In 2021, the UK government announced that it was committed to a world-first: that the country’s electricity system would be fully decarbonised by 2035. In our recent Energy Storage eBook, we highlighted the vital role that electrical energy storage will play in future to support this drive for electrification, not least through helping to balance supply and demand across the grid, but how much storage will we need, and what progress has been made over the last couple of years, towards a target that is little more than a decade away?
By 2050 the National Grid ESO, the electricity system operator for Great Britain, is forecasting that the UK will need at least 50 GW of energy storage power capacity and just under 200GWh of capacity. There are a number of technologies that are likely to help deliver this capability (battery, pumped hydro, air-based etc) with battery energy storage systems (BESS) expected to be responsible for delivering the largest share of storage power capacity.
The company has also identified key milestones along the way against which we can measure progress towards this goal. In its Future Energy Scenario 2023 publication (https://www.nationalgas.com/insight-and-innovation/future-energy-scenarios-fes), the company has suggested that in a best-case scenario (i.e. Leading the Way), deployment rates of battery power storage capacity would be at 20GW by 2030, and 35GW by 2050. As of November 2023, the UK had c.1.6 GW of operational BESS capacity.
Although there is a clear gulf between where the sector is currently operating and where it needs to be, there still appears to be reasonable optimism among energy consultants that the UK will meet its end target. In part this is due to the current momentum behind electrification of both our heat and transport sectors, and growth in renewable energy sources. However, it must be said that much rests on the sector’s ability to attract investors and, again, the indications appear to be good. As of 2023, the UK’s planning system lists 1,145 battery projects (93 of these sites are currently operational), added to which there have been high profile announcements such as Pillswood in Cottingham, East Yorkshire, where a large BESS opened in late 2022. The site, which is owned and operated by Harmony Energy Trade Income (HEIT), was described as the biggest of its kind in Europe when it started operating with capacity to store enough electricity to power 300,000 homes for two hours.
All told, this amounts to around 10GW currently under construction or in planning.
It’s been said before, that all investors like certainty, so what is it about the battery storage sector that might have raised concerns which slowed potential initial investment? Some of the main factors that have been highlighted by various commentators include high upfront costs, long payback periods, perceived levels of risk associated with BESS technology (particularly in relation to fire safety), and of course government policies, which is why the government has again stepped in.
It is now introducing a range of measures to ameliorate concerns and support market growth. This includes creating a regulatory framework to help ensure that BESS facilities operate safely and efficiently. The measures cover the following areas:
The UK’s new regulatory framework is expected to be published in 2024. Meanwhile, encouraging signs of market growth are certainly becoming apparent. At the UK’s capacity auction in February 2023, close to 5GW of BESS capacity was committed for delivery in a single capacity year (2026-27).
The UK is not alone in its drive for BESS capacity; according to energy consultants, Timera Energy, battery storage requirements for Western Europe as a whole are expected to be around 50-70GW by 2030, hence why we’re also seeing record-breaking BESS deployment across the rest of Europe - with the UK very much at the forefront.
A total of 170 battery storage projects came online in 2022, totalling 1.9GW capacity (source: LCP Delta). Of these, nearly 85 per cent were in four European markets, namely: the UK, Ireland (328MW), Germany (226MW) and France (224MW), bringing the total for European grid-scale BESS capacity to 5GW.
As of November 2023, France had approximately 1.2 GW of operational BESS capacity, with a further 2 GW currently under construction or in planning, and a target of 10 GW of BESS capacity by 2030. Meanwhile, Germany has an estimated 0.8 GW of operational BESS capacity to support its burgeoning renewable energy industry, with a further 1 GW currently under construction or in planning. The German government is aiming for 6 GW of BESS capacity by 2030.
And it looks as if Italy (which currently has only 1.3% of European BESS deployments) may leapfrog many of its European neighbours next year (source: Timera Energy). The country has apparently put in place significant support for faster BESS deployment, which includes 15-year capacity agreements in its Capacity Market, and five year ‘Fast Reserve’ contracts with 20-60 €/kW/yr payments for frequency services. Spain, Belgium and the Netherlands are other markets that have also been earmarked as having good potential for future BESS growth.
The EU’s high-profile renewable energy policies are expected to help foster further growth and build on this momentum. Its Net Zero Industry Act, published in March 2023 included a widely welcomed provision for “electricity and heat storage technologies”.
While there are strong grounds for optimism for the expansion of the UK’s BESS deployment, there is no mistaking recent concerns around whether there is sufficient momentum to meet the 2050 net zero target.
New financial support mechanisms, continued government policy support, and direct investment will be vital to enable the country to achieve its energy storage targets and reap the benefits it will bring, while operating a zero-carbon electricity system.
*The Capacity Market is a UK government scheme that pays generators to provide reliable electricity supplies as required to ensure that the UK has enough electricity to meet demand. Auctions are held twice a year when generators to bid to provide capacity.