Wide ranging reforms for energy storage operators will increase the flexibility of the UK’s energy system and reduce costs to customers, according to a new strategy published by the government last week. The policy paper, “upgrading our energy system” outlines plans to encourage the use of innovative technologies, which includes the removal of barriers to uptake. For example, at present battery storage is sometimes treated as a generator and at other times as a consumer of energy, which increases the costs it faces. Ofgem intends to address this by defining the status of storage clearly in legislation. In addition, the requirement for battery storage to pay green levies will be removed. These changes are expected to be in place by 2019.
The energy system is evolving, with increasing levels of low-carbon generation being located near homes and businesses. This contrasts with the traditional centralised system that the energy network was originally designed to handle. In addition, low-carbon generation is intermittent, by its nature, because output is reliant on weather conditions and the time of day. This presents a challenge to the National Grid which must keep the system in balance. The intention is that as the cost of battery storage falls, increased usage will contributeto solving the problem of intermittency and will help to balance the network. This avoids or defers the need for network reinforcement, thereby controlling network costs which are passed on to consumers. While changes to the regulatory framework will play its part, the government has also put aside funding of £70m for smart innovation. This sum is in addition to £246m from the Industrial Strategy Challenge Fund to kick-start the development of disruptive technologies. The full plan to upgrade the energy system covers a range of areas such as the increased use of Demand Side Response. Notably, the report refers to the strategy forming part of the “forthcoming clean growth plan”, which will outline how the government plans to meet carbon reduction targets to 2050. This provides confidence that the longawaited direction on a long-term emission reduction policy will be published in a few months’ time.
