December 4 (Renewables Now) - The UK government has unveiled changes designed to ensure that storage capacity gets a proper remuneration for its contribution to security of supply.
The Department for Business, Energy and Industrial Strategy (BEIS) today published a response to a capacity market (CM) consultation, saying the government will amend the approach to de-rating storage in order to correct an over-valuation of the contribution to security of supply made by short duration batteries. The storage generating technology class will be divided into separate classes and for the upcoming T-1 and T-4 auctions those of up to 3.5 hours minimum duration will be 'duration limited'.
National Grid has simultaneously published its final report on duration-limited storage de-rating factor assessment. Its proposed storage de-rating factors are in the table below:
|Minimum Duration||2018/19 T-1||2021/22 T-4|
According to the government, continuing to award all storage systems a de-rating factor of 96.11% may lead to inefficient auction outcomes. It says that the prequalification results for the upcoming auctions show that projects for around 6 GW of new build battery capacity have applied for the T-4 auction, and over 2 GW for the T-1 auction. "These results demonstrate there is a real possibility of a rapid increase in market penetration of shorter duration batteries, with consequential concerns around security of supply," according to the document.
The Renewable Energy Association (REA) said the CM reforms will largely exclude short-duration batteries from the auction and criticised the timing of the changes, coming in the middle of an on-going auction process.
"The changes unveiled today are slightly less drastic than those first proposed but could make it harder for a number of battery storage projects to compete," said REA policy manager Frank Gordon.