Shortage of grid contracts dampening storage market

Oversubscription for National Grid’s Enhanced Frequency Response service will result in uncertainty for a large proportion of battery developers when the first contracts are awarded on 26 August, Smartest Energy has warned.

Power purchasing and aggregation firm Smartest Energy conducted a survey of 45 battery storage developers hoping to deploy in the UK and found that 70% expect the majority of their revenues to come through grid services.

There is currently at least 1GW of battery storage in the pipeline for the UK, according to Smartest Energy, but only 200MW of contracts are available via the current EFR auction. The firm has therefore called for the future availability of EFR and similar contracts to be made clear as soon as possible in order to give confidence to developers.

Commenting on the survey findings, Robert Owens, vice president of demand side management at Smartest Energy said: “It’s clear that the current EFR capacity in isolation will not be enough to unlock the full potential of batteries, so developers need to know what’s next for the projects that won’t win an EFR contract in this auction.”

This story first appeared on networks.online, the website of Utility Week’s sister title, Network.

A news release issued by Smartest Energy added that oversubsription to the EFR aucution means “a significant amount of storage capacity will remain untapped because of the limited availability of contracts, risking the development of the market at this decisive time.”

Other insights form the survey show that 31% of respondents see monetising battery projects as their single biggest challenge with just under half (49%) predicting that it will take 5-10 years for projects to begin making a return.

Acknowledging this broader commericalisation challenge Owens urged storage providers to collaborate in the interests of whole-sector innovation. “It is critical for developers, aggregators and lenders to work together to identify commercially viable ways to bring these projects to market,” he said.

“Given that storage is on the brink of commercialisation and has the potential to create transformational change in global energy systems, it is important that experience and best practice are shared in order to advance this sector.”