Energy Storage Integration for Net Zero (ESI4NZ) – Written evidence (LES0042)


Authors: ESI4NZ (Energy Storage Integration for Net Zero) project team – Dr Chris Harrison, Dr Jonathan Radcliffe (University of Birmingham), Prof. Dan Gladwin, Dr Andrew Hutchinson (University of Sheffield), Dr Haris Patsios, Dr Arman Alahyari, Dr Tanuj Rawat (Newcastle University), Prof. Dan Rogers, Dr Thomas Bryden (University of Oxford), Prof. Andrew Forsyth (University of Manchester).



The EPSRC-funded ESI4NZ (Energy Storage Integration for Net Zero) research project is exploring how distributed energy storage can be deployed and co-ordinated in support of Net Zero targets. The project includes five academic institutes (Universities of Sheffield, Birmingham, Manchester, Newcastle and Oxford), collaborating with industry, to identify the opportunities, barriers and solutions for the implementation of energy storage. In a recent ESI4NZ workshop, both academic and industry stakeholders discussed some of the questions raised by the call for evidence. This document has been prepared by the project team as a summary of the viewpoints that were expressed during the workshop. A full list of workshop attendees can be seen in the Appendix of this document.


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

In general, there is insufficient policy support for developing and deploying energy storage at scale in the UK. However some specific policies and markets are recognised as having been valuable in bringing forward energy storage projects up to now. Long Duration Energy Storage, LDES, (and storage more generally) can take advantage of the Capacity Market (CM), but competition with fossil fuel-based generation is a challenge for technologies with lower commercial maturity. Battery and pumped hydroelectric technology are the only Electrical Energy Storage (EES) technologies that have been successful in previous auction rounds of the CM. Other long duration storage technologies (e.g. Compressed Air Energy Storage - CAES) have so far been unable to compete in this market. Whilst several R&D funding competitions have provided capital support for the development of LDES, there remains limited opportunity for revenue generation in the market beyond such schemes.


Market reform to create new opportunities (e.g. changes to the Frequency Regulation market) have enabled some types of energy storage to generate revenue in recent years. However, this has been found to be mostly in the form of short-duration energy storage (i.e. batteries) and, after an initial ‘boom’ in this market, clearing prices and revenues have fallen. The business case for further investments in storage on this alone, therefore, seems limited. Other market opportunities are required to allow storage to ‘stack’ different revenue streams.


Response to Question 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)?


General Remarks:

In general, attendees of the workshop expressed the view that current policies are not correctly incentivising energy storage technologies or the specific benefits they provide. Partly, this is a result of legacy policies and markets continuing to incentivise more carbon-intensive options over low-carbon alternatives (e.g. de-rating in the Capacity Market). These barriers were perceived to be more prominent for some services (and/or technologies) than for others; in particular, there was perceived to be a lack of incentive for the storage of electricity beyond diurnal time-scales (i.e. Long-Duration). There is currently very limited economic incentive for the storage of electricity on a seasonal basis. It is important to note that storage on such timescales will be necessary for energy security in a future ‘high renewables’ scenario.


Markets and revenue streams:

Some attendees of the workshop also identified issues for very short-duration storage technologies (e.g. flywheels, supercapacitors, short-duration batteries) which could be well suited to a very specific role but which are currently ‘locked out’ of the market due to the specifics of the market. An example of this can be seen in the frequency regulation market where storage systems must provide output for a sustained period of time (e.g. 60 minutes in the case of the Dynamic Moderation service and 15 minutes for Dynamic Containment); such a requirement places certain technologies at a disadvantage in the market.


For Distributed Energy Storage[1], it was considered that there is insufficient policy support for the deployment of storage across distribution networks. A key benefit of distributed storage is in helping to alleviate grid constraint issues, avoiding network reinforcement requirements. A lack of incentives in this area were seen as a barrier to the most suitable placement of storage on the network. The introduction of new DSO (Distribution System Operator) services (local flexibility), in which network operators take a more active role in balancing the electricity grid, are broadly welcomed. However, it was also noted that these services are under-subscribed, potentially indicating greater communication or improved incentives are required for the uptake of these new services.


Some specific market-related issues were also raised during the workshop. These included (a) the ‘skipping’ (see (1)) of Balancing Mechanism bids from energy storage systems and (b) the potential for market gaming to artificially inflate clearing prices (i.e. exploitation of market power). In these cases, suitable regulation will be required to ensure the value of storage systems is captured and to avoid adverse impacts of storage. In general, it has been noted during the workshop that the future revenue streams associated with storage are uncertain. This represents a clear risk for investors and creates an evident barrier in driving adoption, particularly for those technologies with higher initial CAPEX costs. During the workshop it was identified that the external costs (e.g. embedded emissions associated with particular technologies) and benefits of storage (e.g. emissions avoidance, network investment avoidance) are not well accounted for in the market, creating a barrier to its optimal deployment.



A key issue that was raised by a number of workshop attendees was around the length of time taken from the submission of planning applications to the point at which assets enter into service. It was noted by one group in the workshop that technologies could progress through multiple Technology Readiness Levels (TRLs) in the time taken for a project to be planned and built. Major barriers that were identified as part of this were (a) the time and effort associated with the planning regime and (b) the current queue for grid connections. A specific issue that was raised in relation to planning was in relation to its co-location with renewable assets (e.g. wind-farms) and the possible issues this would cause with the licensing conditions (e.g. around capacity) associated with the renewable asset.


