Report: Policy reforms could spark 20-fold expansion in UK battery storage sector

Battery storage capacity could grow 20-fold between 2016 and 2021, according to a new report from the All-Party Parliamentary Group (APPG) on Energy Storage.

Released yesterday at the group’s Winter Parliamentary Reception in the House of Commons, the report estimates that relatively simple policy changes could see the amount of battery storage capacity in the UK grow from 0.6GW in 2016 to 12GW by the end of 2021.

The report – entitled Batteries, Exports, and Energy Security: The deployment of 12GW of battery storage by the end of 2021 is achievable and can support post-Brexit growth – was authored by the Renewable Energy Association. It analyses a range of battery storage technologies, including grid-scale installations at wind and solar farms, storage projects linked to electric vehicle charge points, and behind the meter storage used by homes and businesses.

It estimates that based on cost reduction projections and anticipated government reforms, such as promised battery R&D funding and Ofgem’s review of smart, flexible grids, the most likely ‘medium deployment’ scenario for the sector would see 8GW of capacity installed by 2021.

But it warns that without promised government reforms deployment could be restricted to just 1.7GW and argues there are compelling economic and energy security reasons for delivering a more supportive policy environment that allows for the 12GW projection to be borne out.

Conservative MP and chair of the APPG on Energy Storage, Peter Aldous, said the more ambitious deployment rate for the sector was entirely feasible. “Significant battery storage deployment is possible if the government keeps to the targets and timelines it has already set for encouraging electricity system flexibility,” he said. “Twelve Gigawatts of battery storage would improve the UK’s energy security, would help us maximise our energy self-sufficiency, and empower consumers across the country as they are more able to manage their bills and take personal action to reduce carbon emissions.”

He added that the growth of the battery storage sector would also help meet the government’s wider economic goals. “Such a significant amount of battery storage deployment would also support the government’s ambitions to develop the UK into a battery manufacturing powerhouse, evidenced in the Faraday Challenge funding announcements last week. Battery manufacturing would create new jobs and exportable expertise post-Brexit.”

The paper sets out proposals for a series of reforms that could help ensure the 12GW prediction is realised, including establishing a clear legal definition of energy storage so it does not fall between generation and demand categories; reforming network charging, ancillary services, the capacity market, and smart tariffs to better account for energy storage; and removing barriers to the co-location of renewables and energy storage sites.

It also recommended that energy storage be given a clear role in any energy sector deal that is delivered through the government’s new Industrial Strategy.

Dr Nina Skorupska, chief executive of the REA, said there was a big opportunity for the UK to become a world leader in battery storage infrastructure, but warned the government needed to avoid the mistakes made during the rapid roll out of solar technologies earlier this decade and deliver a stable and ambitious policy environment.

“The UK government and many in the industry significantly underestimated how cheap and popular solar PV was to become,” she said in a statement. “Analysis at the start of the decade by the energy regulator, Ofgem, expected between 2GW and 7GW of solar to be deployed in the UK by 2030, instead over 12GW was deployed by the end of 2016. The technology and deployment patterns for battery storage and solar PV are similar, and this report is intended to drive big thinking and put the UK on the front foot, rather than react after-the-fact.”

She also warned that despite welcome R&D support for the sector from the government, some recent policy changes could serve to hamper its progress. “Key recent changes, such as Ofgem’s ’embedded benefits’ decision to reduce payments to smaller, decentralised power generators in addition to any potential future levies that might be imposed on decentralised generation in homes and businesses, could reduce the pace of future deployment,” she said.

The report came in the same week as a new 50MW solar farm plus storage site in Anglesey, Wales was granted planning approval.

Renewables developers are increasingly optimistic that the emergence of more cost-effective battery storage technologies and the falling cost of solar and wind technologies could allow them to deliver new solar and wind farms with little or no subsidy.