The report details total cost savings for the UK electricity system, should the potential for energy storage be realised, of up to £2.4bn a year by 2030.
The report (Can storage help reduce the cost of a future UK electricity system?) was collaboratively funded by three major utilities – SSE, Scottish Power and E.On – as well as the UK Department of Energy and Climate Change (DECC) and the Scottish Government.
The analysis, carried out over 12 months by the Carbon Trust and Imperial College London, is the most comprehensive review to date of the benefits of storage at a UK-system level. Key findings of the report also include: –
- The UK can realise significant cost savings if market arrangements for the electricity system allow for an efficient deployment and use of energy storage, alongside other flexibility options such as demand response and interconnectors
- There are several barriers to energy storage deployment that have created a market failure and currently prevent a wider deployment of storage solutions
- Energy storage is a multi-benefit, multi-stakeholder opportunity which requires coordinated action across policymakers, regulators and industry to realise available benefits
- Certain market framework adaptations could more broadly enable a viable business case for storage for all stakeholders, and ensure that the UK will be able to benefit from storage deployment. Many of these changes are likely to be cost neutral and require no additional funding from the government
- The scale of these cost savings increases markedly if policymakers, regulators and industry act now to maximise the benefits storage can provide for the UK.
The report assesses the wider benefits of flexibility solutions for a future UK electricity system, examining the impact storage might have to bill payers across three future energy scenarios out to 2030. These include the National Grid’s ‘No Progression’ and ‘Gone Green’ scenarios, as well as a third scenario developed specifically for this report showing a least-cost pathway for the UK to meet its 2030 carbon emissions reduction target.
Under the National Grid’s ‘Gone Green’ scenario the addition of energy storage can unlock system cost savings of up to £2.4 billion a year by 2030. And if just 50 percent of this saving was passed on to domestic customers it could reduce the average household electricity bill by up to £50 a year.
On a least-cost pathway, deploying storage could deliver cost savings of up to £7 billion in 2030. £2 billion of this comes from the deployment of storage, with a further £5 billion primarily from improved use of existing generation assets and optimised and reduced investment in new low carbon generation assets.
The range of potential benefits provided by energy storage includes absorbing “wrong time” energy, then releasing it to meet demand, to help support capacity constraints and to balance the influx of intermittent and, or inflexible low carbon technologies onto the grid, plus avoiding expense associated with reinforcing assets and adding new capacity.
A trust spokesman said: “If the UK addresses current regulations to create a fair and transparent market, these reduced costs and increased resilience translate into cheaper household energy bills.
“However, despite the technology readiness and the significant societal benefits of energy storage, the split of its benefits across network stakeholders makes it difficult for a single one to develop a business case. An incompatible market structure has reduced the commercial viability of storage for investors by increasing risk and reducing revenue potential.
“Our analysis shows that many of the necessary regulatory reforms are likely to be cost neutral and will require no additional funding from the government. Until the current market conditions are addressed to reflect more accurately the value that storage can provide to the network, the UK risks a future under-deployment of flexibility solutions preventing the capture of the systems benefits identified in the report.”