The Commission on February 6, 2017 presented its published its long awaited Commission Staff Working Document on Energy Storage on the role of energy storage in relation to electricity and outlining status of  several storage technologies. The proposed EU Market Design Initiative (MDI), that came out end of November as part of the “Winter Package” introduces a number of elements into the electricity markets which can facilitate investments in energy storage. Investments should be based on market revenue, rather than subsidies, and should be enabled by improved predictability in relation to the contracted services and allow storage facilities to build on the various value streams 4 that they provide (e.g. ancillary, including balancing services to the grid, avoidance of curtailed variable electricity, decarbonisation of other sectors).

The drive behind the MDI is to get a fair deal for consumers, as they start to play a more active part within the energy market. The MDI strives to protect the consumer with better access to information (ex: smart meters). Flexibility is promoted as a mechanism to better convey pricing in a more responsive manner on both the consumer and the producers. The Winter Package equally strives for technology neutrality where inherent mechanisms will drive prices and investments. For this reason, the Commission has opted to remove priority dispatch, everything will be based on market signals. The only exception being priority dispatch for small RES and small HE CHP and demonstration projects for innovative technologies capped at 15% of installed capacity. With the caveat that those projects already in place prior to the MDI will retain priority dispatch.

The document lists four principles  on which further energy storage deployment should be based:

1.    Full participation of energy storage in electricity markets; Storage services should be traded in competitive markets, where new flexibility products would provide a market value reflecting the system benefits of storage. In line with the market design initiative proposal, owners of storage facilities should be independent from the grid operators, apart from clearly defined exceptions.

2.    Adequate remuneration for services provided by energy storage devices and equal treatment vis-à-vis other providers of flexibility:  Storage operators should be allowed to provide multiple services to electricity system operators and also simultaneously participate in other commercial activities with other economic actors (eg. chemical industry). Some specific services provided by storage facilities to the grid operators can be seen as alternatives to grid extension, and this should be reflected in the investment analysis.

3.    Sectorial integration of energy storage, e.g. through chemical storage (hydrogen), in order to integrate higher amounts of decarbonised, variable renewable energy sources and to foster energy security; various mechanisms can support markets for the integrated solutions, such as power to gas or liquids, power-to-heat, or integration of variable renewable electricity in mobility or as feedstock in industry (e.g. refining, fertilisers, mobility). Such solutions will support both decarbonisation in various economic sectors and provide additional economic opportunities for energy storage.

4.    Full deployment of decentralised storage through a non-discriminatory regulatory framework: Storage, together with other resources like demand response, should be considered in grid planning, both at transmission and distribution level. The access to grid connection should be ensured in the same way as for other flexibility solutions by the grid operator. Market, regulatory and administrative barriers to installation and operation of storage facilities should be removed.

Photo: courtesy Sandvik: HRS powered by wind