Scottish Renewables has warned that the UK’s climate change targets will not be met without the removal of barriers to long duration storage such as pumped storage hydro.
The caution comes in a new report produced by Riverswan Energy Advisory and funded by Scottish Renewables, the British Hydropower Association, Buccleuch, CCSQ, Drax, Intelligent Land Investments Group and SSE Renewables.
The report said that whilst the need for long duration storage was detailed in the energy white paper, there were “no specific market mechanisms to ensure this can be delivered”.
It said that a price floor mechanism would guarantee a minimal level of revenue, which would give confidence to investors with long duration projects currently unable to attract investment from capital markets.
The report said this was largely due to two uncertainties; future project revenues and the future market landscape.
"Without urgent market reform these assets will struggle to be funded," Mark Wilson, ILI Group CEO, warned.
As a result, the report has issued a series of recommendations, including that the Department for Business, Energy and Industrial Strategy (BEIS) and Ofgem should issue a call for evidence to industry about the potential costs and benefits from long duration storage and the barriers to investment and how these could be addressed.
Within the report, benefits of the technology were listed as:
- Increased renewable output by reducing the need for curtailment of renewables due to network constraints or at periods of low demand
- Increased system stability and resilience by providing the full range of flexibility resources for power, frequency, inertia, voltage, short circuit levels and restoration
- Whole system savings by reducing the need for additional network and generation capacity
- Lower costs, particularly with pumped storage, than other long duration flexible technologies
The second recommendation was for both BEIS and Ofgem to ask National Grid ESO to identify major alternative long-term whole system flexibility needs and benefits and prepare a specification for procurement of these long-term flexibility resources.
The two should also design a new flexibility market, exploring how the income floor could work to enable investment in long-term flexibility solutions, with this defining the parameters for the selection of resources, for example flexibility or storage volumes, costs, operational durations and delivery timescales.
Lastly, BEIS should consider the responsibilities and resources for identifying and specifying flexibility needs, market operation and ongoing performance and compliance.
These recommendations should be implemented through the Smart Systems and Flexibility plan due to be published later this year.
Wilson added that if the government doesn't provide clear pricing signals then the market "risks becoming increasingly inefficient, putting net zero and security of supply at risk, and consumers will be paying more than they need to”.