Batteries, Exports, and Energy Security:

The deployment of 12GW of battery storage by the end of 2021 is achievable and can support post-Brexit growth

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There are two stories to tell about the growth of the UK’s emerging energy storage industry. The first is a tale of manufacturing, of innovation, and of international trade in a high-growth sector. The second is of security and stability as the country navigates the historic transition to a low-carbon economy.

In industry circles numerous reports have been written on the significant potential for storing energy. None to date, however, have directly connected the roll-out of storage systems to specific UK Government policies, or attempted to qualify how policy might impact actual deployment levels. This paper attempts to emphasise the crucial role policy has in determining the success of this clean tech sector.

A quick glance at some of 2017’s international energy headlines clearly shows a new direction in policy and investment emerging in many markets. Nearly 90 per cent of new electricity generation capacity installed in the EU in 2016 was renewable. Saudi Arabia has announced an up to $50bn plan to 2023 to diversify away from oil using renewables, a level of investment outdone only by China which has announced a $361bn renewable funding programme to 2020.

Renewables are a major international industry, and employ nearly 126,000 people directly here in the UK. Unfortunately, the United Kingdom missed the opportunity to become technical and manufacturing powerhouses in technologies such as solar PV and onshore wind. An opportunity now exists for the UK to become a leader in energy storage technology that every nation navigating the transition to a low-carbon decentralised energy system is going to need. Today no-one country holds a distinct lead internationally in energy storage research, development and deployment but many are positioning for leadership. Whoever wins the race will not have done so without creating a thriving domestic market first.

The global energy storage industry is growing rapidly. The battery storage sector’s improvements have occurred in conjunction with the growth of the electric vehicle supply chain. The affordability of storage units such as lithium-ion batteries is dramatically improving and energy density is increasing. Bloomberg New Energy Finance estimates that battery pack prices have fallen by 73% between 2010 and 2016 and will more than halve again by 2030. Commitments by the UK and French Governments to ban the sale of new petrol and diesel vehicles by 2040, and the likely introduction of similar (if not more ambitious) measures in other major European countries, such as the Netherlands and Germany, will give rapid rise to new battery and component supply chains. Additionally, China’s electric vehicle sector is already more mature than that of Europe’s, and India has pledged that every new car sold from 2030 will be electric, which speaks to how the shift towards battery-powered transport will be global, not just regional.

Whether it is to increase household or businesses’ energy self-reliance, to maximise the efficiency of a solar farm, to support electric vehicle charge points, or balance the grid nationally thus reducing the need for further fossil fuel investment or grid reinforcement, there is a clear requirement for energy storage technologies at home and abroad.

In the UK, over 25% of electricity now comes from renewable sources, and variable production represents the second greatest proportion of that. Storage technologies also play an important role in managing voltage and frequency on the grid, and can make upgrades redundant, or at the very least, less costly. This is of particular importance, as new stresses will be added to the grid as the UK electrifies its passenger vehicle fleet.

Despite improving supply chains and rapidly falling battery costs, in the UK the entrenched barrier to the widespread deployment of lithium-ion battery storage (the type of battery used in modern electric vehicles) remains Government policy and regulation. A rapid upgrading of the regulatory system, such as that proposed in the Government’s and Ofgem’s Smart Systems and Flexibility Plan, would allow a wide range of storage technologies to take off nationwide. This would result in a reduction in energy and electric transport infrastructure costs, a reduction in energy bills, and an improvement in energy security. A National Infrastructure Commission report in 2016 indicated consumer savings of £8bn a year by 2030 from 4GW of new interconnection, demand flexibility, and storage capacity, in a high renewable generation system. Energy regulator Ofgem reports further potential savings, ranging from £17bn to £40bn in total
by 2050.