Karsten Wurth
UK industry is primed to capture the benefits of electricity storage, and the time to move is now, says VINCI Energies’ Chris Hutchinson
We have all heard now that electricity storage is critical to the future sustainability of the UK’s energy supply. It offers vast potential for grid stabilisation and black start capacity. It can combine with renewable assets, enable smart cities and factories and work within integrated industrial micro-grids. The question now facing us is this: who will take delivery of a storage revolution from promise to reality?
We are now starting to see progress on creating a favourable regulatory framework for storage, catching-up with the technology and market interest. Moves by BEIS and Ofgem to consult on a more flexible electricity market are welcome. Meanwhile, Ofgem has set out a string of actions through to the early 2020s to correspond with the smart meter rollout, decisions on half-hourly balancing and the next round of price controls. And the shift to a grid run by Distribution System Operators rather than Distribution Network Operators will hasten deployment.
Interest in storage tends to lie in grid management, home packs and renewables integration. However, at VINCI Energies we believe it is industry that could be at the forefront of storage uptake, innovation and roll-out. From our day-to-day operations, we see that the highest economic value of electricity storage is currently where commercial and industrial consumers can use behind-the-meter solutions and deliver energy efficiency and flexibility. Industry is already in the position to gain from electricity storage rapidly and easily.
Towards an industrial revolution in energy storage
VINCI Energies’ viewpoint comes from working across and hearing the views of industrial, generating and utilities customers, integrating some of the most efficient energy networks of the UK.
The truth is that there are many incentives for industry to invest in electricity storage now and relatively few regulatory concerns. Many large manufacturers have already invested in renewables and energy management technologies for reasons of cost control and sustainability. Discussions of demand-side response have increased awareness of the arbitrage opportunities from reducing power purchasing at peak times.
Storage offers the opportunity to increase returns from these existing investments – and profit is a great motivator. There is also the fact that industry likes secure, affordable and clean energy, all of which is enhanced by electricity storage capacity. Conversely for the grid, there is a fast evolving regulatory environment and many more external variables over long-term pay back over any investment.
Going forward, moves towards half-hourly energy pricing will only increase the focus on costs and opportunities for avoiding peak pricing. We’re also going to see an increasing appetite for energy efficiency and extra power capacity in our commercial sectors. And that’s on top of the trend towards industrial micro grids, uptake of ever more cost efficient renewable assets and demand-side response.
Industry leading the way
So whilst VINCI Energies applauds the focus on storage across all sectors, we do think that the role of industry deserves more attention. Industry can take the lead without waiting for the perfect policy and regulatory framework, because it can make money in the here and now. Whilst some might fear first-mover risk, if returns exceed other plant investments it makes sense to do it now. Companies that already have energy efficiency, renewables capacity and smart power systems in play should be looking to storage to maximise the benefits these investments provide.
At VINCI Energies, we have a clear view of the challenges faced by electricity storage across the UK and Europe. Smart factories, smart cities and decentralised energy production are arriving in the here and now, not a distant future. A clear vision from policymakers and regulators is important. However, we think industry is already well places to step up and take the lead in delivering innovative solutions that transform electricity networks. Just as it has done before.
18/04/2017
