Electricity storage is not separately defined in the GB legislative framework. For historical reasons, it is currently deemed to be generation for the purposes of licensing under the Electricity Act 1989. As a result, projects over 100MW (currently only the existing pumped-hydro developments fall into this category) must hold a generation licence. Holding a generation licence places a number of obligations on the licensee, such as compliance with the Grid Code.
Whilst the Department of Business, Energy & Industrial Strategy (“BEIS”) and Ofgem have been supportive of energy storage and recognise the benefits and flexibility provided by the various technologies, there is no specific legislation on or regulation of storage at present. No specific subsidy or Government commitment to a level of deployment of electricity storage is expected. As a result, developing a viable business case is more complex than has been the case for renewable generation technologies. This can require the “stacking” of multiple revenue streams, such as ancillary services revenues, capacity market payments, Triad benefits and other embedded benefits.
There is certain funding available for research and development purposes, for example the Low Carbon Networks Fund administered by Ofgem.
National Grid recently ran the first tender for a new ancillary service, enhanced frequency response (“EFR”). The tender has been hugely popular with over 1 GW of proposed capacity pre-qualifying, much of which is from utilities and developers looking to develop standalone battery storage projects. Whilst the tender is technology agnostic, it was of particular interest to stand alone battery storage, as the service is required to be provided within one second (or less) of registering a frequency deviation. The successful bidders secured contracts with an average price of GBP 9.44/MW of EFR/h. The EFR contract has a term of four years and requires developers to meet development milestones and pass a commissioning test prior to the project being eligible for availability payments. It is expected that three tender rounds will deliver 600MW of EFR services.