Battery developers are excited around the opportunities they can offer to the energy sector.
However, there are some challenges that need to be addressed to ensure battery storage reaches its potential.
That’s according to a survey by SmartestEnergy which asked 45 energy storage developers to explore the barriers they face to commercialisation.
The results come ahead of National Grid’s first 200MW Enhanced Frequency Response (EFR) auction later this month. The EFR contracts are said to be ideal for battery technology and are the first step to unlock the potential of this sector.
However, developers are concerned that a significant amount of storage capacity will remain untapped with the pipeline because of the limited availability of contracts.
SmartestEnergy believes National Grid needs to reassure developers that there will be more revenue streams available for them to secure the battery capacity needed for the “smart power revolution”.
Another challenge is the length of grid services contracts available which are currently too short to meet lender requirements.
Almost half of battery developers surveyed expect payback to be achieved within five to 10 years and 16% believe it will take more than 10 years.
Around 70% of the respondents believe the biggest revenue opportunity available will be from providing grid services.
Robert Owens, Vice President of Demand Side Management at SmartestEnergy 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.
“It is also critical for developers, aggregators and lenders to work together to identify commercially viable ways to bring these projects to market. 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.”
Adam Sims, EFR Senior Account Manager at National Grid said they recognise the “potential for storage to support our aim of developing a flexible balancing system”.
He added: “It is vital, however, that we take the time to understand any barriers to participation from the industry and that is why we have been working closely with the Energy Storage Network and made the development of this market a key commitment at our Power Responsive conference in June.”
