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REA warns Ofgem pushing ahead with classifying storage as generation must be a 'stopgap'

Image: Anesco

Image: Anesco

Ofgem’s decision to classify energy storage as a subset of generation must be a “stopgap measure” until parliamentary time is found.

This is according to the Renewable Energy Association (REA), suggesting that defining storage as its own asset class in primary legislation – a solution “strongly argued” for by the energy sector – would be preferable.

Ofgem announced it would be pressing ahead with including a definition of storage in the electricity licence on Friday (2 October), meaning the same rules and regulations will apply to the technology as other forms of generation from 29 November 2020.

This follows Ofgem consulting on the changes in July 2019, with many in the storage sector campaigning for a formal definition to be introduced for a number of years prior.

This is in part due to the double charging of storage, where – because there was no formal definition – it was charged as both a demand customer for its imports and as a generator for its exports.

However, many in the sector argue that storage needs a “broader definition”, as the REA’s head of policy, Frank Gordon, said. This is because electricity storage is different to electricity generated, as well as energy storage having a number of technologies under its umbrella, not just those that are electricity-based.

“Classifying storage as a subset of generation should only be seen as a stopgap measure until parliamentary time allows for a more thorough review,” Gordon said.

“Whilst government has made progress over the past year on creating an enabling environment for electricity storage, the sector is underwhelmed by today’s decision to not define storage as its own asset class in primary legislation.”

In its document outlining the change, Ofgem said that introducing a definition of storage in primary legislation would “further clarify how storage fits into the legislative framework”, reaffirming that the government has “committed to providing this, when parliamentary time allows”.

It said that in the meantime it is focused on addressing “other barriers to storage deployment and ensuring storage is competing on a level playing field with other forms of generation and flexibility sources”.

The Regen-run Electricity Storage Network (ESN) has led the charge on calling for an introduction of a formal definition for storage. Speaking at the Energy Storage Summit in March 2020, policy lead at Regen Madeleine Greenhalgh, explained how the industry had been classifying itself as a subset of generation almost “by default” without any guidance from government.

Greenhalgh explained how classifying storage as a subset of generation would allow the industry to work within a framework that is already familiar to them, but that giving it its own asset class could result in a framework that would allow the technology to flourish and potentially result in the markets being shaped in a “better way”.

In a statement in response to the news Ofgem would be clarifying storage as a subset of generation, the ESN said it "welcomes" the decision, which it hailed as an "important step along the journey to a clear legal and regulatory treatment of storage".

"The next step is for BEIS to define electricity storage and the licencing requirements in law. We expect that the long-promised Energy White Paper will be followed by an Energy Bill including this measure."

This is not only relevant to the UK, however, with the European Union’s Strategy for Energy System Integration stating that double charging should not, in fact, be applied to storage.

This came after a committee of Members of European Parliament (MEPs) highlighted that this was among a number of "shortcomings" in network codes across Europe.

In July 2020, the European Parliament voted in favour of adopting a strategy report putting energy storage and hydrogen at the heart of its agenda, which included the removal of double charging. However, sister site Energy-Storage.news was told by the European Parliament that the vote "won't have a direct legislative effect".

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