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Exploring new and innovative regulatory frameworks have long been a topic of discussion in the energy storage world – it’s a programme topic in this year’s Energy Storage World Forum. But while regulations fail to keep pace with new advances in the sector, how much is this holding back the adoption of energy storage technologies?
Energy storage suffers from lack of regulatory certainty within the EU. While a number of member states – Germany and the UK especially – have made great strides in adoption levels, lack of consistency is a looming issue.
A key problem is that much regulation does not know where energy storage systems should be classed – when treated as a generation asset, this prohibits DNOs from owning or operating them. It also opens storage operators to being charged twice, for both charging and discharging.
The lack of clear regulatory frameworks makes long-term revenue forecasting a difficult affair for developers and keeps investors and financiers cautious.
While these regulatory conditions are not ideal for energy storage developers, the sector continues to grow as the technology matures and financing becomes easier to procure. Capital expenditure costs are falling and new avenues to market are opening, with grid ancillary services being the primary target for new developers. The UK’s National Grid have signalled that large changes to the grid-balancing services market are to come, further expanding energy storage opportunities.
Meeting the needs of end users and grid operators has seen large amounts of storage capacity installed both for grid-scale applications and behind-the-meter. As the benefits of resilience and flexibility become more apparent to potential investors and the business case for storage applications becomes more robust, demand and deployments will keep increasing. Dominique Jamme, Special Adviser to the President of the French Commission de Régulation de l’Énergie (CRE), opined that regulatory barriers are secondary to market barriers in much of Europe in ESWFs February Webinar.
Falling costs and deployment benefits may have given energy storage an unstoppable momentum, but that does not mean that current regulatory frameworks are not hampering growth. Even now, growth is concentrated in a small number of countries – those where policy and regulations favour storage adoptions and recognise (or begin to recognise) it’s value. This effect is particularly noticeable in the United States, where regulatory differences between states have a clear effect on the amount of planned energy storage deployment.
Regulatory barriers are also identified as a hindrance to further energy storage projects by many in the field. In the UK, the All-Party Parliamentary Group (APPG) on Energy Storage claim that current government policy will reduce the storage capacity deployed by 2021 from a potential 12 GW to 8 GW. The European Association for Storage of Energy (EASE) have also stated that regulations must keep up with advances for the technology to flourish.
The benefits of energy storage for both end users and the grid have already reached a tipping point where costs are justified for many business cases – this trend shows no sign of stopping. Regulatory frameworks that recognise the value of the technology, coordinate advances throughout the European member states and give developers a consistent structure for long-term forecast are still necessary for optimum growth.
If you want to know more about this and other topics directly from end users of energy storage technologies join us at one of these energy storage conference: The Energy Storage World Forum (Grid Scale Applications), or The Residential Energy Storage Forum, or one of our Training Courses.