Ofgem has outlined plans to clarify how energy storage is licensed and classified.
The regulator proposes that storage should be treated as a form of generation and will modify the existing generation licence to accommodate storage, ahead of government changes to the Electricity Act.
It thinks that will be the fastest way to address market barriers, with change effective in the first half of 2018.
The move stops distribution networks operating storage, as they are not allowed to own generation.
The rule changes were flagged in the joint Beis/Ofgem smart systems and flexibility plan in July.
The regulator proposes basing its definition of storage on that outlined by the Electricity Storage Network. That is:
‘Electricity storage in the electricity system is the conversion of electrical energy into a form of energy which can be stored, the storing of that energy, and the subsequent reconversion of that energy back into electrical energy in a controllable manner.’
By making the proposed changes, the regulator hopes to remove market barriers for storage operators, such as double charging of environmental levies.
Ofgem seeks views on its proposals.
The regulator is also consulting on changes to distribution network operators’ licences to prevent them operating storage, which it believes would be anti-competitive.
However, within that modification, Ofgem will allow DNOs to operate storage in specific circumstances – such as emergency restoration and small scale UPS at substations. It seeks views on those plans.