Seven battery storage companies have written an open letter to Ofgem complaining that the regulator’s proposed ‘cap and floor’ support for long duration energy storage (LDES) is unfair to battery storage and as a result will disadvantage customers.
The companies – Gresham House Energy Transition, Harmony Energy, Zenobē, Field Energy, Eku Energy, Adaptogen Capital and Voltwise Power – together represent 37% (1.9GW/3.1GWh) of the UK’s 5.3GW operational battery capacity.
reliable and low cost for consumers.
Batetries have been build out at speed in GB and up to 27GW of battery storage is required in the Clean Power 2030 target. They typically have been used to manage short term requirements of minutes or hours.
Other forms of energy storage aimed at acting over days or even weeks – so-called long duration energy storage (LDES) – has proven more difficult to finance. The technologies used are expected to be high capital cost projects that take much longer to build and install than batteries. As a result, batteries have been excluded from a proposed ‘Cap and Floor’ scheme in aimed at other technologies.
The battery companies say lithium-ion batteries are the most competitive LDES technology and they cite a report by LCP Delta which says that excluding batteries save the consumer £2.22bn compared with other technologies.
They say support for LDES “directly impacts bidding behaviours and pricing in markets”. LCP Delta estimates this will cause a 12% reduction in operating margin for shorter duration batteries without revenue support.
They also say cost assumptions in gthe LDES plan are “outdated”. They say there is a bias towards pumped storage hydro, although LCP Delta’s analysis says batteries are cost competitive at 12-hour durations or longer because battery prices have dropped.
The companies also say batteries can be installed in less than two years and are not constrained by location.