Enhanced frequency response will be the main driver of battery storage adoption in the UK, according to a survey by SmartestEnergy, a British buyer of electricity from independent generators.
Almost 70% of the 45 battery innovators surveyed said they believed their biggest revenue opportunities would come from grid services such as EFR contracts.
SmartestEnergy said the survey showed there was ‘great’ appetite and ambition to develop commercial battery storage in the UK.
The announcement came as utility firm National Grid closed a 200MW Enhanced Frequency Response contract auction— seen as a first step to unlocking the sector’s potential.
But with around 1GW of UK battery projects in the pipeline, the limited availability of contracts risk the development of the market, say SmartestEnergy.
The four-year time-span and restricted revenue streams have also left many firms worried about the profitability of potential projects, claim SmartestEnergy.
Around 50% of the firms surveyed expect a project’s payback to be achieved within 5-10 years and 16% believe it will take more than a decade.
Investors and developers are therefore looking to install batteries alongside existing renewable energy projects to maximise profits, stated SmartestEnergy.
This has led SmertestEnergy to call for the National Grid to provide more certainty on future frequency response capacity in order to drive the emerging energy storage sector.
Robert Owens, vice president of Demand Side Management at SmartestEnergy said: “It’s clear that the current EFR capacity in isolation will not be enough to unlock the full potential of batteries, so developers need to know what’s next for the projects that won’t win an EFR contract in this auction.
“It is also critical for developers, aggregators and lenders to work together to identify commercially viable ways to bring these projects to market.
“Given that storage is on the brink of commercialisation and has the potential to create transformational change in global energy systems, it is important that experience and best practice are shared in order to advance this sector.”