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New Govt Rules May Cripple New Battery Storage Projects

December 7, 2017

By Paul Homewood

 

It looks like the government has finally woken up to the inconvenient realities about energy storage.

From PEI:

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The UK has announced changes to its capacity market auctions that could significantly reduce the number of new energy storage projects able to participate.

The changes, announced today by the Department for Business, Energy, and Industrial Strategy (BEIS), would cut de-rating of battery projects by 80 per cent in upcoming auctions. As a result, participating in the auction could become unprofitable for short-duration battery projects.

 

The de-rating factor is a measure of the expected availability of a storage installation in the event of a so-called System Stress Event. These events could potentially last longer than a given battery’s capacity, especially if the battery was not fully charged at the start of the event.

In its response to a consultation opened in July, BEIS said energy storage projects will now be split into different classes that reflect the amount of time that they can generate at full capacity without recharging, measured in 30-minute intervals.

The previous universal de-rating factor of 96 per cent is now to drop as low as 18 per cent for batteries with a 30-minute duration, with an increase for each added 30 minutes.

Storage projects that can generate for over four hours will still receive the 96 per cent de-rating.

BEIS said the proposed change would ensure that storage capacity is remunerated appropriately for its contribution to security of supply and reduce the risk of insufficient capacity being secured to meet its reliability standard, which is three hours of expected loss of load per capacity year.

The changes will be applied as early as February’s scheduled auction.

Some sector analysts said the changes could significantly impact the UK’s energy storage sector as a large proportion of projects under development have a duration of below 30 minutes.

Frank Gordon, policy manager with the Renewable Energy Association (REA), said the changes were “slightly less drastic than those first proposed but could make it harder for a number of battery storage projects to compete”.

“The timing of these changes is our main criticism however,” he added. “As they are being applied in the midst of an on-going auction process it is akin to changing the rules of a football match at half-time.”

Flexible power firm UK Power Reserve, which announced this week that it has pre-qualified 1 GW of new battery energy storage and gas-fired power projects ahead of February’s auction, said it “accept[s] and understand[s] the government’s decision to de-rate battery storage ahead of the Capacity Market auction in February next year.

“We agree with the conclusions from BEIS that de-rating factors should reflect technology duration, and believe that this is in the best interests of the market and the consumer.

“This decision provides the incentive for developers to build the higher quality, longer duration batteries that can help secure the UK’s electricity supply when it is threatened during a stress event,” the firm added.

In its statement, BEIS acknowledged concerns that the changes could affect the business case for storage projects, particularly batteries, “and so appear contrary to the government’s position on storage as set out in its Smart Systems and Flexibility Plan”.

The department said its review of the auction rules was prompted by “(a) emerging evidence that market signals were driving the deployment of limited duration batteries that could generate continuously for a maximum of 30-60 minutes, and (b) initial analysis from National Grid that suggested that the duration of stress events may frequently exceed this.

“This raised concerns regarding the potential for storage to be over-rewarded in the Capacity Market relative to its ability to contribute capacity during longer stress events, which in turn could lead to a reduction in security of supply.”

http://www.powerengineeringint.com/articles/2017/12/uk-capacity-auction-changes-shake-energy-storage-sector.html

 

I have long been complaining about the obsession with MW capacity, rather than how long the energy can be supplied for.

It is nonsensical that battery storage projects should be paid the same as proper generators for stand by capacity, if they can only supply for a half an hour or so.

I would argue that even four hours is woefully short of what is needed, as the grid becomes more and more reliant on renewables. It may be enough to cover peak demands during the day, but the Capacity Mechanism is designed to provide enough capacity to last all day, and even longer.

It is interesting that they say a large proportion of projects under development have a duration of below 30 minutes. This confirms my worst suspicions.

Presumably the only way to get around this problem for the projects concerned is to build many, many more battery units (or reduce the claimed capacity accordingly, which is what the new de-rating rules effectively do. Either way, the projects are unlikely to be economically viable.

