15 September 2017

Last Friday (8 September 2017) Regen responded to the latest consultation on the Capacity Market (CM).

This ‘improving the framework’ consultation was dealing with concerns that short duration batteries in the Capacity Market would pose a risk to security of supply as a result of their potential inability to generate for the full duration of a system stress event. BEIS were looking to adjust de-rating factors to reward longer duration storage.

Along with many others, we had concerns about this consultation. Particularly the late-in-the-day changes being proposed to the forthcoming capacity market auction. We challenged the assertion that ‘market participants may have already been expecting these proposed changes’ as the documentation for pre-qualification published in July had no indication of any such change.

Our rapidly changing energy system requires huge investment from the private sector in diverse energy technologies. Changes like these, made unexpectedly and outside of the formal process, will inevitably impact investor confidence in delivering the government’s energy objectives. We also flagged some concerns with other statements within the consultation.

  1. Assumption of short battery duration. Recent research for Western Power Distribution ‘Energy Storage, Growth Scenarios and Operating Modes’ shows that no generalisation can be made about batteries having a short duration. Each system has different requirements depending on the income streams they hope to capture. Systems co-located with renewables are likely to be longer duration than those delivering Enhanced Frequency Response, but this cannot be assumed.
  2. Issues with degradation and charge. There were also concerns about batteries maintaining capacity levels: ‘The declining performance of batteries over time’ and ‘some batteries may be less than fully charged at the start of a stress event’. We argued that these issues were not unique to batteries, but also that penalties for performance during a stress event already drive the investment to maintain the contracted capacity from all technology participants. If BEIS believe the existing penalties are not sufficient to deter non-delivery, we feel this concern would be best and most fairly addressed by adjustments to penalty system. We feel that trying to tackle these issues in de-rating bands creates a complex and uneven playing field which will make the capacity market less efficient and more costly.

Our final point was to ask for clarity about expected stress events and modelling behind the consultation. We would like to see duration requirements for all technologies related to notice period, length and magnitude of possible stress events. The consultation acknowledged that two hours is the average length of a stress event, but proposed the banding will be highest for four hours and above. To us this seems excessive. 

See the full response here. 

Author: Poppy Maltby

Contact: [email protected]

Image: AES Energy Storage