WEMO24-Compiled Report-Interactive compressed (002) 4154-7882-8116 v.1 - Flipbook - Page 70
Many opportunities exist to make markets more
battery friendly.
Capacity markets exist to support security of supply through
payments for having capacity connected to the grid that can be called
upon when needed.
In the UK’s most recent capacity market auction, 67% of the contracts
by capacity were awarded to gas producers. The 112 successful
battery sites accounted for just over 2% of capacity, though many of
these sites have not yet been built.
Various forms of locational pricing have been adopted in some
networks. This gives different prices for electricity at different points
on the network, rather than a uniform whole network price. In Texas,
which has prices at each network node, revenues to battery owners
have roughly doubled in the past two years. These revenues are now
twice those expected from batteries in other states.
Further opportunities exist for batteries to provide services to
support the operations of the grid. Imagine what happens if a
major generator like a nuclear power station suddenly goes offline.
Batteries can respond in less than a second, whereas spinning up a
gas-fired station might take minutes. Grid operators are increasingly
willing to pay for these services.
Steps towards market reform are needed in all countries to accelerate
the pace of battery deployment. To enable this, a commitment to
providing regulatory stability is required to ensure that investments
are unlocked.
Money can be made, but it depends
on market structures
Regulatory and market conditions need to be optimised for money to
be made in batteries.
Grid connected batteries can make money, but in many markets
limited locational price signals, immature ancillary services markets,
and structural metering issues are hindering this. A long-term stability
of market structures is required to attract investment, which seeks
certainty of returns over many years. .
Governments need to consider batteries as a strategic industry and
take steps to protect companies form fierce Chinese competition,
Stationary grid battery technology will take the price advantage of
following where automotive manufacturers have led and already
invested.
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The turnaround time for changes in regulation are far slower than the
ability to create and adopt newer technologies.
The UK exemplifies a situation where battery energy storage
technology has been available for some time, but deployment has
been significantly delayed due to challenges in adapting market
structures to make the installation and operation of stationary
storage systems financially viable.
Grid connections are facing years-long approval delays, with massive
backlogs of projects and limited prospects for improved business
model economics. This situation hampers the ability to deliver the
grid stability needed during the transition to intermittent renewables
as part of decarbonization efforts, as well as the connection of
infrastructure like public charging facilities to support electric vehicle
adoption.
It’s clear that we can’t hit net zero without batteries, so work is
needed to make them an attractive investment.
The 8-hour battery
This is simply a battery that can supply its location for eight hours. Today most
batteries have durations up to four hours. Extending this to 8 hours brings
signi昀椀cant advantages in grid stability and compensates for the peaks and
troughs of renewables production.
3,000 MWh Capacity
Key operating characteristics of batteries are its total storage capacity in
MWh and its peak power production in MW. The duration of the battery is the
capacity divided by the production.
6,000 MWh Capacity
= 4 hour duration
750 MW Production
= 8 hour duration
750 MW Production
WEMO 2024
Market regulation for batteries
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The Business case for
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