UK’s evolving ESS market likely to take installed base above 1.2GW this year

As much as 500MW of additional large-scale battery storage capacity could be built in the UK in 2019, increasing its capacity by more than 70% to 1.2GW.

As of June 2019, there is currently 700MW of large scale battery storage installed in the UK, with around 80MW showing as completed in the first half of 2019, although this number is likely to be higher due to a slight delay in completed projects being announced.

The pipeline of projects currently stands at 11GW, and although it is unlikely that this will all be built, we currently see nearly 800MW of projects at the ‘under construction/ready to build’ stage, meaning that they are likely to be built within the next 12 months.

Looking at the current pipeline, we could see up to 500MW being built in 2019.

Based on the projects that have been built already and the pipeline of projects that could be built throughout this year, we can also pick out some trends emerging in the types and sizes of projects.

At one end of the scale we have the 49.9MW, utility-scale projects being built as stand-alone projects. These projects typically have Capacity Market contracts awarded in previous years and are approaching the start dates of these contracts.

There is also a large group of projects in the 10 – 20MW capacity range. These projects are more varied and there are developments in this grouping that make up larger portfolios of projects. In addition, facilities in this size group are also being proposed alongside side existing renewables such as solar. Interestingly this group of projects has seen a lot of activity from investors, with funds and developers acquiring sites that are due to be built this year.

At the smaller end of the scale we are now seeing increasing activity in the large C&I sector – projects up to and around 10MW in capacity – with behind the meter batteries being installed alongside generation and also at commercial properties. C&I projects can be harder to track due to the planning requirements for small projects, however the larger size of these projects means that they do require planning permission and some of these projects have won Capacity Market contracts due to start in the coming years. Therefore it is likely they will be built before the contract is due to begin, with the Capacity Market being just one part of the business case for the projects.

Shift from long-term contracts to merchant market
Looking ahead at how the pipeline has developed in 2019 we can see some clear differences in the types of projects being proposed compared to last year. For example, we have seen nearly 30 projects of 49.9MW added to the database in the first six months of 2019, compared to 28 added during the whole of last year.

However, projects of this size have been submitted by fewer than five companies this year compared to nearly 20 companies proposing projects of this size in 2018. Although there is still an obvious interest in these large projects, the companies involved are changing and the business case for such projects looks very different to this time last year.

We are seeing a move away from projects providing frequency services and more of a focus on energy trading, through the Balancing Mechanism and on the wholesale market. There is also a lot of interest in electric vehicle charging, led by Pivot Power, that are intended to support the increasing demand for electricity in this area.

There is also a ramp up in battery storage projects co-located with renewables, best evidenced by both Gridserve’s co-located projects in Warrington and Hull, and ScottishPower’s battery project earmarked for Whitelee Wind Farm. This includes extensions of wind farms with additional storage, rooftop solar with a large behind the meter battery and subsidy-free solar farms with co-located storage. Now the FiT has ended for solar, the economics behind adding a battery to a rooftop solar installation have begun to add up.

What has become abundantly clear is that the UK’s battery storage sector has been adapting to market changes. There has been a shift away from long-term contracts providing specific services, and we are seeing a shift towards more flexible projects that are able to react to the situation at a specific time, opening up opportunities in trading electricity and responding to the market. We are also starting to see a lot more co-location of technologies, including electric vehicle charging, and small-scale generation as the benefits are better understood, indicating an evolution in the use-cases and business models underpinning these projects.

Source: energy-storage.news