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A ‘cap and floor’ mechanism would help drive cost-effective investment in energy storage to enable it to deliver £2.4 billion of consumer savings.
Longer contracts from National Grid for support services, revenue streams designed for stacking and unlocking new revenue opportunities within the distribution network would also help push down revenue risk which is holding back the roll-out of storage.
The recommendations have been made by Everoze in a report commissioned by Scottish Renewables and released a day before the tender for frequency response closes.
Scottish Renewables director of policy Jenny Hogan said: “While batteries today are 94 per cent cheaper than they were in 1990, and a range of pumped storage projects are ‘shovel-ready’ or in the planning process, the current market arrangements are at risk of favouring more expensive sources of flexibility for our network.
“A whole series of changes are needed if we are to ensure that the cheapest and most efficient technologies provide the services that a modern clean electricity system requires.”
Everoze partner Felicity Jones added: “If the overwhelming challenge for the solar and wind sector has been cost reduction, the key challenge for storage is getting financiers comfortable with the merchant risk of revenue streams.
“Yes, continued reduction in the capital cost of storage is needed, but the bigger challenge lies elsewhere.
“Renewables developers eyeing up storage must flip their attention from cost to the other half of the profit formula: revenue.”
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