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European Energy Giants Join Forces to Overcome Barriers to Low-Cost, Low-Carbon Energy System

Renewable energy continues to gain steam, shedding its niche status and moving towards the mainstream, but further progress is being impeded by barriers related to regulation and storage.

Renewable energy continues to gain steam, shedding its niche status and moving towards the mainstream, but further progress is being impeded by barriers related to regulation and storage. In an effort to drive investment and address key issues preventing a more effective transition to a low cost and low carbon energy system, Carbon Trust has launched the Energy Systems Innovation Platform (ESIP), a collaborative initiative that brings together prominent industry players, such as Centrica, DONG Energy, Scottish Power, Statoil and Wood Group to develop solutions to overcome barriers currently deterring investment in flexibility solutions such as energy storage.

Collectively, ESIP partners represent almost 50 percent of the electricity supply market in the UK and hold considerable renewable energy and conventional generation portfolios.

Solutions will be based on rigorous and transparent analysis and relate to issues such as regulation, lack of transparency in decision making and long-term business models necessary to encourage the right investments now to potentially save billions of pounds a year for consumers by 2030.

“There is now general consensus that the UK energy markets need to be revamped so we can embrace a flexible and more decentralized energy system. However, the fragmented nature of the energy market is driving fragmented decision making and many investments are led by technology, not market needs,” said Andrew Lever, Director of Innovation at Carbon Trust. “There is an urgent need for an open forum where the wider industry can collaborate to solve common issues in order to capitalize on recent storage innovation.”

The Energy Systems Innovation Platform aspires to fill this gap, putting in place regulatory mechanisms that will give investors the confidence to focus on the long term and foster new business models.

Last year, the Carbon Trust led a study with industry and government partners that identified that the UK could be saving up to £2.4 billion every year by 2030 if flexibility solutions such as energy storage were integrated into the UK electricity system to help balance the grid, improve the utilization of renewable energy assets and reduce or defer the need for costly grid reinforcements. In 2016, wind farms across the UK generated more electricity than coal power plants for the first time and the size of the opportunity for storage solutions to reduce system costs continues as the share of intermittent renewables rises. However, this opportunity can only be realized if all required industry stakeholders have viable business cases for investing into storage solutions.

In response to a current lack of viable business models for storage assets, EISP will concentrate on developing business models for applications for which storage enables significant cost reductions for the UK’s electricity system. Investigating use cases for energy storage which help to cost effectively integrate wind energy into the grid is a top priority for the initiative, ultimately allowing the UK to meet its decarbonization targets at a lower cost.

DONG Energy, a member of the newly formed EISP, has already leaped into action. The Danish energy company has announced plans to install a 2MW battery system at its existing Burbo Bank offshore wind farm, marking the first time an offshore wind farm has been integrated with a battery system to deliver frequency response to the grid, a mechanism used by National Grid to manage grid stability.

“The need for flexibility is expected to grow and as a low carbon leader, we’re keen to be part of the solution to make the energy system smarter. We already offer leading flexibility products to our business customers and now we’re focusing on enhancing what we offer on the generation side to help National Grid manage grid stability,” said Ole Kjems Sørensen.

“We’re excited to use battery technology to demonstrate this wind power and battery hybrid capability. With eight existing offshore wind farms in the UK and another four under construction, we expect to leverage further technology improvements and innovations and ensure that DONG Energy supports the stability of grid systems as generation capacity becomes cleaner and more sustainable.”

DONG Energy isn’t the only one dabbling in renewables storage. Initiatives across the US and Germany to transform decommissioned coal mines into power storage systems and a pilot project launched by Renault, Powervault and M&S Energy to trial used electric vehicle batteries in home energy storage units in the UK are other examples of the current work being done to boost the renewables sector.

The formation of ESIP builds on the Carbon Trust’s 2016 energy storage report. The report identified cost reduction potential of up to £2.4 billion per year for the UK’s electricity system from the deployment of energy storage by 2030.

“ESIP’s focus on developing viable business models for storage us cases aligned with system benefits is a vital piece of the puzzle which has not been looked at yet. ESIP works in an evidence-based way to address market failures while simultaneously identifying commercial opportunities for industry. This can help to overcome the ‘chicken and egg’ dilemma between market creation and industry deployment that often limits the uptake of promising new solutions,” said Nils Lehmann, ESIP Project Manager at Carbon Trust.

The Carbon Trust has designed ESIP to bring together relevant storage stakeholders from industry and government as members or in advisory roles. ESIP will focus on business models, regulatory barriers and feasible solutions. It plans to publish key results of this work at the end of the year.