in the call for evidence reflect the issues identified in our previous article. It is encouraging that the Government has identified these issues, but a shame that more progress has not yet been made in addressing them.

The issues identified by Government are:

  • how storage connects to the network;
  • how storage is charged for using the electricity network in the network charging methodologies;
  • the absence of a definition of storage in legislation can lead to a lack of clarity when storage interacts with other legislation and regulations, including planning; and
  • how final consumption levies are charged to storage.

How electricity storage connects to the network

Areas under consideration include:

  • changes to network security of supply standards;
  • proactive publication by network operators of hot spots that could benefit from storage;
  • flexible connection agreements that provide cheaper connections linked to limited operating periods/modes; and
  • the ability of storage projects to queue jump where this would help prospective connectees ahead of them in the queue.

Charging methodologies

As we identified in our previous analysis, there is currently a lack of clarity in how storage should be treated under the network charging methodologies, and an inconsistent application by different network operators. Is storage demand or generation or both? Is storage intermittent or not?

BEIS indicates in the call for evidence that it expects industry participants - with input from Ofgem - to proactively amend the charging methodologies through the relevant code modification processes.

Recognition of electricity storage in legislation

As the call for evidence acknowledges, in order allow electricity storage to be treated differently in legislation, it will be necessary to define the concept of electricity storage.

We do already have a definition for the purposes of the Capacity Market, but the call for evidence stresses the need for a definition that will work in all contexts and that will not overlap with the existing regulated activities.

In the case of planning, the working policy position appears to be that the same 50 MW threshold as applies to electricity generation should be used to determine the appropriate planning route. However, the legislation will need to be amended to clarify that this is the position.

The consumption levies

Given that the document is a call for evidence, and not a consultation document, let alone a decision document, it is no surprise that it is light on solutions.

We do at least seem to have a firm policy steer in respect of the treatment of (what are referred to in the call for evidence as) the consumption levies.

The treatment of electricity storage in the context of funding the renewables and capacity incentives - CCL, FIT, RO, CFD, CM - is pretty much universally acknowledged as unfair.

For the most part, the costs of UK renewable electricity incentives are met by electricity suppliers, and are allocated between suppliers by reference to their supply market share. If the electricity used to charge a storage device is counted as supply, then the electricity supplier will need to charge the storage operator for these costs on charging the device. Consequently, the electricity supply is counted twice - on charging the storage device and on its subsequent supply to the end-user following discharge.

It is likely that changes to primary and secondary legislation will be needed to remove this double charge, but Department for Business, Energy & Industrial Strategy (BEIS) and Ofgem have at least acknowledged the current position to be unfair.

Electricity storage as a regulated activity

Looking at the regulatory framework at its highest level, electricity storage is not recognised as a regulated activity, in the way that generation, network operation/ownership and supply are.

Some participants have called for electricity storage to become a regulated activity. However, most would prefer to avoid the costs and regulatory oversight that this would entail.

The Government seems minded to treat storage in the same way as generation, so that a licence is required at a certain capacity, but below that level an exemption is available.

The paper sets out a number of options, but they all seem to be based on a continued treatment of electricity storage as a type of electricity generation. This seems a flawed and short-sighted approach. It may be appropriate to treat electricity storage in the same way as generation in many instances. However, the storage of electricity is quite plainly not a form of generation. A distinct activity should be recognised so that it can be considered and treated on its own merits.

Recognition of electricity storage for co-location with renewables

There has already been some progress in identifying the concept of electricity storage in the context of its co-location with renewable generation. Both the Contract for Difference (CFD) and Renewables Obligation (RO) regimes now provide guidance on the topic. The call for evidence also acknowledges the need for clarity.

However, it is becoming increasingly apparent that the metering requirements inherent in co-locating with renewables might diminish the benefits.

The role of distribution network operators

One of the key issues that we identified in January was the need to clarify the role of distribution network operators.

The call for evidence identifies the need for distribution network operators to transition to becoming distribution system operators (DSOs).

BEIS and Ofgem appear to envisage greater co-operation between distribution network operators and National Grid in respect of network planning and procurement of balancing services, with the possibility of them jointly procuring balancing services and/or the balancing mechanism becoming a platform on which DSOs (as well as National Grid) can accept bids or offers for local system management.

What next?

BEIS is actively seeking responses to its call for evidence, so do get involved if you are in a position to do so.

The coming years are likely to be pivotal for the renewables and storage industries, so it's always wise to keep a weather eye on updates and innovations.

As we have seen with solar pv, the cost of energy storage is likely to reduce rapidly over the coming years, and opportunities for investment and development will continue to grow, making this emerging market a hot topic for future capital growth.

We can help you deliver a successful project

Like many other firms, we are very experienced in advising on UK renewable generation projects.

However, we also have a market-leading reputation in UK stand-by and peaking projects. This means we have the expertise you will need in those aspects of battery storage that differ from renewables - particularly National Grid's balancing service contracts and PPAs which include optimisation structures.

If investment and development in this technology is something you're interested in, then please get in touch to see if we can help.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
14 Sep 2017, Seminar, Birmingham, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

18 Sep 2017, Seminar, London, UK

Our annual event as part of the London Design Festival is now in its fifth year. We would be delighted if you are able to join us again.

21 Sep 2017, Seminar, London, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.