Highview Power Enterprises – Written evidence (LES0011)

 

Introduction – Highview Power

Highview Power is one of the UK’s leading long-duration energy storage organisations, providing Liquid Air Energy Storage (LAES), a form of long-duration energy storage (LDES) with synchronous generation. It has been operating with support from DESNZ for over 15 years as it has evolved and proven its technology. Highview’s technology and products make renewables more flexible, efficient and dependable to energise businesses, communities and nations worldwide, while simultaneously providing for a more stable grid.

 

Highview is currently finalising fundraising, to build the first commercial-scale LAES facility at the Trafford Energy Park in Carrington, Manchester. Carrington will be capable of storing enough renewable energy to power 1 million homes thanks to its storage capacity of 300 MWh and output power of 50 MW. Its construction will support over 650 local jobs. The Carrington project is the first of a £10bn infrastructure programme across the UK underpinning Highview’s ambition to deliver nearly 20% of the UK’s long-duration storage requirements.

 

The speed and success of the programme will be hugely dependent on the nature and amount of government support for long-duration energy storage over the coming years, particularly its potential positive effect on investments through guaranteed revenue streams that increase certainty for investors. Highview Power would be interested in providing an oral response if the House of Lords considers it necessary.

 

Highview Power responses

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?

 

 

Source: Future Energy Scenarios 2023.

 

 

Source: Aurora Energy Research.

 

 

 

Storage will be needed in all scenarios of a true net zero power system as power will need to be supplied to customers when the wind does not blow or the sun does not shine.

 

But there are mainly two cases in which the grid will draw heavily on LDES:

  1. The high-generation, low-demand scenarios: refers to times of high wind or high solar generation when energy storage assets will be used to store excess renewable energy, thereby increasing the efficient use of renewable energy.
  2. The low-generation, high-demand scenarios: refers to times of low wind and solar generation when the grid will rely on energy storage to meet demands, thereby reducing reliance on peak carbon emitting thermal generation.

 

Long-duration storage is required to match the typical durations of UK windy spells: when the wind blows it tends to blow for many hours far exceeding the storage durations of typical battery storage projects.

 

However, the scenarios are poorly understood as traditional market analysis models tend to assume a perfect grid transmission system and no grid stability needs.

 

In reality,

(a) thermal CCGTs are still being used by the ESO to provide locational grid stability which could instead be provided by certain types of long duration storage that offer synchronous generation.

(b) In addition, there is a practical limitation to the amount of invertor-based generation that can be safely managed within a grid system. LDES technologies that provide synchronous generation will be required to support inverter-based generation; and

(c)  grid transmission line thermal constraints mean that generated renewable energy cannot meet demand due to inadequate grid transmission capacity therefore leading to an even greater requirement for long duration storage than is currently forecast by most market analysts. The only way to truly understand the grid system needs is to use a full power flow model.

 

 

No comment.

 

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

 

In all scenarios, a very large volume of storage needs to be built out to achieve net zero, which is why action needs to be taken now. The precise storage estimates can vary due to the following:

-          The level of grid reinforcement within the GB transmission system;

-          The physical locations of the renewable energy projects within GB;

-          The number of interconnectors with other transmission systems;

-          The level of short cycle storage (including EVs);

-          The overall level of electrification; and

-          The viability of other low carbon flexible assets.

 

 

The GB market cannot rely on nuclear power and fossil fuel generation with CCUS alone as:

(a) these technologies are most optimal as baseload generators;

(b) they can only be located in certain locations or clusters; and

(c) they don’t provide a demand when there is excess renewable energy.

 

These power plants aren't designed to operate as flexible assets in response to immediate grid requirements and therefore energy storage will remain important to the grid. Specifically, LAES can be located anywhere and dispatched flexibly, unlike some other technologies.

 

 

Interconnectors can help address the balance between supply and demand, but they are also not a complete solution as (a) the benefit of an interconnector is reduced if there is a strong correlation of needs across both markets and (b) it still needs to be physically possible to transport the energy across the GB and secondary market transmission system to reach the interconnector location. Many interconnectors are in the south of England and Wales, where there is already a challenge in transmitting energy from the north to the south.

 

 

The scale of what is required is beyond what can be achieved via demand-side management. Demand-side management could reduce short term storage requirements, but long-term storage needs cannot be addressed via demand-side management.

 

 

No comment.

 

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

 

Liquid air energy storage is one of the most mature technologies that can be scaled up. Highview Power is about to start construction on a 50MW / 6-hour storage facility in Carrington, Manchester, and is planning a programme of much larger projects of a size of around 200MW + / 12-hour storage +. As the liquid air is stored above ground in steel tanks, the projects can be installed anywhere in the transmission system where the need is the greatest – the technology does not require mountains (pumped hydro) or underground caverns (compressed air).

 

Highview power can not comment on other technologies.

 

 

Liquid air energy storage is best suited for durations of 6-24 hours. Lithium-ion battery storage has focused on the 1-2 hour range with a few projects now being developed for 4 hours. It is important to focus on solutions for the 6-24 hour range today before attempting to consider storage of longer durations (i.e. seasonal storage).

