Post - Blog
By Darren Farrar, energy segment manager at Schneider Electric
Asia Pacific Nuclear Energy (APNE) 2025
As the world’s need for consistent, reliable energy grows, we need to embrace innovative ways of generating and making the most of the power at our disposal. Within the next 15 years, the UK is expected to lose 39GW of generating capacity alone due to the government’s continuing programme of coal and nuclear power plant decommissioning.
To meet this capacity challenge, providers and policy-makers across the globe are having to think outside the box. This is why excitement is building around the potential of battery storage. Partly thanks to the declining price of Lithium Ion (Li-Ion), battery storage technology stands on the precipice of strong growth. Indeed, the UK government has recently launched its first phase of a £246 million investment in battery technology, while the energy storage market is projected to reach up to 10.7GW by 2050.
Cost-effective energy storage that can be deployed to scale is the key to unlocking extra capacity, further potential in renewables and support frequency response and peak shifting. It also offers the promise of helping to balance our increasingly localised networks. The ability to store energy generated from renewable sources, such as solar and wind, makes them more reliable – providing a dependable power source no matter the weather. Battery storage also provides a valuable reservoir of back-up power, which ensures the lights stay on even when the traditional grid cannot cope with demand.
In Puerto Rico, USA, Schneider Electric has deployed an energy storage solution to improve the stability of a highly renewable energy-dependent grid. With so much of its power generated by renewable sources, the grid often struggled to meet demand as the amount of power available fluctuated unpredictably.
However, the introduction of a 40 MW PV power plant, a range of power conversion systems and a 19 MW Li-Ion storage battery has accommodated a higher penetration of renewable sources without compromising stability. With the presence of energy storage, excess energy can be stored for when renewable output is low, enabling frequency regulation, voltage regulation, and power ramping to smooth active power injection during fluctuations.
Besides addressing our capacity needs sustainably, the growing popularity of battery storage technology will create another paradigm shift. Namely, it will change how we distribute, manage and share our energy on a national and local level. With the ability to store large quantities of energy more easily, the importance of the national grid will diminish as smaller, more self-sufficient local networks spring up across the country to take their place.
In recent years, the National Grid has implemented capacity auctions to allow bidding by new generating plants to provide new capacity to the grid. Yet much of the new capacity has been at distribution level – i.e. at voltages managed by the Distribution Network Operators (DNOs) – and awarded to smaller generators. A seismic shift is taking place, moving away from traditional large generators and towards smaller plants connecting into distribution rather than transmission networks. The trend suggests that from the early 2020s onwards, we will witness the widespread transition of DNOs into Distribution System Operators (DSOs), with the ability and remit to balance supply and demand at a more local level.
Battery storage is enabling this evolution, but it also poses its own challenges to those attempting to make the transition. The main barrier to entry so far has proven to be policy. Alongside the necessary licensing changes needed to become a DSO, DNOs must contend with the official definition of battery storage as a form of generation. As DNOs have historically only been involved in distribution, this puts them in a difficult position with the regulator, Ofgem.
More seriously, battery storage is charged twice by the regulator as it both takes and adds power to the network. In a market where revenue ‘stacking’ – using the technology to confer the optimal number of opportunities and benefits – is key to the new technology’s success, such regulations are putting a cap on its potential.
However, there are reassuring signs that the government is listening and many in the industry expect Ofgem’s upcoming plan for a smart, flexible energy system to resolve the regulatory burdens surrounding battery storage and draw up a new definition that further opens up the storage market. Following a call for evidence issued in winter 2016 and despite a delay caused by the 2017 General Election, all signs from the government and regulator suggest they are listening to the industry’s concerns and will act accordingly.
In the near future, battery storage will form an essential part of power generation, transmission, distribution and consumption. Alongside flexible generation, new and more efficient infrastructures and growth in demand response, energy storage will act as the catalyst for the transition of DNOs into DSOs and our evolution towards a more localised and sustainable energy system.
Yet, to reap its rewards we must liberate its potential. The adoption of battery storage has been stymied by an obscure definition that prevents revenue stacking and discourages investment. Urgent clarity is needed to truly allow us to supercharge the future of battery storage.