Select Committee on Innovation, Universities, Science and Skills Written Evidence

Memorandum 24

Submission from Swanburton Limited



  1.  Energy storage has potential as an enabling technology to support the wider introduction of renewable technologies and for the development of intelligent power grids. The size and initial cost of large-scale demonstrations inhibits development in this area. The current regulatory regime does not favour such demonstrations by either established or new companies. A realistic level of commercial support is needed to secure the early implementation of large-scale energy storage projects using novel technologies.

  2.  The Japanese Government is supporting the widespread use of energy storage as a means of smoothing windpower output and so assisting their power industry to reach targets for renewable generation. Large-scale battery storage plants have been constructed and operated in Japan with initial capital funding support as part of the renewable programme. Similar support (but at a lower level) has been provided for projects in the USA and Australia.


  1.  "Energy storage" has been cited as an essential part of any energy network. To be precise, energy storage could refer to stocks of coal, oil, natural gas or even water in a reservoir as these are all parts of the energy chain. For convenience, this memorandum uses the term "energy storage" to mean the conversion of primary energy into some form of stored energy, so that it can be restored again at future stage. Most commonly, this is associated with electrical energy storage.

  2.  Electricity is an energy vector, but not the only one. Gas, Heat, compressed air and hydraulic power are others. Hydrogen is attracting considerable attention as a novel energy vector and some are proposing significant investment in hydrogen infrastructure (electrolysers, pipes, compression facilities, storage and fuel cells) as a future energy network.

  3.  Many electrical energy storage technologies are already well developed in terms of their technical performance. However their commercial introduction is somewhat slower that would be hoped.


  4.  The UK has taken a major role in the development of several electrical energy storage technologies. Members of universities, other research groups and industry will be able to comment on specific technologies. In general terms, the UK's pumped storage facility at Dinorwig, built by the CEGB was one of the best in class at the time of its construction. Its performance has recently been surpassed by other pumped storage plants overseas, such as Goldistahl in Germany. Over the past ten years, the UK has had leading roles in the development of other storage technologies such as flywheels, high temperature batteries and flow batteries. Lack of commercial follow-through has slowed or delayed progress in this area.

  5.  Electrical energy storage devices can be categorised in many ways, by size, by storage type or by application. In terms of their relevance to renewable generation technologies, it is likely that storage devices will be needed that have the following technical parameters:

    —    Small scale (5—50 kW, and two to eight hour storage) for use with domestic size micro generation from renewables.

    —    Medium scale (one to 10 MW, two to eight hours storage) for use by distribution companies, and renewable energy companies to defer network upgrades and/or modulate the output from renewable energy sources.

    —    Large scale (10—100 MW, up to eight hours storage) for use as network management, to provide ancillary services to the grid and for energy trading.

    —    Very large installations, such as pumped storage of 1,000 MW or more are considered unlikely due to lack of suitable sites in the UK.

  The status of commercialising energy storage technologies and reliability and carbon footprints are shown in the following simplified chart.

Figure 1


  6.  A range of possible storage technologies are under consideration. With the exception of the widespread use of the lead acid battery in un-interruptible power supplies, the others have not achieved any significant market penetration for use alongside renewable generation. This is mainly due to a range of commercial factors. Nevertheless, the UK continues to be represented by a number of companies with interests in advanced batteries (including flow batteries), capacitors and flywheels, but we have yet to see significant commercial development activitiy.

  7.  The capital costs of an energy storage device must include the storage medium itself, plus the costs of the equipment for energy conversion. So for a battery system, there must be an AC/DC power converter as well as the battery cells. With pumped hydro there are pumps and motor generators as well as the cost of the reservoirs and penstocks. The operational costs of the energy storage device include any maintenance of the system as well as the efficiency loss of the system.

  8.  In the British competitive electricity market, this means that there must be a price differential between the purchase price and the selling price of electricity sufficient to repay the efficiency loss, as well as the capital and other operating costs of the plant. Although there have been complaints about the high cost of electricity at peak times, this is a relatively rare occurrence and it does not happen frequently enough to justify substantial investment in bulk energy storage incurring the present expected capital costs. In other words, it is often cheaper to buy power from the market, than it is to store electricity for several hours.

  9.  The British regulatory regime (based on the EU model for "deregulation" of the power industries) also inhibits the commercial development of energy storage. Many network companies (Distribution Network Operators or DNO's) have shown interest in using energy storage devices as part of their network assets. Sited in areas where there are restricted distribution links, a large battery for example could be used as a means of connecting a new windfarm to an existing wire, as the battery would act as a buffer or warehouse, giving the network operator security of supply. However, because a DNO may not trade energy it cannot recover the true value of the asset. It would need to lease the asset from a third party so that it does not have to trade energy itself, which would be outside its licence obligations.

  10.  Significant research has been made into the potential benefit that energy storage can give to electricity networks. Storage can be used to provide reserve power, compensate for fluctuations from renewable generators such as wind turbines and manage supplies in the event of local or national dis-connections. By shifting demand to base load generation, storage can reduce the need for less efficient peaking plant.[28] Using storage instead of other generating sets can yield significant savings in power plant emissions.[29] Yet those involved in the marketing of large scale storage products are discouraged, because the market framework works against ownership and operation of energy storage. A network company is prevented from owning such assets and it is not able to remunerated by sales of energy and other services. On the other hand, for an energy sales company to profit from sales of energy form energy storage plants, they must rely on substantial price swings between peak and off peak prices, which, certainly in mainland Europe, is an anathema to those setting energy policy in Europe. So we have the situation where many organisations, such as network operators, energy traders and renewable energy generators would like to use energy storage but they are commercially dis-incentivised so to do.

