Batteries Win Biggest Energy Storage Competition of the Year

Batteries won big in the U.K.’s contest to provide power that can be dispatched quickly to help keep the electricity grid stable, a step that will help the nation expand the amount of renewable energy it’s using.

The companies that won National Grid Plc’s enhanced frequency-response tender include EDF Energy Renewables Ltd., Vattenfall AB, EON SE, Low Carbon, Element Power Ltd., RES and Belectric Solar Ltd. Of the 64 sites with storage units that bid, 61 were batteries, marking the first time National Grid will used the technology at that scale. They will supply electricity at 1 second’s notice.

Frequency response is something the National Grid does every day, keeping the network steady on a second-to-second basis. It costs the operator 160 million and 170 million pounds ($212 million to $225 million) a year, and the grid said these contracts will save 200 million pounds over four years. Adding batteries marks an advance in energy storage technology that will make it easier to integrate more variable power from wind and solar farms into the grid.

“Frequency response is something we’ve always had and enhanced frequency-response is a faster version of it,” said Cathy McCay, head of commercial operations at National Grid. “As we get more renewables on the system, this flexibility is going to be incredibly important.”

This is likely to be the energy storage industry’s biggest award this year worldwide in a market expected to install $5.1 billion of equipment in 2020, according to Bloomberg New Energy Finance.

This contest was another step toward expanding energy storage on the network, giving the manager flexibility to use power stored up at times when demand was lower. National Grid plans to add 30 percent more such units by 2020 in order to deal with expanding flows of clean energy in the U.K. Traditional generators, including plants fired by natural gas and coal, also have technologies to respond as quickly as batteries.

The companies awarded contracts through the tender will have to be on the grid by April 2018. They must pass post-tender milestone tests around February. They won primarily because of the price they submitted, but availability was also taken into account. Most of them offered to provide the service 24 hours a day, seven days a week.

Bids Submitted

National Grid prequalified 64 offers submitted from 37 separate bidders, which makes up 1.2 GW of capacity. They included utilities such as AES Corp., Engie SA, EDF Energy Plc and Vattenfall AB; electronics makers such as Delta Electronics Inc.; and specialist providers such as Open Energi Ltd.

“These awards show that we can work with industry to bring forward new technology,” Cordi O’Hara, director of U.K. system operator at National Grid, said in a statement. “I believe storage has much to contribute to the flexible energy system of tomorrow. This is the beginning of an exciting new chapter for the industry.”

Most of the submitted offers were batteries. Of the 37 bids it received, 34 were for batteries. Nearly all of those were lithium-ion — a bigger version of the packs that power mobile phones and electric cars.

“As we move to a more decarbonized world, we need more of these services but the traditional providers of frequency response will gradually disappear,” said McCay at National Grid. “The future of frequency response is not necessarily just batteries. I think other things that can deliver such as flywheel technologies.”

National Grid is likely to plan more tenders like this one in the future, she said.

©2016 Bloomberg News

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