Experts call for market certainty to deliver long-duration energy storage

Policy-makers need to better incentivise investment in long-duration energy storage solutions to ensure the stability of electricity grids powered by renewables, a panel of experts has warned.  

At a special roundtable for the UN Climate Conference (COP26) organised by SSE Renewables, the panellists addressed the policy, regulatory and market challenges to developing pumped storage hydropower (PSH) and other technologies such as liquid air energy storage and green hydrogen.  

Malcolm Turnbull, former Prime Minister of Australia and Co-Chair of the International Forum on Pumped Storage Hydropower, emphasised the need to move quickly to build more PSH to meet 2030 and 2050 net zero emissions goals.  

Commenting on the need for the grid balancing services offered by long-duration storage, Mr Turnbull said: “Pumped storage hydropower is the key technology that is doing that today, but there is a big temporal asymmetry.  

“We can build solar in months and wind in a year, but hydropower takes time. We’ve got to do more [pumped storage hydropower] and we’ve got to get ahead of the game.”

Balancing intermittent renewables

This view was echoed by Jim Smith, Managing Director of SSE Renewable, who said: “We all know that wind is intermittent and that with the [UK] government’s targets for 2030 we need to move quickly to build additional long-duration energy storage.”

SSE Renewables is developing a major new PSH scheme in Scotland, Coire Glas, which has a potential capacity of up to 1500 MW. It is the first such large-scale scheme to be developed in the UK for more than 30 years and would more than double existing national storage capacity.  

“We’re pleased the government has come out with a consultation on long-duration energy storage and outcomes are expected next year. SSE Renewables has asked for a Cap and Floor mechanism in order to stabilise the revenue streams and bring more investment.

But Mr Smith warned: “We can’t afford to wait too long for the government to make decisions. Construction takes a long time, we’re anticipating six years with Coire Glas and everything in the sector now needs to be done at speed,” he said.

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An ignored crisis

Eddie Rich, CEO of the International Hydropower Association (IHA), said: “This is the crisis within the crisis – where’s the back-up, what happens when the wind doesn’t blow and the sun doesn’t shine, as well as when there’s too much excess energy from those sources. We need to wake the policymakers up to this ignored crisis.

“As the IEA and IRENA have stated, we need to build in the next 30 years more hydropower capacity than we’ve built in the last 130, so it’s a big challenge. There’s not nearly enough being built globally.”

Mr Rich emphasised the importance of ensuring that moving forward, all hydropower is sustainable.

“We’ve discussed some of the priorities [for accelerating PSH development] in Scotland and the UK… but we still have to demonstrate sustainability. The only acceptable hydropower is sustainable, in line with the recently launched Hydropower Sustainability Standard,” he said.  

Policy and regularly framework

The lack of an enabling policy and regulatory framework for investment in PSH technology was identified by the roundtable as the most significant barrier to greater investment in new long-duration energy storage.  

Ian McKinniard, Scottish Assets and Generation Engineering Director at Drax, said: “The challenge is the long route to market and revenue stability. Trying to predict the future is very difficult, and these are assets with an almost infinite lifetime.

“It is very capital intensive and has a long lead time before, as a business, we get a return on this investment… we need to make these decisions soon to meet the [net zero] target.”

Regarding the regulatory and market incentives needed, Ed Porter, Business Director at Invinity Energy Systems, said: “We’re going from a very centralised system to one where we have to be very smart about where we put these technologies and how we balance the grid.  

“The capacity market is mainly providing support to higher carbon solutions, and we need to encourage low carbon solutions.”

New market mechanisms  

Julian Leslie, Head of Networks at the National Grid Energy Electricity System Operator, spoke of his concern about how lengthy periods of low generation from variable renewables, particularly wind, would be met in the future. He said: “We need very, very large scale long-duration energy storage.  

“By 2025 we will have surplus [variable renewables] generation that we will need storage for. We absolutely need market certainty to bring these technologies to market, we need mechanisms like Cap and Floor, and we have a lot to do with long-duration energy storage in a very short time.”

Simon Gill, Head of Whole System and Technical Policy at the Scottish Government, agreed that technologies like PSH need the support of Cap and Floor mechanisms to support the return on investment. He said the energy and the amount of storage required across the system to respond to situations such as wind droughts is huge.  

“We’re doing what we can to decarbonise energy generation through renewables, but how do we decarbonise that energy storage to deal with wind droughts in the future?  

“What we as a country and globally need to do is to understand what role each technology needs to play. PSH has a role to play in managing hour by hour and day by day variations.”

Simon Markall, Deputy Director of External Affairs at Energy UK, said that a plan for the different technologies required to support the future energy system is urgently needed from the UK and Scottish Governments.

“We’re not going to meet net zero through renewables alone. We need a mix of technologies and nuclear will play a part in that. Not in Scotland, but in the UK at least one nuclear plant is planned to provide that stability in the system.”  

Vision from policy-makers

Ita Kettleborough, Deputy Director at the Energy Transitions Commission spoke about its work to assess what will be required across the energy system to reach net zero by 2050. “We can see lots of solutions, but if we’re going to make this transition in the next 30 years, we need the vision from policymakers… we need to see a market design and we need large amounts of private capital to flow in as quickly as possible,” she said.

Stantech’s Director of Water Power and Dams, Craig Scott, agreed that there is a gap between the private sector and the government sector globally in how to enable long-duration energy storage projects. He said that the common factor across the schemes Stantec is working on across the world, involved regulators looking at security of supply or specific technologies to unlock private investment. He said: “Very few are getting developed, but it can be done.”

Managing Director at COWI UK Andy Sloane queried whether the UK has the ambition to build the scale of new energy storage needed. “The scale of ambition in Scandinavian countries and especially Denmark is significant. They’re making a £24 billion investment in a series of offshore windfarms to create green hydrogen on an island for industry (not long-duration storage). Do we have that ambition in terms of scale from a policy perspective? It takes a long time to build these projects and get them off the ground.”

When asked what one message needed to be conveyed to world leaders at COP26 about long-duration energy storage, the group highlighted the need to remain technology neutral in order to meet the ambitious targets, and the urgent need for an overall plan – a market design – to provide direction to the energy sector.  

Read more about IHA at COP26

Watch: SSE Renewables at COP26 - Setting out our vital role in addressing the climate emergency

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