I must admit, I do have a certain amount of sympathy for any projects already committed to. It is an issue that the government should really have got to grips at the very start.

Instead they seem to have looked at energy storage with starry eyes, imagining it would solve all of the problems with intermittent renewables at the flick of a switch.

 

There is one other issue.

Some of the Capacity Auction will also go to Demand Side Response (DSR), under which certain consumers agree to stop using electricity. But the question is the same as with batteries – how long for?

Tesco may be perfectly happy switching their fridges off for half an hour, but they certainly won’t for a whole day.

There is the need for a lot more clarity here from the government.

32 Comments
  1. Harry Passfield permalink
    December 7, 2017 10:25 am

    A power station – of whatever type – should be measured based on the continuous level of power that it can deliver. If the power station happens to be a wind-farm or a solar farm and the owners claim it can power (cough) 30,000 homes the regulator should insist that it make a verifiable claim to how many MWhrs it will deliver. It should then be responsible for delivering that amount of energy no matter what the wind or sun is doing. If that means they have to provide their own back-up, so be it. These ‘power stations’ have been getting a free ride from the legacy generators for too long.

    • Gerry, England permalink
      December 7, 2017 1:36 pm

      Absolutely correct.

  2. martinbrumby permalink
    December 7, 2017 11:01 am

    Actually, it isn’t clarity that is wanted. It is basic common sense.
    We have had a quarter century of arrant, obviously incompetent, virtue-signalling buffoonery from the denizens of Westminster and Brussels.
    And sheer fraud from the promoters of ruinable energy.
    Few digns

  3. martinbrumby permalink
    December 7, 2017 11:02 am

    Few signs of any significant engineering thought being brought to bear.

  4. Joe Public permalink
    December 7, 2017 11:15 am

    Paging Elon Musk ……. Mr Musk …..

  5. Allan Griffiths permalink
    December 7, 2017 11:24 am

    Does any of this impact the economics of domestic battery systems attached to roof mounted solar PV panels? I agree totally with Harry Passfield’s comment about how power sources are rated. It shouldn’t be beyond the wit of man (even those in Westminster) to devise a measurement which links energy output to the length of time over which the power can be delivered. Simply referring to “installed capacity” is a cynical deception which benefits nobody other than the subsidy recipients.

    • Gamecock permalink
      December 8, 2017 1:06 pm

      Yes, capacity is in the weather, not the equipment.

  6. Ben Vorlich permalink
    December 7, 2017 11:50 am

    In the UK the most reliable weather forecast for tomorrow morning is that the weather conditions will be the same as this afternoon. Therefore any storage system should be able to cover the loss of a renewable for at least 36 hours, but 48 hours should be the governments requirement assuming that they are still going down the renewable blind alley.

    Otherwise it’s Private Frazer time.

  7. December 7, 2017 11:51 am

    I am in the middle of writing a submission for an appeal into a joint battery storage and diesel generator STOR proposal. The batteries, 2MW capacity and 2MWh energy storage (when new) were originally proposed for energy balancing services, but after planning permission was refused, for the appeal the batteries are now proposed to be used for ‘dynamic frequency response’. Either way, the consumer will pay for this very inefficient use of batteries and STOR. One other thing is also evident. DGs for STOR and batteries for whatever purpose increase CO2 emissions compared to the same services provided by a part-loaded CCGT.

    • Graeme No.3 permalink
      December 7, 2017 9:06 pm

      Phillip,
      in South Australia and Victoria, where they have been dynamiting shut down coal fired power stations, large scale installations of diesel generators are in vogue (guilty politicians suddenly and belatedly realising that blackouts lose votes) so diesel is now an “honoury renewable”.

  8. NeilC permalink
    December 7, 2017 12:37 pm

    “….in the event of a so-called System Stress Event.” They mean, demand exceeding supply.

    For a modern developed country to have electricity black-outs and/or asking users to switch off is dreadful.

    We need a secure energy market without government intervention for inexpensive reliable energy. Simple.

