A panel of experts has come to the conclusion that market mechanisms in the energy sector must be adjusted with the aim of supporting long-duration energy storage, as current frameworks have found it hard to incentivize these technologies. The experts debated the policy outlook for long-duration storage during the 2021 Energy Storage Summit, which was organized by Solar Media.
Robert Hull, the energy advisory managing director at Riverswan, called attention to how revenue-generating mechanisms weren’t supportive of long-duration, energy-storage technologies, despite the support of overall policies. He noted that nearly all of the 4GW long-duration, energy-storage assets in the United Kingdom were built after the energy market in the UK was privatized. Hull explained that the lack of market activity for long-duration energy storage came against inventive developments for other technologies, such as the Li-ion batteries.
Hull also observed that in the UK market, frameworks such as the Capacity Market, which is utilized in addressing seasonal generation capacity margins, and the Balancing Mechanism, which is used to balance power demand and supply by the National Grid ESO, had proven to be fruitful ground for asset operators to make more revenue. He suggested that modifications be made to current mechanisms in the long-term, renewable, energy-storage market because this would enable the market to develop while also giving investors confidence to invest in the market.
This view was seconded by Swanbarton’s managing director Anthony Price who stated that while some adjustments to the energy market in the UK had allowed for the inclusion of renewable energy assets, the same had not been done for the long-term, renewable, energy-storage market. He stated that a possible solution to this would be to modernize the Capacity Market in an attempt to make it more relevant to the power system’s constant evolving needs. Currently, the Capacity Market auctions for the availability of generation capacity during the winter season in the event of an increase in demand or other issues.
Price noted that this didn’t place value on any asset’s intrinsic flexibility, despite placing value on the generation possibility of energy infrastructure. He explained that a Capacity Market adjustment that reflected the potential of any storage asset, and in particular that of long-duration energy storage, to not only charge but also discharge from the grid when needed, would make the Capacity Market mechanism more pertinent to a power system transitioning towards renewable net-zero status.
Price added that an alternative to this would be to escalate the carbon policy, which would allow for cost competition between fossil-fuel-fired generators and long-duration, energy-storage technologies. Hopefully, companies such as StorEn Technologies Inc. will come up with products that are so functional and competitively priced that the market will have no option but to increase its uptake of those long-term, energy-storage solutions.
NOTE TO INVESTORS: The latest news and updates relating to StorEn Technologies Inc. are available in the company’s newsroom at https://ibn.fm/StorEn
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