Background
Within its latest work, ERP considers storage as a system-wide service for the storage of energy in multiple forms. The financial, legal, political, commercial and regulatory barriers to electrical, thermal, gas, hydrogen and transport storage are addressed.
ERP’s work in 2011 highlighted that Energy Storage is not a panacea – there are other competing options (e.g. Interconnection or Demand-Side Response). Under the right conditions however -where the system shows a clear need, or a market-pull – Energy Storage has the potential to provide multiple benefits to the energy system.
ERP notes that Energy Storage capabilities are already at the heart of our energy system – in the form of fossil fuels which currently provide large volumes of long duration storage over a period of months. Economic as well technical solutions are therefore already in existence. However, new challenges are being created by changes to our current system e.g. renewable technologies, electrification of heat and transport, the phasing out of coal, discussions over the future role of gas, and alternative options using Hydrogen (e.g. for power-to-gas, storage and transport). A key challenge is therefore to replace the current high value, low cost solutions that are already offered and provide storage that accounts for daily fluctuations, as well as variations over several weeks and months or seasons, in a cost and benefit-appropriate way.
It has long been recognised that more modern Energy Storage applications have a role to play in the future success and management of energy systems. This is particularly the case with pledges from a number of countries internationally (e.g. at the recent COP21 talks in Paris, December 2015) to limit the rise of global warming; resulting in commitments to further increase penetrations of renewables within the global energy mix. Alongside this increase in renewables, Energy Storage is deemed a valuable and complementary solution for storing electricity that is generated variably and intermittently, dispatching it as needed to meet demand.
The use of Energy Storage alongside renewables is not the only area where storage can potentially add value though. Energy Storage provides a complex field for analysis, with an array of possible technologies and applications, with many locational and temporal considerations. These wide-ranging applications provide storage with the potential to compete in a variety of energy markets, plus markets for energy services.
Show more
Aims & Objectives
ERP’s work on Energy Storage (2016) will provide a system-wide overview of the current financial, legal, political, commercial and regulatory challenges for Energy Storage deployment to 2030 with a “light-touch” focus on the technical challenges.
The work will begin looking at the whole system need for Energy Storage and potentially competing technologies before moving ahead to:
- Identify system-wide barriers to Energy Storage & possible ways to overcome them
- Provide clarity for: policy-makers, regulators, network operators, customers, investors & ES developers (tech & supply chain developers) to:
- Help catalyse & mobilise an ES supply chain of value to the UK, stimulating investment.
This last aim will be achieved by enabling collaboration of the parties and actors that are key to the system-wide development and deployment of Energy Storage.
In relation to step 1, an ‘inputs and scoping’ workshop was held in April 2016 to facilitate discussion amongst attendees and representatives from across the energy system, and to gather first-hand knowledge and experience of the barriers faced. In addition to interviews with relevant contacts from the wider energy community, the workshop has helped to inform ERP’s project work and the examples or case studies referred to.
Following the above analysis, ERP’s project will highlight significant barriers identified and put forward recommendations for how energy storage applications can be enabled and utilised across the UK.
Conclusions
TBA
Follow-up activities
TBA
Steering Group
Steering Group Chair:
- Peter Bance, Origami Energy Ltd.
Steering Group Members:
- Keith MacLean (UKERC)
- Craig Edgar, Atkins
- John Tindal, SSE
- Sally Fenton, DECC
- Judith Ross, Ofgem
- Martin Southall, GE
- David Butler, Scottish Enterprise
- Stephen Marland, National Grid
- Allen Creedy / Andrew Poole, FSB
- Andrew Lever, The Carbon Trust
- Nick Heywood, Origami Energy Ltd.
Further Information
For more information about the project, please contact ERP .
Background
The amount of intermittent generation connected to the grid is expected to increase significantly over the next couple of decades. This, alongside significant changes to the generation portfolio, is likely to have significant impact on the role and operation of all generation plant. There is likely to be an increased demand for ancillary services such as reserve, response and inertia whilst traditional providers retire from the market place. The project examined the entire market for ancillary services including the need to maintain firm capacity to provide security.
Show more
The project undertook some modelling and analysis of the GB electricity system in the light of the carbon targets set by the Committee on Climate Change. Firstly a brief examination was made of the German and Irish markets with the hope of learning from their advanced penetration of variable renewables. Secondly a new model, BERIC, was written to simultaneously balance the need for energy, reserve, inertia and firm capacity on the system and its findings compared with simpler stacking against the load duration curve. The intention was to assess the need for flexibility on the system but some broader conclusions also emerged:
Conclusions
A system with weather dependent renewables needs companion low carbon technologies to provide firm capacity. This firm capacity could be supplied by a number of technologies such as nuclear, biomass or fossil CCS.
Policy makers and system operators need to value services that ensure grid stability so new providers feel a market pull. Currently some necessary services are provided free or as a mandatory service. However traditional providers (fossil plant) are disappearing at the same time that demand is growing. New providers can’t develop in the absence of a market signal.
A holistic approach to system cost would better recognise the importance of firm low carbon technologies and the cost of balancing the system. The value to the system of a technology is dependent on the existing generation mix and the services which that technology can provide. This means that a technology cannot be characterised by a single number such as levelised cost of energy.
Recommendations
A much deeper examination of the issues raised here is needed but must employ a whole systems approach.
New zero carbon firm capacity is essential to decarbonisation but leading technologies such as nuclear and CCS require long lead times so meeting 2030 targets requires action today.
DECC and National Grid should consider how new providers of ancillary services can be given the financial comfort needed to underpin their development and deployment before traditional providers disappear.
