Advice on Community Energy Storage

Helpful advice on the state of energy storage from RegenSW.

“Firstly it should be stressed that energy storage is very different to renewables and there are a different set of issues for community groups to consider:

  • The income is less certain – the income is not long term or from government-backed subsidy (like the Feed-in Tariff). In many cases projects rely on “stacking” different income streams to be viable. This means more risk and less regulation.
  • Lithium-ion batteries are dominant  – when we talk about energy storage we cover a broad range of technologies. Lithium-ion battery technology is currently the dominant technology, with 83% of installed global storage capacity in 2016 (excluding pumped hydro). This could change in the medium term, particularly with hydrogen and heat storage growing in importance.
  • Warranties and lifetime vary – Lithium-ion batteries normally have a warranty for a number of years or number of cycles (one cycle is a full charge and discharge of the battery). These batteries do reduce in performance over an approximate lifetime of 10 years. This changes depending on how the installation is used and there is a lack of transparency around how this will affect the business model.
  • Costs are coming down rapidly – we’ve seen a 15-20% reduction in 2016. Tesla’s Gigafactory started production in early 2017, which is likely to continue the downward trend in the price of systems.
  • Regulation is lagging behind the market – the energy storage market is evolving rapidly and this has outpaced the formation of guidance. This is starting to change, with a detailed code of practice expected in April 2017 and the Department for Business Energy and Industrial Strategy (BEIS)/Ofgem call for evidence. A smart systems policy paper is expected in May and BEIS will be speaking on progress at Smart Energy Marketplace. In comparison with renewable energy, the energy storage market remains largely unstructured.
  • Grid connection issues – there have been examples of small energy storage systems taking a lot of time and money to connect to the grid. A new process has been proposed, that should resolve the issue in a few months time. Regen has developed the Electricity storage guide for communities and independent developers to help you connect electricity storage to the grid.
  • There is a risk of mis-selling – at the domestic scale consumers may not get a payback/return on their investment and there is a risk this is not being explained upfront. Some examples of mis-selling by lead generation companies were mentioned at our forum. The BRE Guidance for domestic and small commercial consumers contains some questions for consumers to ask their installer.

All this makes judging the right time to enter the energy storage market very difficult. In the Regen paper, Energy storage – towards a commercial model (2nd edition), we use an unsolved Rubik’s CubeTM to describe the current state of the energy storage market, with barriers and misalignment commonplace. Changes are in motion to make the UK market function better, but at the moment we would urge communities and their networks to treat the energy storage sector with cautious optimism.

We are working on various innovation projects looking at the role of communities and energy storage. The latest learning and business models will be shared with our network.”

About Alison Kidd

Research Psychologist
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