    • Nigel S permalink
      December 7, 2017 4:07 pm

      ‘the war situation has developed not necessarily to Japan’s advantage…’

  9. December 7, 2017 1:12 pm

    Batteries only make sense as sub-systems of diesel/gas peaking generators, providing power for a short period before the burning starts. Rather like cars in fact, in which batteries only make sense for starting them.

  10. Dave Ward permalink
    December 7, 2017 1:16 pm

    “Tesco may be perfectly happy switching their fridges off for half an hour, but they certainly won’t for a whole day”

    Pay them enough and I’ll bet they would be happy to fire up the backup genset (assuming they actually have one?). Oh, I forgot, they are (probably) already signed up to act as STOR providers…

    • Graeme No.3 permalink
      December 7, 2017 9:10 pm

      Dave Ward,
      in SA every time a supermarket’s cold store gets above 4℃ for even a short time, they have to dump ALL stock. Consequently all our local supermarkets have diesel generators, as does our (solar panel festooned) petrol station and 3 at least of the 4 cafés in town.

  11. Gerry, England permalink
    December 7, 2017 1:40 pm

    Unlike Paul, I have no sympathy whatever for those projects that are already committed. When you sup with the devil use a long spoon. If your business is based on screwing taxpayers then you will always be vulnerable to the rules being changed.

    i am very interested in their batteries that ‘generate’ energy. Anyone know where you can get one? I wonder what fuel they use?

  12. It doesn't add up... permalink
    December 7, 2017 2:16 pm

    These batteries were never meant to provide capacity in anything other than the very short term, so called Enhanced Frequency Response market. That is designed to replace some of the grid inertia automatic response that comes with traditional generators that handle the fluctuations in demand by using the natural flywheel energy of the generators, with a secondary response in terms of adjusting steam flow and fuel burn rates to restore the generator to the right speed and generation frequency. There are two reasons to experiment in this market: firstly, as we get periods where intermittent sources supply a large share of the total generation there is less available natural grid inertia, and secondly, intermittent sources tend to generate fluctuating amounts of power with gusts of wind or clouds passing over a solar farm. It is incidentally the main purpose of the Musk battery in South Australia – stabilising the output of the nearby wind farms, for which 70MW out of 100MW has been reserved.

    The standard for EFR requires a battery to maintain 100% power rating in discharge or charge mode for 15 minutes, and since it must cover both, it will target being at 50% charge and have 30 minute duration. The idea in part is that inside 15 minutes, other capacity can be spun up. Winning auction bids were as low as 7/MW/hour of availability, i.e. an income of £61,320/MW per year: no brownie points for extra storage. More detail on EFR from here:

    https://www.nationalgrid.com/uk/electricity/balancing-services/frequency-response-services/enhanced-frequency-response-efr?technical-requirements

    Perhaps if the government is now backing off from them, National Grid is finding that these battery systems aren’t as helpful as they had hoped in this role. The idea that these systems could get additional revenue streams from the capacity market is at first sight a little odd, given that they are supposed to be handling EFR. In practice, most EFR fluctuations only last a matter of seconds.

    Perhaps the government has different concerns: two hours is rather a long time to spin up reserve generating capacity. However, if you find that you are competing with the French for power supplies via the various interconnectors, you may be interested in something a little more long lasting that half an hour – and you may also be interested in something with some serious capacity grunt, like added CCGT capacity. It has been very noticeable that once again the UK has been supplying France a full 2GW most of the time to cover for their shut down nuclear plant. What happens when we get a really cold spell and demand soars we will perhaps see quite soon.

  13. thebushveldperspective permalink
    December 7, 2017 2:37 pm

    The derating factors still do not go so far as to attribute the same value to 1 joule of energy from a 30 minute battery as a 4 hour one. Why should a battery that conks out after 30 minutes be any better than one that can go for 4 hours. Even if you run the 30 minute battery at 1/8th its max-rated power and both therefore run for 4 hours you still get paid more for the same 1 MWh of energy from the 30 minute battery than the 4 hour one.

