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The energy regulator Ofgem has taken another step forward in levelling the playing field for electricity storage operators.
Earlier this month, Ofgem announced a consultation around holding a review of the way electricity system users such as generators and storage operators get charges for using the grid.
The Significant Code Review is proposed because the rapid pace of change and innovation – for example rapid increase in small-scale renewable generation, more and more electric vehicles and greater deployment of electricity storage – was not anticipated when the current charging approach was set up.
There are a myriad of different charges and fees depending which part of the electricity system is being used when and by whom. In general networks users are charged for initial connection and then for continuing use. This is to cover the costs incurred by network operators in maintain their systems, for example in replacing cables.
One particular element that Ofgem intends to look at is how these charges affect operators of electricity storage. As ICE pointed out in our Realising the Potential report, because grid-connected storage both imports and exports electricity they get charged twice where a generator which only exports electricity gets charged once.
At first this might seem fair – storage is using the system twice so should be charged twice.
However, one of the charges levelled is to cover the cost of balancing the transmission grid – that is, making sure the supply of electricity matches the demand. As providing this balance is one of the main functions of electricity storage – it can either take or generate electricity as the system requires – it is actually unfair and it is holding back greater use of storage.
Why does this matter? One reason is that an increasing amount of renewables on the system means more intermittency – fluctuations in the amount of power being generated as wind and sunshine varies minute to minute.
At present, we generally rely on gas power stations for back up when there is too little power from renewables and curtailing wind generation when there is too much. This is very inefficient.
A better way would be to store the power generated when there is excess for times when there isn’t enough. The more storage we have the more renewables the system can accommodate and the more efficiently they can run, keeping costs down for consumers. Ofgem’s proposals realise this and will hopefully result in removing a barrier to more storage.