Enoda – Written evidence (LES0012)

Introduction to Enoda

Enoda are committed to solving the big problems of the energy system, seeking to resolve the energy trilemma through our platform of advanced technologies. Our ENSEMBL™️ platform and PRIME™️ technology will establish Enoda as the next-generation energy technology market leader.

The ENSEMBL™️ platform establishes coordination of flexible energy assets through distributed ledger technology. The technology interfaces the legacy system with Enoda enabled assets, as well as other, third-party flexible assets to coordinate supply and demand across a complex multiagent ecosystem and realise network effects not possible in traditional markets. This platform will enable any asset to contribute to system stability, and be paid for doing so, in any market where ENSEMBL operates.

The Enoda PRIME™️ exchanger bridges analogue and digital technologies to provide real time electricity signal correction, delivering on-target frequency and voltage, increasing grid capacity, resilience, and stability in low voltage distribution networks. The exchanger ensures system stability by maintaining system frequency, locally presenting an optimal resistive load to the network and providing voltage regulation, power factor control and harmonics removal, as well as phase and load balancing. This replaces a bundle of power flow equipment on the distribution network and, by providing balancing services through ENSEMBL, reduces or removes the need for costly and, in some case, high carbon providers of balancing services.

We are responding to this call for evidence as we care deeply about the future of the grid and its stability. Enoda recognises that the grid is key to achieving the energy transition and net zero targets, and therefore is heavily invested in achieving the right policy and regulatory environment to allow a secure, stable grid that enables the decarbonisation of electricity without compromising energy security of affordability. This includes ensuring that all technologies which benefit the grid, including medium- and long-duration storage, are enabled through policy solutions. Enoda’s team includes former UK and US civil servants with years of experience in energy policy making and top technical and economic experts drawn from across academia, industry and cutting-edge research organisations. We are passionate about technology agnostic policymaking, which will unlock the innovation needed to build a net zero electricity grid.

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?

• Under what scenarios would the grid draw heavily on long-duration storage? What is the range of estimates for likely electricity demand in 2035?

The nature of renewables is they are not dispatchable – there must be dispatchable technologies on the network to assist with peaks of demand as well as periods when there is limited renewable energy supply.

This year, the National Grid Future Energy Scenarios, for the first time, included Dunkelflaute periods – long term periods of low energy production from renewable due to weather conditions. The modelling foresees a role for long duration storage, as well as Demand Side Response, gas generation with Carbon Capture and Storage, and interconnection. The ESO envisions long-duration energy storage as one of a suite of technologies to maintain flexibility on the system, and different scenarios look at different amounts of storage being required. Consumer led scenarios, with an increased consumer appetite for flexibility, have the largest deployment of storage of the ESO’s four credible pathways.

The amount of storage required, including LDES, is a function of system design. This is most apparent with medium-duration storage, as there are alternative system designs that would dramatically reduce the need for medium-duration storage. For example, demand management, including both demand-side response and voltage control, can reduce consumption during periods of lower generation. Dispatchable processes (e.g., Power-to-X) can facilitate overbuilding of renewables, ensuring that sufficient generation is available for immediate requirements during periods that are unfavourable for renewable generation

Whilst considering how to match supply and demand is important, and reaching the government’s stated aims for decarbonisation will require this, consideration also needs to be given to stability of the grid, which requires considering the system holistically. Batteries are currently low carbon providers of balancing and ancillary services and both short and medium-duration storage market, which diverts battery minerals from applications, like electric vehicles, where there are no alternatives to batteries. An integrated approach would treat all technologies that can provides grid balancing equally, whether they operate by through supply, demand, storage or the grid itself.

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

• What role could nuclear power, fossil fuel generation with carbon capture and storage, or other energy technologies, play in reducing the need for energy storage on a net zero grid?

Just like renewables, the dispatchability of nuclear power is limited, so it will not increase grid flexibility. Renewables are intermittent, whereas current nuclear technology is consistent, but inflexible. It poses the similar challenges as renewables by virtue of being too inflexible rather than too flexible. Importantly, the amount of storage that is required is not only a function of the future balance of supply and demand, but also the nature of the grid. The government needs to take a far more active role in designing policy that considers the grid itself first and foremost, rather than as an enabler of generation. The fundamental technology of the grid was established more than a century ago, leading many to assume that the key question is about how big the grid is, but not its nature. However, a host of new grid technologies are now becoming available that will transform the nature of the grid. Policymakers must be alert to the develop of these technologies and ensure a technology agnostic level playing field for the services that they can provide.

• What role could greater grid interconnectivity between Great Britain, Northern Ireland and other nations play in addressing the imbalance between supply and demand?
• What role could demand-side management of electricity play in reducing the dependence on storage?

The amount of storage required, including LDES, is a function of system design. This is most apparent with medium-duration storage, as there are alternative system designs that would dramatically reduce the need for medium-duration storage. For example, demand management, including both demand-side response through the direct management of electrical loads and voltage control at the level of the distribution grid, can reduce consumption during periods of lower generation. Dispatchable processes (e.g., Power-to-X) can facilitate overbuilding of renewables, ensuring that sufficient generation is available for immediate requirements during periods that are unfavourable for renewable generation. These types of demand management can play a major role in reducing the requirement for short and medium-term energy storage.

