Developers pin hopes on batteries as renewables flatline

Independent developers are turning their attention to the storage market after the growth of renewables flatlined towards the end of last year, a new report by Smartest Energy has found.

Developers pin hopes on batteries as renewables flatline

Battery storage capacity is set to grow by up to 100-fold between now and 2020 as developers come to terms with sudden and steep cuts to renewable subsidies, according to the consultancy firm.

“Independent developers still have renewable project pipelines and are looking at innovative ways to build without subsidy. They are now also driving forward the battery revolution.”

The report, which focuses on non-traditional players in the energy market, notes that independent generators have so far invested £2.75 billion in more than 6,400 solar parks, wind farms and other renewable projects in the UK with a combined capacity of 12.75GW. Of that around two thirds – or 8GW – was built in the last four years at a cost of £1.5 billion.

However, this growth stalled in the final quarter of 2016, “bearing out warnings that subsidy cuts and political uncertainty are combining to push a thriving sector over a cliff edge.”

On average, 275 independent renewable projects were completed each quarter since 2013, but the figure fell to 38 in the last three months of 2016 and just 21 in the first three months of this year. The collapse in investment followed the government’s decision to slash feed-in tariff rates and close the renewables obligation ahead of schedule.

Faced with an “extremely challenging” renewables market, energy entrepreneurs are now pinning their hopes on the burgeoning storage sector, where “falling technology costs and the availability of new revenue streams” are creating opportunities for growth.

Contracts worth £235 million have already been won by 31 new battery storage projects in the capacity market auction and the enhanced frequency response (EFR) tender. Independent developers secured four in five of battery contracts in the capacity market and more than half of EFR contracts.

The report says these agreements alone will bring the installed battery capacity in the UK to 131MW in 2017, 221MW in 2018 and 578MW in 2020.

But this is only part of the picture, as plans have been announced to build a total of 153 battery storage projects over the next four years with a combined capacity of 2.3GW – more than 100-times the 20MW installed capacity at the end of 2016.

Of this, a quarter is planned for Kent and 11 per cent for Yorkshire, both of which have large volumes of renewable generation when compared to the rest of the country.

However, the report warns that there are challenges to overcome if the storage sector is to reach its full potential, including the limited availability and short length of contracts for grid services and the double-charging of storage.

Iain Robertson, vice president for renewables at Smartest Energy said: “Energy entrepreneurs are at the forefront as we transition to a new energy system. Independent developers still have renewable project pipelines and are looking at innovative ways to build without subsidy. They are now also driving forward the battery revolution.

“We call on the government to recognise the role renewables and storage can play in its forthcoming industrial strategy, and to allow them to compete with traditional generation on a level playing field.”


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