By BEN COOK
- Lack of clear policy support is stunting growth of long duration energy storage
- Now is the time to introduce targets for long duration storage capacity and procurement
- Long Duration Energy Storage Council says there are ‘well-tested’ policies that could be implemented
Long duration energy storage – that is, technologies that can store power from half a day to a week – have the potential to play a major role in the development of a net zero world, but it’s a technology that society has, so far, failed to capitalise on.
There are a number of factors involved – however, perhaps the main problem is that governments are failing to provide sufficient policy support. Indeed, “uncertainty in the policy landscape” has been highlighted by the Long Duration Energy Storage Council (LDES Council) as one of the key barriers to the greater commercialisation of long duration storage.
‘Elevated risk perception’ is major barrier
The LDES Council – which was launched a year ago and counts technology companies like Google and Microsoft among its members – has said that “comprehensive policy support” would help long duration storage overcome many of the barriers it faces. These barriers include imprecise regulatory definitions as an asset class, high initial project costs, elevated customer and investor perceptions of risk, limited project revenue certainty, and physical infrastructure constraints.
So, what would “comprehensive policy support” look like?
In a report entitled ‘The journey to net-zero: An action plan to unlock a secure net zero power system’, the LDES Council argued that there were a number of “well-tested” policies that could be considered. They include:
- The setting of storage capacity targets and procurement targets, as well as the incorporation of energy storage into grid planning efforts will be key in terms of providing long-term market signals. In addition, carbon pricing and removal of fossil fuel subsidies will level the playing field versus “conventional forms of fossil-fired flexibility”.
- Mechanisms that both enhance revenues and provide long-term revenue certainty such as contracts for difference, caps & floors, hourly energy attribute certificates, power purchase agreements, and the regulated asset base. The LDES council has highlighted revenue mechanisms as being “most effective” in improving project financial viability for customers and investors.
- Direct technology support and enabling measures also have the potential to unlock growth – such measures could take the form of public-private partnerships, grants and incentives, and targeted tenders to accelerate early projects and their required infrastructure. In addition, narrow definitions of storage in RFPs, as well as standards and rules will need to be expanded and be more flexible to include long duration energy storage.
It’s also important that the approach to building markets for long duration energy storage includes policies that foster adoption of the technology in both the short term and longer term.
Where are the market pricing signals?
The industry recognises that the type and level of support – as well as the kind of policies that are introduced – will evolve as the long duration energy storage sector matures. In this respect, the LDES Council has highlighted examples such as the decline of rooftop photovoltaic feed-in-tariff prices in Germany as well as strike prices in UK offshore wind contract for difference auctions.
Yet, the belief in the long duration energy storage community is that, while frameworks for the operation of the market are important, what is vital is that there are well-developed pricing signals in balancing, intraday and day ahead markets as this will facilitate the effective participation of storage assets.
Savings for society outweigh costs
It’s also important to stress that the “societal savings”, as the LDES Council describes them, generated by large scale long duration energy storage deployment will outweigh the cost of implementing friendly policies. This is because the increase in utilisation of existing renewable generation resources reduces the investment required in standby peaking power capacity or additional power grid expansion.
3 steps you can take to increase long duration storage deployment
How can each local area go about increasing the deployment of long duration energy storage? There are three key steps:
- Firstly, you need to form of a baseline understanding regarding what flexibility is needed to reliably meet the goals of the energy system.
- Secondly, you need to understand what technology is available locally as well as the requirements of energy system stakeholders.
- Finally, you need to ensure that, after policies have been introduced, those policies are regularly reviewed to make sure they continue to be effective as the market develops and new technologies come online.
It’s vital that we act now on this issue.
Why? Because policies can take a considerable amount of time to implement and, as the LDES Council has highlighted “capital-intensive industries can be slow to scale”.
Introducing policies that help to reduce the costs associated with long duration energy storage will do much to accelerate the energy transition.