Earlier this week the UK government and energy regulator Ofgem published a strategy for a modernised, smart and flexible power system, the result of an eagerly anticipated response to last year’s Smart Power Call for Evidence.
The 32-page document outlines how the Department for Business, Energy and Industrial Strategy (BEIS) considers the domestic power market to mature and includes significant clarity, transparency and guidance for its minded role for storage, as well as potential benefits for the UK’s solar scene.
Business secretary Greg Clark said: “Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy. A smarter energy system will create opportunities to reduce energy costs, increase productivity and put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”
Breaking the document down into four main sub-sects, the key points of the big unveil are:
Utility-scale solar
Solar asset holders are to receive guidance on how storage can be retrofitted onto their sites without impacting subsidy schemes they may qualify for. The most recent CfD (Contracts for Difference – a government-backed method for investing in low carbon tech) consultation has revealed how storage should be treated on CfD-eligible builds, while Ofgem has updated it guidance on the Renewable Obligation subsidy scheme (RO) accreditation amendment process and provided guidance on how to co-locate storage. This will be followed by new guidance on the feed-in tariff (FiT) and RO schemes for any participants who wish to retrofit battery storage at a later date. This is likely to be of significant importance to owners of solar assets, particularly funds and other long-term holders, who could deploy battery storage en masse once more certainty is provided and the economics make sense.
Utility-scale energy storage
Storage may not face demand residual charges at transmission and distribution level courtesy of Ofgem’s Targeted Charging Review, published in March this year. Ofgem is expected to announce details on the scope of that review shortly, with a view to provide guidance on the subject by the end of the year.
Primary legislation will be used to amend the Electricity Act 1989 to include an explicit definition of electricity storage, specifically as a generation subset. This will then allow Ofgem to consult on a modified generation licence for storage which it intends to introduce by next summer.
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