Energy storage in the UK: is the government doing enough?

The UK Government pledged to support the development of the energy storage sector in February, stating that the technology could be 'potentially revolutionary'. But is the government creating the right policy framework to support the sector and help it integrate into the UK energy network?

"Storing energy will become increasingly important in the move towards a low carbon economy, and has the potential to save the energy system over £4bn by 2050," UK Energy and Climate Change Minister Greg Barker said in February as he announced the government had awarded an £8m grant to two British companies to scale up a liquid air energy storage (LAES) system.

"This isn't a Cinderella sector," he assured. "It's happening under the radar and we are giving it support."

Currently, most of the energy storage capacity in the UK energy system is provided by stocks of fossil fuels. Almost all of the country's electricity is generated when required and networks are designed to accommodate demand spikes with back-up peak power plants that can be costly to run, produce a lot of carbon emissions and take around 20 minutes to ramp up.

Energy can be stored in mechanical, electrical or chemical devices and in the form of heat, and many commercially successful operations run throughout Europe and America. But pumped hydroelectric storage is by far the most popular storage method and accounts for 99% of the world's energy storage, not including fossil fuels. In the UK, there are only four major pumped hydro projects with an installed capacity of 2.7GW and a volume of 27.6GWh. These are all now more than 30 years old.

In 2011, a report released by the Energy Research Partnerships (ERP) highlighted the important role energy storage could play in facilitating a low-carbon future and meeting the UK's ambitious emissions reduction goals by 2050, but also warned that the sector currently faces a number of technical and regulatory challenges.

The government has acknowledged that energy storage, most notably electrical storage, could play an important role in supporting the UK's growth in 'low carbon, renewable energy sources' as well as 'maintaining security of electricity supply in the UK'. However, experts working in the energy storage sector say that, despite investment in research and development (R&D), the government is hampering the sector's development with short-term policies and insufficient efforts to develop market structure.

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The case for increased electricity storage

Liquid Air Energy Network founder Toby Peters says electricity storage is unique because it can absorb warehouse "wrong-time" electricity for use on demand

"This is key to integrating renewables into the energy mix without back-up fossil fuel plants for when the wind is not blowing or the sun not shining," he says. "Well-located electricity storage also optimises the use of generation, wires and cables, allowing them to be sized for average demand, not peak demand."

Anthony Price of the Electricity Storage Network says that incorporating energy storage into the UK's energy framework will bring down overall operating costs and reduce electricity bills in the long-term.

"You can operate the system in a more rational way; you can overcome constraints, balance power and demand more evenly, which encourages you to bring on more renewables to the system," says Price, who runs his own consultancy specialising in energy storage.

"You can then reduce your network infrastructure cost by using the network more efficiently, which reduces the total system operating costs and ultimately results in reduced electricity bills for all customers," he adds. "And because you are operating the system in a more efficient way you can use more efficient power plants most of the time, which reduces your environmental burden."

"There is no long-term contract or stability that a commercial operator of storage has in order to give him confidence to make an investment."

Though there are fully commercial technologies for electricity energy storage being used around the world, R&D is still ongoing.

These efforts include Highview Power Storage's LAES system which, in conjunction with Viridor Waste Management, won the £8m government grant. LAES works by turning air to liquid at -196°C. When ambient heat is applied, the liquid rapidly re-gasifies and is used to drive a turbine. Highview already has a pilot plant in Slough which is currently connected to the grid.

A representative from the Department of Energy and Climate Change says since 2010 UK public sector funders have provided more than £50m of support for research, development and demonstration of energy storage technologies. This includes more than £15m awarded by DECC via two energy storage competitions - the Energy Storage Technology Demonstration Competition and the Energy Storage Component Research and Feasibility Study Scheme.

Developing the energy storage market

Other government investments into energy storage include £30m from the Department of Business, Innovation and Skills in 2013 to create dedicated R&D facilities for energy storage. However, Price says R&D investment will be wasted if the government doesn't sort out the financial market for energy storage.

"They [government] have put insufficient effort into developing the market for [energy storage] and without a strong home market for British companies to demonstrate their products," Price says. "It's a bit rich for those companies to find markets and develop them if there is no home-base to work from - there is going to be nowhere for them to show [their technology] off."

"There is no long-term contract or stability that a commercial operator of storage has in order to give him confidence to make an investment," he adds. "Whereas almost everything else in the electricity industry has some form of incentive to encourage investment."

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Wind farms and solar panels, for example, benefit from guaranteed feed-in tariffs or a renewable obligation certificate (ROC) which, according to Price, "gives an almost guaranteed rate of return for the life of your project"..

A 2012 report by Low Carbon Futures entitled 'Pathways for Energy Storage in the UK' highlights the fact that regulatory arrangements in the UK separate monopoly and competitive activities, and so network companies - distribution and transmission - cannot own energy storage facilities and use them in the trading environment. It adds that "storage often has the greatest value to the system when placed closest to the source of demand", i.e. the grid, which in current regulatory conditions could not happen with the grid owning the storage facility.

What more should the government do?

For faster development of the energy storage sector, Highview suggests a more stable and long term market framework would be beneficial, as well as a dedicated government official or office responsible for electricity storage. A strategy for storage, including a target of 2000 MW by 2020 would also be a key driver, the company says.

Highview also highlights two mandates put in place in the US, such as AB2514 in California, which directs the California Public Utilities Commission to establish procurement targets and policies for cost-effective and commercially viable energy storage systems for the state's investor-owned utilities. The Long Island Power Authority's requests for proposals in New York state also calls specifically for the replacement of peaking power stations with technology such as storage. Similar mechanisms could benefit the deployment of LAES in the UK and around the world.

Price says that the government tends to go for policy 'we regret afterwards' such as putting in lots of diesel and gas turbines to meet peak demand which 'destroys the business case to ever put in storage, which would be a much better way of doing things'.

"We believe that public innovation support is needed to help to secure viable, cost-effective storage technology."

"You have either got to come up with a mechanism that encourages people to make the investment in storage or you have got to remove all the subsidies and distortions from everything else in the market," Price says. "We have got to go the other way round and find a way the government can encourage the deployment of storage and give some long-term future for it."

He agrees that there is provision in the infrastructure planning process for the government to perhaps underwrite finance loans for new technologies but he adds: "That needs someone quite brave to take it on".

A representative from DECC in an emailed statement said: "The extent of energy storage deployment within the UK and globally is still uncertain; for example, other balancing technologies, such as demand reduction and interconnection, are available but the Low Carbon Innovation Coordination Group's new Strategic Framework, published in February this year, highlights energy storage as one of the key low carbon technology areas."

The statement adds: "Different energy storage technologies are currently at different stages of development and further innovation is needed to reduce the technology costs to make storage technologies applicable for wide deployment. We believe that public innovation support is needed to help to secure viable, cost-effective storage technology."

However, listening to the industry, it's clear the government is saying the right things but not necessarily taking the action that is needed. According to an Energy Research Workshop, policy-makers will need to take a "holistic approach", along with bold actions and long-term commitment, to fully integrate electrical energy storage into the UK energy network.

For encouragement, ministers might like to remember the words of Prof Richard Williams, pro-vice-chancellor of the University of Birmingham. "Energy storage is the missing link in UK energy strategy and is critical to future UK domestic electrical energy supply and industrial needs," he said.

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