Post - Blog
Charles Deacon Managing Director at Eclipse Power Solutions .
WBE 2025
We are going through what seems like a perfect storm of reasons why there might be fewer lithium battery storage projects coming online. Connection constraints, supply chain problems, and a lack of skilled resources have the potential to hold back the much-needed transition to a carbon-free economy.
The issue that most people point to is the grid connection queue. Estimates suggest that it is approaching the terawatt range now. The amount of Battery Energy Storage Systems (BESS) connections in the queue is forecast to outstrip even the most optimistic future battery requirements needed to meet net zero.
Problems within the supply chain also present a challenge. Some of the largest switchgear suppliers are discontinuing popular models because of the phasing out of SF6 gases that have been used as an insulator across the electricity sector for decades.
When you are connecting to the DNO or transmission system, you are also limited to the types of kit that the DNO or transmission operator approves for use on their systems. By contrast, IDNOs offer more flexibility in the choice of kit, which means fewer constraints due to supply chain issues.
Planning is also an obstacle, where the biggest limitation is resource. We don’t need planning policy changes, but we do need to put more resource into local planning. Delays mean the 16-week determination doesn’t happen anymore and projects can take six to twelve months to be reviewed.
There’s a bit of a gold rush among developers, and some projects are possibly heading towards where they can get a connection rather than where Battery Energy Storage Systems (BESS) could provide most benefit to the grid. Priority should be given to those mechanisms that ensure that BESS are located in the right place to help the grid.
Market reform
In the past, BESS was being skipped in the balancing mechanism because the way that dispatch occurred was quite manual. It was easier to dispatch a large 300-megawatt CCGT (Combined Cycle Gas Turbine) than it is to dispatch maybe five or six smaller battery sites run by different companies. National Grid Electricity System Operator (NGESO) has started to introduce reforms to level the playing field.
Tradable volumes affect how the asset can be traded in balancing markets, as well. Eclipse has projects totalling 100s of MWs, they are split into smaller metered connections. A good example is a project that is 150 megawatts and is split into three connections of 50 megawatts each. When these projects were developed there was not much of a market to trade over 50 megawatts. But now people are looking to trade 100 and 200 megawatt projects, which has increased the appetite for larger connections.
This raised the appetite for BESS schemes from individual 50MW schemes (or 50 MW parcels of bigger schemes) to projects in the 100s of MWs. So, there are now projects or sites with big connections for 400 or 500 megawatts. They might want to sit on that amount and wait until they either decide to split it up or so just trade that whole amount at once.
Connection reform
There is a lot going on in the connection reform space. The first is the Two Step Offer connections process. NGESO has changed the background planning assumptions which will hopefully bring some connections forward. Initial feedback was suggesting that at least 40% of connections in that queue would see an improvement in their date – which leaves 60% who won’t. This process has now concluded, so we should start to see the final impact soon. This has been in conjunction with the Transmission Works Review, the first results of which we hope to see this summer.
There is also a proposal to offer ‘non-firm’ or flexible transmission connections to batteries, whereby they can be constrained or curtailed if they were going to cause an issue on the grid.
The current modelling assumes import or export all the time, which as we know doesn't happen. A reform to extend the active network management principles of distribution up to transmission might mean getting a connection sooner, similar to the non-firm proposals mentioned above. So, if you try and export your full amount between 12 and two in the afternoon in June, you may see a curtailment if there is solar PV in the area, because that is when the PV is producing energy. You wouldn't wish to sell your power from a battery then anyway, because the market is loaded with cheap solar energy.
If things go as planned, Connections Reform should be in by January next year, this will prioritise ‘first-ready first-connected’. This relies on land rights and a planning submission. As battery is often inherently quicker to get planning consent, it is more likely to be connected.
NGESO is also bringing forward a ‘Technical Limits Initiative’ where you can be connected, with a constrained connection until the transmission system is reinforced. That has seen 30 gigawatts come forward according to UKPN . The average curtailment nationally is given at around 20%. It essentially means that connections can be fast-tracked ahead of transmission works, which can be really beneficial. However, the works will still go ahead and customers will be required to pay or securitise towards these.
Increase competition for innovative thinking
There is no doubt that the energy industry is looking for innovative ways to address the many challenges that the sector is going through at present and will do for several more years. Market and connection reforms will go some way to unblock the biggest challenge – the connections queue. But it is likely to take a more radical change than those suggested. Increasing competition is a sure-fire way to introduce more innovative problem solving.
We would like to see more competition in the transmission space, especially at a very localised level around the last-mile connections. If you’re installing a point-to-point connection for a single customer, why not use this to extend the licensed network and make it drive more value? Applying an IDNO-style model could tip the IRR (Internal Rate of Return) into a more attractive proposition for battery storage projects getting approval and being built.