This work supports some key recommendations from the European Commission’s Smart Grid Task Force, in particular:
- Equal access to electricity markets for all providers
- Contractual simplicity and transparency
- Standardised measurement of flexibility
- Incentives to grid operators to enable flexibility for meeting 2030 targets rather than focussing on short-term optimisation
- Improved price signals for providers of flexibility
Follow-up activities
A workshop was held in November to test these initial conclusions. Further work and modifications to the modelling will take place in response to that. Talks have also been given to the 14th Annual APGTF Workshop, the Gas to Power UK Forum 2014 and the IChemE workshop at the Grantham Institute for Climate Change.
Working Group
Project Chair:
Peter Emery – Drax
Steering Group:
- Phil Lawton – National Grid
- Nick Bevan – DECC
- Nick Eraut – ETI
- Ed Sherman – BIS
- Alexandra Malone – SSE
Steering group advisor
Further Information
Please contact ERP .
Background
Existing works on low carbon pathways and policies have focused on ‘the energy trilemma’: cost of energy, security of supply and carbon emissions, often with a significant emphasis on cost effectiveness. In particular, importance has been placed on achieving the lowest costs in the short-term, with decreasing costs in the long-term.
An area that has been relatively neglected within the development of pathways and scenarios (and related models) is the value and impact of pathways on economic growth (measured in GDP/GVA) and analysis of other socio-economic effects, including at regional levels. Reasons for this relate to current modelling interests and capabilities, and a lack of existing ‘top-down’ or ‘spatial’ models utilised within the UK.
It is well known and accepted that economic and socio-economic impacts can be intangible and complex to measure and define, but there are some existing UK models that can and do assess them.
ERP’s paper addresses the issue of how the UK currently considers and assesses economic impacts and benefits within five of the UK’s major pathway and scenario works. It additionally considers modelling capabilities (now and in future) and highlights other relevant models or works that can assist with analysis in this area. Works assessed within the paper are: 1) CCC’s 4th Carbon Budget Review, 2) DECC’s 2050 Pathways/Calculator & Analysis (with some extra consideration of the Dynamic Dispatch (DDM) model), 3) ETI’s ESME model, 4) National Grid’s Future Energy Scenarios (RESOM model) and 5) the MARKAL ELASTIC DEMAND model used to inform two of UKERC’s Energy 2050 scenario works. The work additionally considers the MARKAL-MACRO and Cambridge Econometrics’ MDM-E3 models.
The paper concludes by making recommendations for how further analysis of economic and socio-economic impacts can be carried out – by utilising appropriate modelling capabilities (existing and new), to help inform policy from both a top-down and bottom-up perspective of the energy system.
Show more
This project:
- Provides a broad overview of how the UK currently considers and assesses economic impacts and benefits within some of its major pathway and scenario works.
- Checks for consistency in the use of these approaches across relevant scenarios and reports.
- Considers modelling capabilities (now and in future) for making these assessments and highlights other relevant models and works that can assist with analysis in this area.
- Provides a summary of key findings and recommendations for potential future work to be taken forward by other organisations/departments.
Key Messages
- Assessments of economic growth and job creation within low carbon pathways have been relatively neglected, although it is accepted that these are complex to measure and define. Current modelling types and approaches tend to focus on 1) cost-optimisation and 2) achieving the carbon targets. There is also a lack of clarity regarding input assumptions used.
- Many works are not designed to make these assessments (it is not within their remit) and incorporating this type of analysis within the models assessed is seen as unfeasible. Impacts on a regional level within the UK (Scotland, England, Wales etc.) are complex to capture and are therefore rarely assessed.
- The type and limited number of macro-economic ‘top-down’ energy models being utilised currently constrains the range and reliability of assessments informing policy. Although these models exist (e.g. the Cambridge Econometrics’ MDM-E3), many are not set up to assess the economic value of low carbon pathways and the range of economic and socio-economic impacts of interest to policy-makers.
- There is a level of uncertainty regarding current and future modelling capabilities (models are designed for a specific purpose and are not always adapted) and a range of opinions as to whether these assessments should be included within pathway and scenario works.
Recommendations
This study has looked at a variety of models and criteria used to make judgements about future low carbon pathways and potential benefits to the UK. It is clear that further work is required to better understand the full range of models available in government, industry and academia to support this assessment, their limitations and how they interact with whole economy models. Recommendations therefore include:
- Further investigation is required to consider how and whether models can be used for more in depth socioeconomic assessments;
- The integration of existing model types should be considered, to enable more socioeconomic analysis and inform policy at a more strategic level.
- Clear communication and transparency regarding the design, premise and limitations of modelling works should be encouraged to avoid the risks of misinforming policy e.g. the effect of economic input assumptions on results obtained.
- Continued and more detailed work to assess the impacts and benefits of specific technologies for GDP, job creation and investment opportunities is encouraged, including at regional levels.
- Analysis of economic growth and job creation should be included as part of, or alongside pathway and scenario works wherever possible. This may involve an additional element of secondary analysis.
- Greater funding support is required for the development of these model types – to improve the quality of outputs and understanding of their potential.
A full list of recommendations and associated ‘Next Steps’ can be found in the Summary Paper and Final Report.
Steering Group
- Chris Pook (BIS) – Steering Group Chair
- Tom Delay (The Carbon Trust)
- Rob Saunders (TSB)
- Will Lecky/Adam Harmon (DECC)
- Emma Edworthy (Welsh Government)
- James Bolton / Aftab Malik (BIS)
- Kenny Richmond (Scottish Enterprise)
- Eric Ling (CCC)
