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This Month in Energy – April






Wholesale energy prices continue to stabilise, but for many British businesses the impacts of the energy crisis are still all too evident. Elsewhere, while questions remain around the green credentials of the UK’s Energy Security Plan, a wave of investment in clean technology shows growing confidence in UK green investment. However, could a rapidly growing pipeline of new grid-scale storage have unintended impacts on behind-the-meter battery users? Powerstar’s Head of Sales Dean Hogg summarises the last month in energy. 

The Energy Crisis Rumbles On 

Warnings that the switch from a business price cap to a discount scheme could increase prices for non-domestic energy users increasingly look to have been accurate. A survey by financial comparison site NerdWallet shows just how significant this increase in costs is for many British businesses, with 45% of respondents indicating that they were concerned about being forced to close their business due to energy costs.

Just 11% felt their business was able to cope with rising costs. Sectors that have not been lined up for additional support despite significant energy costs, just as hospitality, have been particularly significantly impacted, with more than 150 pubs forced to close in the first three months of 2023. Hospitality trade bodies have warned that without support, one in three hospitality businesses face closure during 2023. 

Ofgem have acknowledged that the energy crisis is now moving into a different phase, echoing warnings from many in the industry, including Powerstar, that what we have seen so far is the initial, acute phase of a transition towards a new normal of elevated energy prices. Ofgem Chief Jonathan Brearley has stated that while a decline in wholesale prices should finally start to be reflected in energy bills in the coming months, we are unlikely to see a return to prices seen before 2021. 

This month the IPCC (Intergovernmental Panel on Climate Change) found that hitting the target set by the Pasris agreement  keeping warming to 1.5°C would require emissions to “peak before 2025 at the latest”  and drop by 43% by 2030. 

Addressing emissions also represents an opportunity for the green economy.  Industries helping the world shift to net-zero emissions could be worth $10.3 trillion to the global economy by 2050, that’s according to sustainable development consultancy Arup and economics advisory firm Oxford Economics. 

The challenge facing the energy sector today is how to redesign the entire system while maintaining an affordable, resilient supply that’s sustainable for the planet. 

Record Growth for Grid Scale Storage  

The biggest driver of renewable growth today is energy security, with renewable generation slated to play a major role in the UK’s overhauled Energy Security Strategy. A successful transition to a renewables-based system, however, isn’t as simple as just building out wind and solar capacity. The inflexible nature of these generation methods means that to effectively balance the grid, substantial flexibility will also be needed. Battery energy storage will likely form the majority of this, and the UK’s pipeline for new battery capacity is looking extremely robust.  

April has brought a string of positive forecasts when it comes to the growth of the UK’s energy storage sector. Analysis from Norwegian energy research company Rystad Energy predicted battery storage capacity in the UK will hit 24GW by the end of the decade. Expected to attract an additional $20 billion in investment, making the UK the fourth largest global market for battery storage with 9% of global capacity. 

Despite the scale of this predicted growth, it could still potentially fall short of the government’s own ambitious energy storage targets for 2030, which aims to hit 30GW of capacity. Other technologies will play a role, including pumped hydro, flywheels and liquid air storage, but growing issues around grid connections and capacity will also need to be resolved. 

The Energy Networks Association stated in April that 164GW of new connection requests were received last year up to October, more than double the capacity of the entire grid currently. For renewable generation and storage projects alike, delays accessing the grid are rapidly becoming one of the largest stumbling blocks as an aging grid struggles to accommodate new connections, while new requests are amassing far more quickly than National Grid or DNOs can reinforce existing infrastructure. For many projects, connections before 2030 are becoming a struggle. 

Impact on Behind-the-Meter Battery Storage 

The huge growth of grid-scale storage is a vote of confidence in some respects for the technology, but also presents potential problems for behind-the-meter storage systems. Storage plays a huge role in balancing the grid and can generate significant income in return for doing so. These grid revenues have historically been a major selling point for behind-the-meter projects. 

However, as grid-scale battery grows, the role of smaller grid flexibility providers becomes less clear, with National Grid likely to further favour large projects for balancing capacity and frequency rather than relying on large numbers of small batteries grouped together by an aggregator. While grid revenues may not vanish entirely, there is a good chance that they will decline and already they are seeing a growing amount of volatility that makes an accurate model of the revenue they can generate very difficult.  

Increasingly, the value that a BESS delivers is in solving energy management issues elsewhere on a site, while the additional revenue it has the potential to generate is, while nice to have, very much an additional benefit. Battery storage behind-the-meter is at its best when it is being used intelligently to provide UPS to protect a site, firm on-site renewable generation, manage a microgrid or solve grid constraints that can stem from technologies such as rapid EV charging.  

Find out more about Powerstar’s bespoke battery energy storage solutions here 


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