Deep dive into Energy Storage in the UK

Nexa Advisory commissioned Swanbarton Limited, UK-based specialists in electricity storage and microgrids to undertake an assessment of the current environment for electricity storage and batteries in particular, in the UK. 

The Great Britain (GB) Electricity System Operator (ESO) launched a tender for the first battery-specific system support service in 2016, for Enhanced Frequency Response (EFR).  This tender supported the deployment of 200 MW of batteries. 

Today the GB system has 8 GW of storage, comprising 2.9 GW of legacy pumped Hydro Energy Storage (PHES) and 3.1 GW of batteries.  This compares to the National Electricity Market’s 1.6 GW of PHES and 1.4 GW of batteries. 

While batteries can participate in the UK Capacity Market, they are significantly derated to close 10 % of their capacity to account for the finite state of charge.  Additionally, the UK Capacity Market favours existing fossil fuel generation, with gas securing nearly 70 % of available capacity in the most recent auction and batteries securing just 3 %.  Coal is excluded from participation given the legislated requirement in the UK for coal generation to be out of the system by 2025. 

The UK government has focused on R&D funding for long-duration energy storage.  Growth in batteries in the GB power system is entirely driven by the creation of new services markets. 

Batteries have made significant inroads in the ancillary services markets. The GB ESO has focused on developing the services needed to support a zero-carbon electricity system, undertaking strategic operability assessments to determine physical system needs.  New services include a range of fast acting dynamic services and quick reserve. 

Batteries can also operate in the balancing mechanism and energy market, with 49 % of revenue drawn from the dynamic services, 39 % from the wholesale market and 11 % from the balancing mechanism. 

Quick reserve is a new service and revenues are not yet established. 

However, battery revenues are volatile with specialist battery management companies maximising battery revenue by moving batteries between markets and mechanisms. 

See full report Electricity Storage Market Opportunities in the UK – Swanbarton Report – v2.0 (1)