• What impact will future climate change have on demand – for example, how much will the seasonal differences in power demand change with warmer winters and greater use of air conditioning?

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

• Which timescales for storage are different technologies most suited to? Is there a preferred technology for medium-duration and long-duration storage?
• What are the technology readiness levels for these energy storage technologies?
• Is it possible to produce enough domestic green hydrogen to fulfil long-term energy storage demand needs?
• Is there a distinct role for technologies that store heat instead of electricity?

Whilst there are undoubtedly different technologies that are suited to different roles in stabilising and balancing the grid, we wish to stress the importance of keeping policy technology agnostic. Certainly, with respect to short and medium-term storage, the appropriate focus on policy should be to ensure that the energy system remains in balance, whether this is done with dispatchable generation, storage, demand side response, voltage control, dispatchable loads or other technologies. Current technologies are not enough to provide system stability and ensure holistic functioning of the system, therefore the electricity markets, and regulation of the system must operate in such a way that enables new, innovative technologies to enter the market to reach the point of commercialisation and scalability. Failure to provide a technology agnostic level playing fields risks stifling innovation and locking in uncompetitive technologies, with the risk of suboptimal outcomes that include higher costs to consumers and a less stable energy system.

There must be committed regulatory support for technologies at the post-R&D TRLs – technologies/companies at this stage should be able to access markets that bring them to the point of commercial viability. This can be difficult with byzantine regulation, high technical barriers to certain markets, definitions which are predicated on existing technologies and the risk that policymakers and regulators may not fully understand the unfolding technology landscape.

As much as possible, policy should focus on the outcome in terms of the physics of the AC waveform that we want to incentivise. Storage is only one way of supporting the frequency of the waveform through period of low VRE (Variable Renewable Energy) supply. Therefore, technology agnosticism extends to the very concept of incentivising storage, especially in the short and medium term. The system does not need storage, but rather it needs to balance supply and demand. That can be done by varying demand in many ways, and dispatchable processes could change the nature of demand to facilitate a very much greater amount of intermittent supply.

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

• How good is the economic case for long-duration energy storage? What policies and market structures need to be put in place to make the business case viable?
• How will the grid need to change to support long-duration storage? Which stakeholders (e.g., energy companies, the Electricity System Operator, National Gas) should be planning for these changes?
• What role does the Review of Electricity Market Arrangements need to play to support medium- and long-duration storage development?
• Is the Government’s current reliance on market actors and technology competitions likely to deliver the storage needs on time?

Reliance on markets and technology competitions can absolutely bring forward the technology needed for the energy transition, but the markets must be technology agnostic, accessible to new technologies and set up to allow for these new to technologies to participate exactly as legacy technologies and to create a level playing field among new technologies.

Policy from the government and regulatory changes can make this a reality. The REMA (Review of Electricity Market Arrangements) programme, in its next phase, needs to commit to a full balancing market review, as these markets are incredibly valuable to technologies with the characteristics of medium and long duration storage and offer a potential route to robust business cases and commercialisation. Government also needs to work with network operators to develop local flexibility markets, adding another useful revenue stream and diversification for long and medium duration storage. Once again, we would also like to affirm the importance of these policy and market design decisions promoting technology agnosticism. Other government policies such as the Strategy and Policy Statement for Ofgem and the FSO (Future System Operator) can empower the regulator and system operator to make decisions that consider the security, stability and decarbonisation of the grid, beyond mere questions of affordability. We commend the government for expanding Ofgem’s duties with a net zero mandate, as this will better enable the regulator to make the trade-offs required to decarbonise the power sector.

In terms of the development of the grid, we see the creation of the Future System Operator (FSO) as key. The FSO needs to consider the holistic network – which will require better modelling and forecasting abilities to promote the correct technologies, including medium and long duration storage, by setting a strong indicative direction of travel and therefore providing investors and developers with certainty on the way forward.

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?

• Are there any storage technologies that have a significant export potential for the UK?
• For which technologies does the UK have significant existing research or industrial capacity? Is the Government doing enough to support the industry to grow and drive exports and economic growth?

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)?

• Are there sufficient training schemes in place to ensure the UK has the workforce to deliver the energy storage the grid will need?
• How long is it likely to take to develop the necessary infrastructure?

A major barrier is in the continuation of outdated views on how to manage the grid and the technology needed for decarbonisation. Large amounts of the technology needed to decarbonise the grid are only just coming to market – successful scale-up is dependent on an understanding of the challenges facing the grid and the ways in which system and market design can be used to combat these, as alluded to in our earlier answer on the role of the FSO.

To nuance the ‘beyond cost’ point raised by the question– it's not a matter of absolute costs but market design that enables access to the market, giving investors certainty and galvanizing private investment. Enhanced forecasting capabilities that accurately project grid needs and allow the system operator and regulator to signal these to industry are needed, as well as markets which allow these technologies to maximise their revenues to develop robust business cases in the route to commercialisation.

Necessary infrastructure includes not only storage solutions themselves but also grid infrastructure to support these and platforms to enable innovators to easily access markets for balancing and ancillary services.

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

• Can the UK learn from other countries that have successful policies for supporting large-scale energy storage, or from pilot projects elsewhere?

11 September 2023