The Quarry Battery Company – Written evidence (LES0005)


Introduction to The Quarry Battery Company.


QBC have championed new Pumped Hydro in the UK since 2010. We have developed a suitable site to the point of being “construction ready” in North Wales, called Glyn Rhonwy. We have a grid connection offer, land options and planning consents and we await government policy clarity before we can make our Final Investment Decision. We are currently backed by a large and well respected UK based energy company.


Recent events have led to a significant uplift in the expected construction costs of our facility. Energy price volatility as a result of the sanctions applied to Russian energy exports, and materials and labour cost increases in the UK have led to well documented increases in the cost of UK infrastructure projects. A reliable and stable energy policy background is in our opinion the only thing now that can assist in delivery of this much needed class of energy storage as we transition to a net zero economy.


We think an interconnector style “Cap and Floor” system will be as successful at delivering sovereign long duration large scale energy storage as it has been at delivering interconnection between the UK and its neighbouring countries. Our project, its preferred contractors and our investment committee await the government’s decision.


1. How much medium- and long-duration energy storage will be needed to reach the Government’s goal of a fully decarbonised power grid by 2035 and net zero by 2050, and by when will it need to be ready?


QBC – others are better positioned to provide a response here.



 2. How sensitive is the amount of storage needed to assumptions about the future balance of supply and demand on the grid?


Electrifying heat and transport is a central part of the UK net zero strategy. Electrification of heat and transport will inevitably increase the MWh of electricity required by the UK. More supply and more demand will need more balancing.


However the amount of balancing required is affected not just by the overall size of the market, but also by the nature of the energy provided. Ramping up and down gas and coal production is relatively simple, whereas wind and solar are weather dependent and nuclear is difficult to switch off. A renewable energy system with storage is cheaper to run than without storage. When the wind blows the price drops and the stores are filled. When the wind drops the price rises and the stores are emptied.



3. Which technologies can scale up to play a major role in storage?


The cost of installing lithium batteries is proportional to the MWh installed. It is relatively inexpensive to create a powerful battery, but very expensive to create a battery that can keep on delivering for many hours at a time. These battery installations last around 10 years and then need replacing.


The cost of Pumped Hydro is proportional to its MW more than its MWh. This makes it expensive to make a powerful Pumped Hydro installation, but it is not much more expensive to make a deep battery than can deliver for 4 hours or more. These installations require a serious initial investment but last indefinitely with proper maintenance.


Both of these technologies will be complementary of a net zero energy system.



4. What policy support is currently in place to support deployment of storage technologies? Is it sufficient to support deployment at scale?


The Capacity Mechanism is not sufficient in its current form to support large scale long duration storage.


The CM fails to recognise the duality of storage. A 100MW storage facility can act as a source of generation, or as a source of demand and so is uniquely useful in assisting the grid.


The CM fails to value the speed of response. During a stress event you have 4 hours notice to get your generator warmed up while fulfilling your obligations under the CM. Storage is often dispatched in under a second or a minute. The market mechanism for this is the Balancing Mechanism, and this provides clear price signals, however not on a time horizon that gives sufficient security to an investor. Therefore studies we have commissioned into the value of storage tend to discount heavily the price signals in the market and instead focus on wholesale price spreads – which also fail to value the flexibility and speed of storage.


The failure of the policy environment to capture the nature and the value of storage to the UK consumer is contributing to consumer bills. The proportion of consumer bills attributable to Grid Balancing has greatly increased over the last 5 years as a result. The market signals in the balancing mechanism are not long lived or reliable enough to base a 100+ year investment decision upon. This is why lithium is being built but pumped hydro is not.



5. How well developed is the UK industry across different storage technologies, such as hydrogen or redox flow batteries? How does the UK compare to global competitors in these industries?


QBC – others are better positioned to provide a response here.



6. Beyond the cost of deploying long-duration energy storage, what major barriers exist to its successful scale up (e.g. the availability of a skilled workforce, the ability to construct the necessary infrastructure on time, or safety concerns around new technologies)?


QBC – others are better positioned to provide a response here.



7. What steps should the Government take now to ensure this storage can come online later in the current decade?


Clear long term policy support in the form of cap and floor for large scale long duration energy storage projects. Policy should understand that location, size, depth, speed and asset life all play a part in the benefit of building such facilities.


7 September 2023