Mr Eamonn Boland, Baringa Partners
The GB Power Market is in a period of transition. The existing infrastructure of large thermal plant connected to high voltage transmission networks is steadily being replaced by small scale intermittent wind and solar generation, connected at lower voltage levels. This creates a unique set of challenges for the system operator (National Grid), who will increasingly need to utilise flexible generation and storage assets through their balancing service provisions to manage the level of intermittent generation on the network.
Large pumped storage hydro stations and spinning thermal plant have been the stalwarts of the system operator historically. Responding dynamically within seconds, these units continue to manage real time supply and demand imbalances on the system, ensuring frequency limits are met and the lights in GB stay on.
It is these real time balancing services markets that are the first entry point for new flexible technologies, be they gas reciprocating engines, demand side response or electrochemical storage (storage). In the case of storage, it has been difficult for storage developers to build a robust business case in the existing short term (1 year) frequency response products thus far. The competition with incumbent generators and the prohibitive battery costs have to date limited the potential of new entrant storage to a few niche and proof of concept applications.
Acknowledging this, National Grid introduced a new Enhanced Frequency Response product in late 2015, differentiating the capability of storage from the incumbents by requiring a sub 1 second response time. These contracts, which are potentially up to 4 years in duration, remove many of the barriers to entry that have prohibited storage developers thus far. This new product, coupled with rapidly decreasing battery cell costs, has resulted in over 800 MW of electrochemical storage pre-qualifying for the E-FR product, with much more capacity understood to be in various stages of development.
Baringa has worked extensively with new entrant storage developers, helping them build enduring and financeable business cases for what is still a largely unknown technology in very niche and opaque markets. We have assisted the incumbent operators in these balancing services markets to understand the potential for new entrant storage competition and the risk to their core business. And we have worked with DNOs, exploring the benefits of storage connected on their distribution networks.
It is the commercial opportunity for new entry storage in GB, the likely roles of battery storage in today’s market (for the market design that exists today) and whether the entry signals given to new entrant storage are aligned to the wider system benefits that we would discuss. We would reference our public client work where possible.
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