How energy storage will fit into the electricity markets of the future

A new policy document applies lessons from the food industry to the energy sector. Photo by Shane Rounce on Unsplash.

A new policy document applies lessons from the food industry to the energy sector. Photo by Shane Rounce on Unsplash.

By Jason Deign

Energy storage could become as ubiquitous as electricity itself in an idealised market envisaged by policy advisers in the UK.

Laura Sandys, one of the authors of a report called ReShaping Regulation, said that in the future “storage is going to happen all the way through” the energy system, with different stores being called into play by a central optimiser.

The optimiser, which could be an energy utility or equally a data services provider such as Google, would control diverse storage assets to match supply and demand in a stable, cost-effective and carbon-free way.

In future, says the report, “there will be multiple consumer archetypes, masses of data, sophisticated analytics and the potential—for example, through storage and smart devices—to divorce energy consumption from purchase.”

The report, co-authored by Prof Richard Green and Dr Jeff Hardy from Imperial College London in the UK, looked at what an ideal decarbonised electricity system might look like. 

Optimising all energy assets

It recommended four principles for lawmakers to follow: having a single consumer regulator, optimising all energy assets, opening markets to more players and shifting focus from security of supply to cyber and data security.

“Consumers will not need specific energy regulation to protect them as energy will be an almost invisible product bundled in with other home services from Alexa, electric car providers and local authorities,” said a press announcement.

“Utility companies will need to transform to avoid being superseded by new service providers and data companies who [sic] will be better placed to serve consumers, and more effective at optimising our future electricity system.”

The report takes its inspiration from other industries, such as the food sector, which the authors believe do a better job than the energy industry at optimising supply.

In the food sector, for example, procurement logistics are largely automated and take care of factors such as seasonality, supply chain shortages and perishability. 

“We have something called a fridge”

“There are more variables in the food sector than there are in the energy sector,” said Sandys. “We then have something called a fridge, which holds your food and is similar to a battery for storage.”

Residential batteries would be just one of many storage assets in the study’s future scenario, though. Sandys said some domestic appliance manufacturers were already building battery storage into devices such as TVs.

For now, this storage is mainly to keep units working in the event of a power failure. However, in future the batteries could be harnessed by smart home networks to increase use of residential solar power or reduce peak energy use.

“I think storage is going to be very, very, very big,” Sandys said.

Similarly, smarter systems may drastically change the way power is used, for example only carrying out tasks such as fridge defrosting at times when there is an oversupply of renewable energy on the grid.  

Producing less energy for the same demand

“Decarbonisation isn’t just about generation assets,” said Sandys. “It’s actually about producing less energy for the same amount of demand. The electricity sector is only 46% productive, which is shocking.

“There are very few incentives to improve the productivity of the system.”

Getting rid of current inefficiencies could free up cash for investment in long-term, flexible sources of generation, she said.

The report was published by Sandys’ firm, Challenging Ideas, along with Imperial College Business School, the Grantham Institute for Climate Change and the Environment, the Energy Systems Catapult and UK Power Networks.

Sandys, who is a member of the UK’s Advisory Panel on the Cost of Energy Review, said the report had been well received by the government and regulators such as Ofgem and Ofwat. 

The best paths from today’s energy system

The authors are due to deliver a follow-up study next year, looking at the best paths to get from today’s energy system to the one they advocate.

Charmaine Coutinho, principal analyst at Delta Energy & Environment (Delta-ee), welcomed the report.

“The emphasis on putting the customer at the heart of a changing energy system breaks the mould of the traditional energy industry approach,” she said.

“This won’t be easy to achieve, but Delta-ee’s research identifies lots of customer-centric innovation already happening in the market.”

Shifting the UK’s regulatory focus, as proposed in the report, would “certainly support” innovation and new market entrants, she said.

“A flexible, optimised energy system could benefit all,” said Coutinho, “and the report rightly asks: where really is the risk for consumers?”

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