World Energy Resources | 2016

WORLD ENERGY COUNCIL | E-STORAGE
technology-agnostic approach will also allow flexible generation, demand
management and greater interconnection to compete against storage.
3. Revenue compensation for services: Fairly value the full range of services that
storage can provide. This is often not the case at present. For instance, the
opportunity to help network operators to defer investment in transmission or
distribution assets is not always clearly priced, or even available. Similarly,
intervention in some wholesale energy markets has reduced the “spikiness” or
volatility in energy prices, meaning that price arbitrage services are not fairly
compensated.
4. Removing regulatory anomalies: Ensure that regulation is storage-ready.
Address outdated regulatory barriers, such as double fees for storage assets for
both charging and discharging, and clarification of storage’s functional
classification. Ensure that storage located on the distribution network is not unfairly
prevented from providing value to the transmission network.
5. Supporting innovation: Storage technologies with low Technology Readiness
Levels, and startups with innovative business models, may justify capital grant
support to test their higher-risk propositions. In Canada (Ontario), innovative
storage projects are being supported by contracts for 10 years, as short-term
market arrangements are seen as difficult for projects with high capex.
6. Promoting data transparency from system and network operators: Ensure that
network and system operators make data publicly available and transparent, to
inform storage siting and system sizing decisions.
The following case studies provide examples of incentivizing a range of storage business
models.
ENHANCED FREQUENCY RESPONSE (EFR) IN THE UK
The UK’s transmission system operator National Grid issued its first tender for
Enhanced Frequency Response (EFR) in 2016. The goal is to procure services
that address the challenge of reducing system inertia (due to increasing
penetration of non-synchronous sources such as PV and wind), improving
management of the system frequency.
Contract duration is 4 years. EFR providers must offer a solution which can
activate within 1 second, and provide this service for at least 15 minutes at a
time. Projects can be between 1 MW and 50 MW.
This revenue stream comes in the context of a wider National Grid campaign,
“Power Responsive”, which has helped ensure stakeholder engagement early
on.
To ensure cost-effective procurement on behalf of consumers, National Grid has
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