Other comments:

Several supply chain factors were identified as barriers to the deployment of energy storage. This includes a shortfall in the number of skilled workers available to install and maintain new’[2] forms of storage (e.g. Liquid Air Energy Storage or Flywheel Energy Storage), and an absence of manufacturing capability. The lack of knowledge and understanding relating to energy storage amongst the general public was also seen to be a barrier, which could be damaging to the sector in the long-term in terms of the ability to attract the necessary workforce and investment.


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


General comments:

It was noted that the overall goal of policy should be to provide certainty over a sustained period (years-to-decades) to create the necessary investor confidence. However, it is evident that there is a growing need to deploy storage technologies from the current time. The immediate goal of policy should be to remove barriers to entry and to incentivise the most appropriate solutions for the services required. A number of specific proposals were offered during the workshop which are summarised below.


Communication to industry and public:

The UK government should publish a clear roadmap for Long Duration Energy Storage and identify how future markets will work, in order to provide clarity to stakeholders and to attract the necessary investment required. To support Distributed Energy Storage specifically, a published register of where connections are required (or the identification of connection capacity by DNOs to support rapid deployment) would support investment decisions. More generally, policies and markets should recognise locational challenges and opportunities when incentivising the deployment of storage.


Improved public education and engagement could address some of the challenges associated with energy storage. Clear messaging of the benefits of storage could help to encourage positive perceptions (e.g. impact on household bills) and ensure the public is ‘on side’. An honest communication around the costs (and the matter of “who pays?”) should also be part of such engagement activities. Improved awareness of the sector could also help to address the drive to close the skills gap.



Further and continued financial support for pilot schemes was proposed as a means to support technologies in the pre-commercialisation phase, extending the government’s prior support in this area (e.g. Long Duration Energy Storage Demonstration Competition).


Market and revenue streams:

The successful deployment of wind energy in the UK offers useful lessons for encouraging an effective deployment of energy storage. In a similar approach to the Contracts for Difference scheme, providing guaranteed returns for storage (e.g. a Cap and Floor mechanism possibly related to CAPEX to reflect the differing Technical Readiness Levels and hence economic challenges), would overcome the economic risk from investing.


To overcome some of the issues relating to the electricity markets, it was proposed that a ‘green weighting’ could be introduced to prioritise the employment and dispatch of low carbon electricity and to disincentivise the operation of (and investment in) fossil fuel generation. There should additionally be greater recognition of wider sustainability issues (e.g. lifetime of Li-ion batteries) from the government and this should be considered in developing effective policy/markets. Greater standardisation of regulations in this area (e.g. carbon accounting) will be necessary in helping to driving effective decision-making. With regards to ‘building in’ sustainability issues into markets, an interesting example from the Netherlands is the use of non-financial criteria in energy auctions (2).



To reduce the timeframe within which assets can be brought to market, there is a need to accelerate the speed with which both planning and connections can be conducted. A review of both aspects alongside industry stakeholders could help to identify the main bottlenecks involved.


29 September 2023




Full list of workshop attendees: Dan Gladwin, Andrew Hutchinson, Abdussalam A Aburziza (University of Sheffield), Chris Harrison, Jonathan Radcliffe (University of Birmingham), Haris Patsios, Arman Alahyari, Tanuj Rawat (Newcastle University), Dan Rogers, Thomas Bryden (University of Oxford), Andrew Forsyth (University of Manchester), Shahab Nejad (EnexStor), Tomek Cwioro (Exergy Solutions), Cynthia Grainger (Enel X), Cristina Boscariol (High View Power), Luca Pietrasanta (High View Power), Alex Louden (Orsted), Phil Jeffrey (SSE), Paul Slorach (Verlume World)


Note: The points made in this evidence piece are those of the authors (as identified on page 1), based on discussion from the workshop. The content of the article does not necessarily represent the views of all workshop attendees.






Compressed Air Energy Storage


Capital Expenditure


Capacity Market


Distribution Network Operator


Distribution System Operator


Electrical Energy Storage


Energy Storage Integration for Net Zero


Liquid Air Energy Storage


Long Duration Energy Storage


Technology Readiness Level



  1. Murray C. UK: High BM skip rate for BESS bemoaned as H1 revenues crash [Internet]. Energy Storage News. 2023 [Accessed: 28/9/2023]. Available from: BM is used to,2023 alone%2C at 91%25
  2. Wind Europe. Europe’s latest offshore auction mainly using non-price criteria is a success [Internet]. Windflix. 2022 [Accessed: 26/9/2023]. Available from:



[1] In the ESI4NZ project, Distributed Energy Storage is defined as “Energy storage installed in-front-of-the-meter on the 11kV-and-above distribution network

[2] We note that many of these technologies that are often considered as ‘new’ forms of storage are actually technologies that have been technically proven for many years. However, the scale-up, commercialisation and wide-scale deployment of these technologies in electricity markets is in its relative infancy.