 

 

Highview Power’s liquid air energy storage technology is ready to build now. Highview Power has completed a number of pilot projects to prove the technology and has completed engineering and procurement for the Carrington project, which is about to start construction. DNZES would currently describe the technology readiness level for liquid air energy storage as a 7, escalating to a 9 once the Carrington project is operational.

 

 

Domestic green hydrogen is not a viable solution to fulfil long-term energy storage needs.

 

Some market economic analysts have shown that, in theory, the amount of surplus domestic renewable energy, if stored as hydrogen, matches the shortfalls in generation when renewables are unavailable. This analysis is superficial as such studies fail to consider the practicalities of such a solution.

 

 

Better and lower-cost storage system solutions should be considered before considering hydrogen as a storage medium.

 

 

No comment.

 

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

 

There is no policy support in place to support storage, which makes storage one of the only forms of generation that does not have some policy support. Whilst positive business cases can be put in place to support the merchant build-out of a long-duration energy storage project (e.g. Highview's project at Carrington), equity investors require some market support to reduce revenue uncertainty with LDES utility-scale projects that are highly capital intensive. Without policy support, LDES deployment will be limited in terms of the number and size of projects.

 

 

It is of Highview’s view that the economic case for medium/long-duration storage in suitable locations can be positive. However, more is needed to attract project finance or equity investors as the revenues of storage projects incorporate a high level of uncertainty.

 

The economic case for medium/long-duration energy storage for the customer, when taking a system-wide view of overall customer costs, is also very positive.

 

By their nature, storage projects do not capture the full economic benefit that they provide. This is because all market participants gain better pricing if more storage exists (e.g. there would be less negative pricing to a renewables generator). Furthermore, storage reduces the risk of scarce supply which, again, the storage owners are not compensated for. There is therefore a whole system benefit of having more storage that is higher than market prices alone can provide.

 

To attract investors, a market structure that guarantees a minimum level of return needs to be put in place to allow projects to proceed. Any such scheme should also consider the locational and system benefits of individual projects to ensure that only projects that provide a benefit to the overall power system are taken forward. Such a market structure would allow a rapid investment in LDES.

 

 

The ESO already recognises the benefits of storage and is looking to amend its grid connection processes to allow storage to be granted interconnection in a timely and efficient manner, with priority where necessary. The full system benefits (including dispatch of demand or generation by the ESO) is critical to be included in a renewable energy cycle to reduce CCGT actions associated with voltage, etc. The ESO must also continue developing its ancillary services contracts to allow storage projects to access all relevant markets where a benefit can be provided.

 

 

There is nothing in REMA, that Highview is aware of, that will directly resolve the challenge facing storage as there is no proposal to remove market risk for storage projects. Whilst proposals like locational pricing may improve the economics of certain storage projects, locational pricing will only become more volatile and riskier and therefore difficult to forecast. Highview is concerned that REMA may delay implementation of any market structure for storage. The need for policy support for storage will remain irrespective of how REMA is implemented.

 

 

No. Highview Power has benefited greatly from government grants to fund pilot projects, and this is highly appreciated. But a grant is never going to be big enough to fund a commercial utility scale long duration storage project. A new market mechanism is required to allow utility scale projects to be built at scale and speed for the UK to be able to meet Net Zero ambitions.

 

 

Highview Power is seen as the world leading developer of liquid air energy storage. Highview cannot comment on other technologies.

 

 

Yes. All technologies that are developed and built in the UK have the potential to be exported. The UK is unique in that it is an island with a high level of renewables and therefore the need for long duration storage is clear today. This same clear need will become more obvious in other more integrated power markets when they have progressed further through their energy transition and have less reliance on thermal power plants to provide back-up and grid stability services. A pipeline of projects in the UK will allow a supply chain to be developed in the UK before other countries, which will allow UK companies to export storage services and components abroad.

 

 

Long duration energy storage can use existing research and industrial capacity from other sectors. Facilitating a pipeline of projects is the best way to develop this capacity into this new area.

 

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)?

 

Liquid air energy storage uses components and skills already present in the UK in other process industries. Facilitating a pipeline of projects is the best way to develop skills and the supply chain into this new area. There is the potential for government to help manufacturing of certain components (e.g. large steel vessels), where a domestic industry could be developed further to provide more supply chain certainty, to reduce costs and help more than one sector (i.e. also help offshore wind).

 

 

No Comment

 

 

No Comment

 

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

 

The main step is to put in place a support mechanism that helps developers secure project finance and equity investment.

 

 

Yes. Other countries have put in place tax incentives (USA, Canada) to encourage investment in storage. In addition, the Californian government has secured USD$380m to provide incentives to the deployment of long-duration energy storage projects.

 

In Australia, New South Wales has put in place an option scheme for LDES that is similar to the cap and floor regime. This is a new process in New South Wales, and it is too early to draw any lessons from this.

 

11 September 2023