Editor’s weekly: EFR winners and losers

The allocation of the first contracts for enhanced frequency response is welcome, but they have not dispelled uncertainty about prospects for energy storage.

30th August 2016 by Networks

The champagne is no doubt still flowing at the eight energy storage providers who landed contracts with National Grid’s enhanced frequency response service on Friday 26 August.

The contracts, worth almost £66 million in total, are a major boon to their recipients. It’s often been said in these pages that demonstrating a viable business case for energy storage is the major barrier to the growth of fledgling manufacturers and service providers. Now, here are eight companies with a variety of battery technologies, providing essential support to the UK’s system operator and bagging themselves millions into the bargain.

“Every silver lining has a cloud. Even before the EFR contracts were announced in late August, there were voices pointing out that the celebrants would be far outstripped by disappointed bidders.”

National Grid’s awards for 200MW of EFR are the first of their kind in the UK and collectively represent the biggest deal for the storage sector globally this year, according to Bloomberg New Energy Finance.

As such, they have been welcomed by most as a significant fillip for the sector as a whole. But every silver lining has a cloud and even before the EFR contracts were announced in late August, there were also voices pointing out that the celebrants would be far outstripped by disappointed bidders. With no visibility of more EFR contracts, or similar, in the pipeline, Smartest Energy, an aggregator, warned that uncertainty is still a very real problem for most energy storage players. “What’s next?” for the providers that didn’t win a contract, it asked.

The answer may soon become apparent as responses flood in to the smart systems call for evidence, expected in early September.

The call, issued by Ofgem and the Department for Business, Energy and Industrial Strategy, devotes considerable space to the prospects and potential of energy storage. It shares thoughts on “undue” barriers to the industry’s development including so called “double charging” and consumption levies as well as asset classification and planning regulations.

As with most government processes, the call won’t lead to immediate remedies to these problems – that will take moths at best – but it should at give greater clarity on the direction of thinking within government and the regulator about the role it would like storage to play in the future energy system.

Notably, the call will give insight into the possible future of DNO interaction with storage, most likely as local system operators with their own EFR-style contracts to offer eager bidders.