New analysis from LCP’s Energy Analytics team highlights how rapidly scaling up battery storage capacity in Great Britain is key to avoiding large volumes of renewable energy wastage and providing clean energy to power millions of homes.
Based on current wind power capacity, LCP estimates an extra 20GWh of battery storage could reduce the amount of wind power curtailed by up to 50%. Wind power curtailment occurs when too much power is being generated for the grid to accept.
LCP predicts by 2025, wind curtailments between Scotland and England will cost consumers £1bn per year. This figure is likely to grow with wind set to play a central role in future renewable energy with the UK Government aiming to quadruple the amount of offshore wind capacity to 40GW by 2030.
As the UK increases its share of renewable energy, a sharp rise in investment in flexible technologies, such as energy storage, will be needed to ensure excess clean energy is stored and used when needed.
Analysis from LCP shows Great Britain curtailed wind power on 75% of days in 2020, with over 3.6TWh of wind power being turned off in total, mainly due to network constraints. This volume of wasted wind power is enough to have powered over a million homes for a whole year.
Chris Matson, Partner at LCP says: “Energy storage will play a crucial role in helping to decarbonize the power system, by balancing the grid in real time and backing up renewable generation.
“The increase in renewable energy capacity, without increases in network capacity or flexible technologies, will result in increasing volumes of renewable energy being wasted, with costs ultimately falling on consumers. This issue needs to be tackled urgently if the UK is to meet its Net Zero targets.”
Opportunities for investors and traders
This analysis on how increased battery storage capacity could reduce inefficiencies in the production and consumption of renewable energy in the UK is the focus of a new report: ‘Is battery storage a good investment opportunity?’
The report examines the main revenue sources available to investors from battery storage assets, how these markets will change over time and the opportunities for power traders.
LCP says battery storage could be a lucrative investment due to efforts to decarbonize power markets resulting in increased demand for energy storage.
“Spending on the UK’s energy storage infrastructure is likely to rise over the coming years. As the system changes and technologies mature, we expect the business case for battery storage to change in part due to their unique capabilities allowing them to provide value in multiple markets, added Matson.
“Due to their flexibility, battery storage assets will continue to provide value in the balancing and frequency response markets. Over time, arbitrage opportunities are expected to grow as renewable penetration drives increases in price spreads. Capacity Market prices are also expected to increase, and longer duration battery storage assets will capture more of this value due to their higher de-rating factors.”