National Grid has almost halved its top-end prediction for long term penetration of UK energy storage. However, the market is growing faster than it anticipated, with more than 5GW set to be connected by 2020.
The System Operator makes long-term forecasts each year under its Future Energy Scenarios document.
Last year, under the high level ‘Consumer Power’ scenario, Grid estimated a maximum of 18.3GW on the system by 2040.
This year, however, the top-end projection is just 10.7GW by 2050.
Head of energy insights Marcus Stewart said the downward revision was due to “improved modelling” that accounted for likely cannibalisation of arbitrage opportunities for battery storage assets.
“Last year was the first year battery storage was included in the scenario,” he said. “We had a reasonably simplistic approach to working out theoretical maximum [for battery penetration last year].
“This year we have improved modelling. So the values we calculated this year are lower – we have looked at the arbitrage value and you start to see cannibalisation of revenues. So we have brought that [estimate] down to a level where we see storage being economic as a business case.”
Stewart said the methodology now took into account balancing of renewables against different loads at different times of the day. “So it is more sophisticated.”
However, the Future Energy Scenario document does show a faster build rate of initial storage growth over the next couple of years, suggesting almost 6GW of storage capacity by 2020.
Click here to download the Future Energy Scenarios 2017 document.