The long-duration electricity storage needed for the UK to transition away from fossil fuels should be supported by an innovative funding mechanism, claims a new report.
Electricity market changes needed to meet net zero could raise consumer bills if long-duration storage options are not properly delivered, according to report authors Riverswan Energy Advisory.
In the report, titled “Filling the flexibility gap”, the authors argue that “an efficient future electricity market will need to attract all the necessary resources for continuous stable operation”, including resources for flexibility, reserve and voltage support currently provided by fossil-fuel generators. It recommends introducing a ‘price floor’ to allow more long-duration storage projects, including pumped-storage hydropower, to be built.
The research was funded by Scottish Renewables, the British Hydropower Association [BHA] and hydropower developers Buccleuch, CCSQ, Drax Group, Intelligent Land Investments Group and SSE Renewables.
Because the variability of wind and solar power generation requires more flexibility on the grid, argues Cara Dalziel, Policy Manager at Scottish Renewables, the electricity system needs energy storage batteries, which provide flexibility over short time periods, but also long-duration pumped storage hydropower.
“The current, fragmented design of the electricity market does not offer sufficient confidence to investors,” she said. “A new price stabilisation mechanism is needed, and this report sets out that a new market to derive an income floor for the provision of long duration flexibility services should fill the gap,” Dalziel added.
The report was launched on Wednesday at Scottish Renewables’ Annual Conference, ahead of a refresh of a Smart Systems and Flexibility Plan by the UK Government’s Department of Business, Energy and Industrial Strategy and energy market regulator Ofgem.
“The publication of this report demonstrates just how important pumped storage hydro is to the UK energy mix,” said BHA chief executive Simon Hamlyn. “Ultimately this is a major opportunity for the government to grasp the pumped storage message and help deliver new jobs, new infrastructure, ensure future flexibility and reduce consumer bills.”
This publication follows publication of a separate report by Imperial College Consultants, commissioned by SSE Renewables, which showed that building 4.5GW of new pumped storage would save the UK £690 million a year by 2050.