    Thus owners of 30-minute lithium ion batteries should not be complaining but they should thank their lucky stars that they they are not getting a derating of 12% compared with the 96% of a 4 hour Vanadium Flow Battery.

    • Nigel S permalink
      December 7, 2017 3:56 pm

      Vrystaat!

  14. Nigel S permalink
    December 7, 2017 3:52 pm

    I hope this damages further the prospects of the 900 acre solar ‘farm’ proposed to destroy Graveney Marshes and its internationally significant migrating birdlife. Went to a ‘community consultation’ yesterday and was threatened with a 1 metre rise in sea level by 2100 (when I told them I live next to the creek) and then a nuclear power station causing a fall in house prices (the fifth horseman!) when I resisted (said I’d be fine with the proper power station). Interesting how quickly the temperature rose when I employed some of the invaluable research gleaned here!

    https://www.clevehillsolar.com/

    • Nigel S permalink
      December 7, 2017 6:49 pm

      After a bit more research I realise that these apocalyptic threats were from the local Green candidate (also a psychology prof.), so not too surprising in retrospect. He quoted the $5 trillion fossil fuel subsidy myth so I’ve sent him the excellent analysis from 1st June 2017.

  15. John W permalink
    December 7, 2017 5:50 pm

    tyoical of government that does not understand basic arithmatic. Reminds me of the article in today’s Telegraph about the mess the government has made over taxing disel cars, thus deterring new clean diesels being purchsed. In the middle of that aticle it says “the government just does not get it and is in dangerof becoming part of the rproblem.” Absolutely !

  16. December 7, 2017 6:08 pm

    Reblogged this on Wolsten and commented:
    It does appear that the UK government is starting to see sense, hopefully more to follow. Repeal the Climate Change Act?

    • Chilli permalink
      December 7, 2017 9:15 pm

      Definitely seems to be a quiet rowing back from some of the more extreme green lunacy while ministers still pay lip service to green shibboleths. (They don’t want to alienate the gullible green youth vote – fresh from their brainwashing at school). But £Billions have been wasted and unfortunately will go on being wasted for many decades to come.

  17. markl permalink
    December 7, 2017 6:32 pm

    After throwing literally tons of money at battery research since being told it would “fix” the intermittent power of wind and solar energy generation they are just now waking up to reality?

  18. Athelstan permalink
    December 7, 2017 6:56 pm

    BEIS = DECC = not fit for aught.

    Paul said: “I must admit, I do have a certain amount of sympathy for any projects already committed to.”

    Not me, these green freaks/corporate blob are playing the taxpayer like a fiddle.

    Paul closed with this:

    “There is the need for a lot more clarity here from the government.”

    Clarity, there are no bloody lights on!

    The green woodentops in the executive are led by. We are run by a monster bureaucracy which is out of control, full of green snowflakes and bod’s who just want a quiet life, can’t add up for toffee, cannot be bothered, doing power point presentatons all day, unionized beyond insanity and not to forget COMMON PURPOSE, still taking their direktives from offices in Brussels, Strasbourg, Luxetania and Berlin (ref; Energiewende – a total fiasco).

    “Clarity” they don’t know what year it is and want to take us back three Centuries.

    • A C Osborn permalink
      December 7, 2017 9:44 pm

      Are you by any chance also an angry grumpy old git like me?

  19. Bitter&twisted permalink
    December 7, 2017 7:29 pm

    A minor outbreak of common sense?

  20. CheshireRed permalink
    December 7, 2017 9:48 pm

    Potentially explosive judgement in the US. Previously withheld Climategate emails to be released!

    https://www.thegwpf.com/arizona-supreme-court-orders-release-of-climategate-related-emails/

  21. December 8, 2017 12:49 pm

    What’s a 49.5MW battery ?
    Yorkshire Post reported
    “Energy storage system developer Harmony Energy Storage has secured permission from East Riding of Yorkshire Council’s Planning Committee for the construction of a 49.5MW battery storage facility.”

    Re-reported here
    https://www.insidermedia.com/insider/yorkshire/battery-storage-facility-gains-planning-approval

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