Expert Explains Changes on the horizon for battery storage

Expert Explains | Changes on the horizon for battery storage

The shift towards increased used of intermittent renewables generation is bringing about significant challenges for electricity networks as they seek to match demand with intermittent supply while maintaining grid resilience.

Around the world, utilities, regulators, investors and businesses are pursuing various approaches to build up the flexible capacity needed to meet demand, with batteries commonly being cited as a critical piece of the jigsaw. Despite battery technologies being hailed as a crucial part of the energy mix, and falling costs of technologies, the challenge is that currently for many stakeholders there are insufficient economic signals to incentivise investment. The successful development of the sector requires the right market conditions and sufficient incentives, values and monetisation prospects for the various functions that each individual battery can perform.

Historically the main revenue streams for batteries have been (frequency) response programmes, the Balancing Mechanism, wholesale market trading, the Capacity Market and cost saving opportunities (such as Triad avoidance). Some of these markets such as response services, Balancing Mechanism are undergoing reforms, while constraint management and voltage response are becoming more important for batteries.

In this paper, we look at current and future changes in the available revenues for batteries.