Memorandum 24
Submission from Swanburton Limited
INTELLIGENT GRID MANAGEMENT AND ENERGY STORAGE
1. EXECUTIVE
SUMMARY
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.
2. INTRODUCTION
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.
3. THE CURRENT
STATE OF
UK RESEARCH AND
DEVELOPMENT AND
DEPLOYMENT OF
ENERGY STORAGE
TECHNOLOGIES
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
SCALE-UP, COMMERCIALISATION AND TECHNICAL
MATURITY OF ENERGY STORAGE TECHNOLOGIES SUITABLE FOR USE WITH
RENEWABLE GENERATION
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.
4. THE UK GOVERNMENT'S
ROLE IN
FUNDING RESEARCH
AND DEVELOPMENTS
AND INCENTIVES
FOR TECHNOLOGY
TRANSFER
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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