Market and regulatory barriers to electrical energy storage innovation

Research output: Contribution to journalArticle

Authors

Colleges, School and Institutes

External organisations

  • UCL Energy Institute, University College London

Abstract

Energy storage has been identified as a priority technology for innovation. However, the rapidly developing family of storage technologies will find it difficult, under the current regulatory regimes, to compete with conventional generators for the provision of electricity system services, and this is likely to impede innovation. This paper analyses and categorizes 16 investment barriers hindering the near-term deployment of energy storage technologies in electricity markets, which are related to four regulatory and public attitudes barriers.

The most important regulatory barrier is the current classification of storage as a generation asset, despite it being unable to provide a positive net flow of electricity, which is used to justify double network usage charges. The merit order design of balancing and ancillary markets hampers the ability of storage technologies to recoup their relatively high capital cost, while capacity markets penalize their limited discharge duration. Network companies are in the best position to realize the system value of storage, but their ownership may only be acceptable if system operation is made independent of network operation.

Current initiatives to address these issues include flexible connection agreements and the development of enhanced frequency response and aggregate fast reserve services. However, to remove the identified barriers, a market structure that valued the flexibility offered by storage, viewing it as complementing rather than competing with network and generation assets, would be required.

Details

Original languageEnglish
Pages (from-to)781-790
JournalRenewable and Sustainable Energy Reviews
Volume82
Early online date3 Oct 2017
Publication statusPublished - Feb 2018

Keywords

  • Regulatory barriers, Electricity policy, Energy storage, Electricity market, Market regulation