  11.  Although many individuals in the wind power community claim that no network reinforcement is necessary to accommodate present levels of windpower generation, there is evidence to suggest that reinforcement will be necessary when levels of windpower generation exceed 20 or 25%.[30] I refer to this as the 20% transition point. Although not the only solution, energy storage can offer significant benefits. However, without a favourable regime to encourage the early adoption of distributed and flexible storage, there simply will not be the technologies or the installations to meet network requirements when the requirements become significant.

  12.  There are further disincentives to storage, especially for projects in the UK. Studies show that large storage plants (say 20-50 MW or more) could support the grid by providing modulating power and reserve power to deal with rapid fluctuations. However gaining connections to the network for projects of this size is a challenge, (as indeed it is for other large-scale renewable developers). A recent private study[31] identified only three suitable sites where connection would be possible in one of the DNO licensed areas in the south of England. Larger projects require connection to the higher voltage networks, such as 132 kV or 275 kV

  13.  Even where a site has been identified, the capital cost of the connection is high, connection fees have to be paid, and furthermore business rates may be due on the assets themselves. (Batteries that can be used in an un-interruptible power supply are rateable. In a study that is ongoing at the moment, the potential rating liability equals nearly one eighth of the plant's expected annual financial turnover. Add the cost of rent, maintenance and insurance and the uncertainty of income and the rates of return fall well below that expected in the power industry.


  14.  Although not high, in comparison to some countries such as France, Germany and Japan, the UK Government has been consistent in providing modest funds for research in a number of energy storage technologies.

  15.  At the early stage of development, universities, research organisation and industry are able to research and develop products, especially for devices that are targeted at the small scale. Support for development and demonstration at the medium and large scale has been somewhat less encouraging, probably for two reasons, (a) a lack of suitable projects and (b) the more significant scale of investment required for large-scale demonstration. The DTI has been supportive of energy storage R&D and has included energy storage in its technology programme. The DTI has also recognised the role of storage as an enabling technology in the networks of the future. However sizeable projects simply cannot be proposed and demonstrated within the very tight regulatory and commercial framework that exists in today's power industry unless there is a realistic level of commercial support for the project as exists for other renewable energy technologies.

  15.  The use of hydrogen as an energy vector has, in my view, attracted a disproportional level of funding. The role of hydrogen as a proxy for storage is misunderstood. Its economics are even more insecure than that of batteries.

  16.  The UK government has not been pro-active enough in promoting technology transfer at the MW scale demonstration level. Private companies have led the way in technology transfer from overseas of important technologies such as high temperature batteries, flow batteries and capacitors. Although some technologies can easily be transferred because they are so close to commercialisation, there is real benefit from participation in large-scale demonstrations which would bring benefit to the national power industry across all levels.

  17.  If the UK is to be ready to deploy advanced technologies such as energy storage when they are required, it is necessary to take action to encourage such investment now. The supply chain needs to build capacity and the existing power industry needs to be able to adopt the new technologies before the 20% transition point is reached.

  18.  Japan currently has about 1100 MW windpower generation and is committed to increasing this to 3000 MW by 2010. Progress is restricted by concerns about grid stability due to the fluctuating output of the wind farms, weak interconnections between local networks and the long distances between the wind farms and the areas of demand.

  19.  A 50 MW wind farm being developed at Rokkhashu in the Tohuko region of Japan is being integrated with a 30 MW NAS battery.[32] The local power company will not accept additional windpower onto its network if there is insufficient regulating reserve power available to secure the stability of the grid. The 30 MW 210 MWh battery will be used to provide either a constant power output or a smooth power output. This will be one of the largest batteries in the world. The Japanese government is providing support for this project in order to support Japan's quest of increasing its windpower resource. The battery and wind farm are under construction now and are expected to be operational by the end of 2007.

  20.  In the USA, there are several examples of MW size energy projects supported by funds from the US Department of Energy and State funds. These projects recognise the need for financial support in order to initiate large project development. The US Department of Energy Energy Storage Systems Program is also collaborating with the Australian Government on demonstration projects.

  21.  In the UK, Large-scale renewable generation technologies can receive funding support, albeit indirectly, through the Renewable Obligation Certificates. Technologies such as energy storage are not eligible for ROCs and are further penalised by unfavourable regulatory regimes which limits ownership and operational opportunities. It would be appropriate for the UK government to consider how energy storage projects can be supported in their early phase.

July 2007

28   See for example Royal Commission on Environmental Pollution Report, Energy The Changing Climate, 22nd Report, Chapter 8. Back

29   For example, Emissions comparison for a 20 MW Flywheel based Frequency Regulation Power Plant, KEMA Consulting, 2007 under contract to Beacon Power, funded by US Department of Energy through Sandia National Laboratories. Back

30   Large Scale Integration of Wind Energy in the European Power Supply, European Wind Energy Association, Report December 2005. Back

31   Private study by Swanbarton Limited, confidential information. Back

32   The Battery Developer is NGK Insulators Ltd. Back

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