Summary: Energy storage seems set to transform the world’s energy order over the coming years. Today, the UK took a step toward this new order with the announcement of the first tender results for National Grid’s new enhanced frequency response (“EFR”) service.
EFR is a new balancing service available to technologies which can achieve one hundred percent active power output within one second of registering a frequency deviation. Given batteries’ ability to deliver active power almost immediately, they are ideally suited to provide such services (and the service was put together with batteries specifically in mind). EFR, therefore, will provide a key revenue stream to developers of battery storage assets and may provide the basis on which they will be able to obtain third party finance provided other challenges can be overcome.
In order to participate in EFR, participants must pre-qualify and take part in a tender process. The results of the first tender were published today (26 August 2016).
Of 203 tenders submitted, eight were successful, securing 201MW of EFR capability, all from energy storage assets. The average price of the accepted tenders was £9.44 per MW for each hour of EFR availability.
The successful tenders were submitted by EDF Energy, Vattenfall, E.ON, Element Power, RES, Belectric and Low Carbon (which had two tenders accepted).
Although EFR may provide a key revenue stream for those considering investing in battery storage, there remain a number of regulatory and commercial obstacles to overcome first.
We are publishing a series of articles on energy storage (read the first installment entitled 'Energy storage: Behind the meter part 1 - Benefits') to help those considering investing in energy storage navigate the most significant issues. Please do not hesitate to get in touch if you wish to discuss or have any questions.
Full details of National Grid’s EFR announcement can be found here: http://www2.nationalgrid.com/Enhanced-Frequency-Response.aspx.