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Batteries could save £195m annually by providing Reserve finds National Grid ESO trial

Arenko optimised the Gresham House Energy Storage Fund owned 41MW Bloxwich battery throughout the trials. Image: Arenko.

Arenko optimised the Gresham House Energy Storage Fund owned 41MW Bloxwich battery throughout the trials. Image: Arenko.

Using batteries for reserve could save £195 million a year, according to the results of an Arenko led National Grid ESO trial.

Over the summer of 2020, the operator used 110MW – and an additional 49MW in the final week – of optimised storage to meet the demand for Reserve during three trial periods. This included 41MW of storage from the Arenko optimised Bloxwich battery site.

Participants received an average of £16.78 per MW per hour in Reserve, which represented a 40% saving when compared with traditional Reserve capacity, predominantly CCGTs.

The success of the trial has led National Grid ESO to confirm its ambition to procure Reserve from batteries going forwards.

The Reserve from Storage trial was designed by Arenko and first announced back in May 2020 in response to the surge in renewables and low demand due to the COVID-19 pandemic that was straining the grid. The first trial – which just utilised the Bloxwich battery, built by Arenko but sold to Gresham House Energy Storage Fund – was hailed a success in July, showing that batteries could provide reserve, and could do it in a cost effective way.

It was then expanded to include a larger amount of battery storage capacity over two subsequent trials in the summer. During a 20-day trial in Q3 2020 this led to £0.7 million in savings. If scaled up linearly to meet the c.2GW of Reserve requirement identified in National Grid ESO’s System Operability Plan, this could provide the consumer with almost £200 million in saving annually, although Arenko added that this doesn’t fully capture the true value for the consumer.

As such, batteries have been shown to be cost effective source of Reserve, representing value in 80% of the half hourly settlement periods during the trial.

Additionally, unlike CCGT plants, batteries do not need to be producing power in order to provide Reserve as they can charge when there is abundant renewable energy on the grid, and then wait to react when needed. As CCGT’s need to be producing power to provide this service, it can led to renewables switched off in favour of the more carbon intensive fossil fuel generation, to ensure Reserve is available if needed.

Therefore, Reserve from Storage could provide a key solution for National Grid ESO’s target of net zero operations by 2025.

Rupert Newland, chief executive of Arenko said they were “delighted” to have worked to develop and deliver the trial “whose results have huge global significance for the battery industry.”

“The trial provides irrefutable evidence that new battery technologies, operated using intelligent software, can transform the management of the electricity grid to enable the mass deployment of renewable energy, a zero-carbon electricity system and the realisation of huge savings for the consumer.”

Arenko added that it believes there is a commercial and environmental imperative following the trial, that National Grid ESO should rapidly scale up the service to unlock the full benefits for consumers and system stability.

It also called for a level playing field for all technology classes going forwards, and that the existing market mechanisms from for the trial are used to rapidly procure the service.

Throughout the trial periods, Arenko operated in reserve, balancing mechanism and European Power Exchange (EPEX) markets, highlighting the ability to stack revenues, providing additional impetus for battery development.

A summary of the batteries participating for the duration of the trial. Image: Arenko.
A summary of the batteries participating for the duration of the trial. Image: Arenko.

Currently in the UK, there is an operational portfolio of 1.2GW of storage and a pipeline of just over 14GW according to recent research from Current± publisher Solar Media. For each new MW of installed capacity, the consumer could save £97.6k per annum (£11.14 per MW per hour) according to the results of the Reserve from Storage trial.

This will become increasingly important as the share of renewables in the energy mix grows, with National Grid ESO’s Future Energy Scenarios predicting installed capacity of renewables to rise from 40GW today to between 70-104GW in 2030. Fossil fuels are expected to drop from 49GW today to 24-40GW during the same period.

This shift will likely drive up the requirement for Reserve, for example during the ‘glimpse of the future’ energy mix seen during the first lockdown in 2020 in the UK, Reserve requirement more than doubles to c.5GW.

For more information on the trials, a full copy of National Grid ESO’s report can be found here.

Our publisher Solar Media will be hosting the Energy Storage Summit 2021 in an exciting new format on 23-24 February and again on 3-4 March. See the website for more details.

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