Written evidence submitted by
Dr Jonathan Radcliffe, University of Birmingham (CGE0041)

Background and declaration of interests

I lead the Energy Systems and Policy Analysis Group at the University of Birmingham and hold a number of energy research grants from UK Research Councils, in particular on the integration of energy storage. The submission has been prepared with the input of the research group, in particular Dr Daniel Murrant. The group’s expertise covers engineering, local energy system modelling, economics and policy.

We have been developing a national roadmap for energy storage, due to be published later in 2018, and host the UK Energy Storage Observatory, part of the £5m MANIFEST project (EP/N032888/1) supported by the Engineering and Physical Sciences Research Council. I am co-Director of the £4m Energy Storage Supergen Hub (EP/L019469/1) and an investigator on the Energy Revolution Research Consortium, a £8m UKRI programme commencing in December 2018. I have also received funding from central and local government bodies, industry and the European Commission. A full list of my funding is available at https://www.birmingham.ac.uk/staff/profiles/eps/radcliffe-jonathan.aspx.

Summary

1. Technology pathways are uncertain but increased generation from variable renewables and the electrification of demand will create challenges for the energy system through the 2020s. In particular, the decarbonisation of heat will difficult to manage, with seasonal and daily variations in consumption that are much greater than anything the electricity sector experiences now. Supply and demand are becoming more decentralised, putting more emphasis on local initiatives, and introducing cross-scale challenges.

2. A more integrated approach across heat, electric and transport sectors is required from policy, regulation and technology innovation.

• Large-scale energy storage of electricity and heat could be a key component of the future energy system, but policy/market signals that would encourage investment are lacking.
• Governance frameworks and decision-making processes will need to be reconfigured, recognising the characteristics of a multi-scalar energy system.
• The UK’s energy technology innovation system should be coherent and strategic, understanding the complexities of the innovation process, with support for technology innovation and policy mechanisms for deployment.

3. To meet carbon reduction targets through the 2020s and beyond, whilst maintaining a system that can respond to change

The strategy

Current and future technologies contribution to the carbon budgets

4. The transition to a decarbonised economy presents challenges to energy systems by reducing their flexibility as an increased proportion of energy comes from variable renewable energy sources. Energy storage technologies are one option for adding flexibility back into an energy system and analysis has shown that they have the potential to be part of a cost-effective transition to a low carbon and secure energy system (Carbon Trust, 2016).

5. Energy storage technologies can provide a range of ‘flexibility ‘services’ to the energy system, including but not limited to:

• Ancillary services; services required to balance the transmission and distribution networks on a real-time basis to support their operation e.g. voltage support, frequency response.
• Intra-day peak shifting; storing daily off-peak energy, discharging at peak times.
• Inter-day levelling; storing energy during days of higher supply to be discharged during days off lower supply
• Seasonal peak-shifting; capturing excess energy in the summer, discharging in winter to lower the additional power capacity required.

Uncertainty in future technologies’ contribution

6. Technological pathways for decarbonisation are inherently uncertain, but from an analysis of several modelled scenarios, from the government, National Grid and the Energy Technologies Institute, we have identified some common elements.

7. It is very likely that there will be increased generation from intermittent renewable energy sources, and increased electrification of the transport sector. Energy storage can help to manage the consequences of these changes:

• There will be an increased need for ancillary services to maintain network stability. This requires technologies which have short response times; a number of energy storage technologies can provide these services with certain battery chemistries now competitive in some markets – such as the enhanced frequency response tender.
• There will be an increase in net electrical demand and potentially peak demand, increasing the need for flexibility in the system which can be met by services energy storage can provide. In particular, intra-day peak shifting and inter-day load levelling will be required to maximise the utilisation of available generation capacity on existing networks. Additionally, batteries will increasingly be used for EV and second-life applications.

8. Although the technological pathway for heat decarbonisation is uncertain it is likely to involve electrification to some extent. This will change the daily electricity demand profile and lead to large seasonal variation in electrical demand.

• Small to medium scale energy storage, including but not limited to batteries, will be required to provide intra-day peak shifting and inter-day load levelling to help manage the change in daily electricity demand profile.
• Large-scale thermal energy storage will be required to provide seasonal peak shifting allowing the seasonal variation in demand to be managed.

Decision-making

9. In a study on decision making in energy policy[1], we observed cases in which evidence used to inform decision-making side-lined inter- and intra-scale phenomena, and ignored uncertainty arising from multi-level governance, creating risks of misallocated investment, e.g.:

• sub-national regions ignoring their interdependencies with neighbouring regions leading to either under or over investment in particular areas;
• local policies promoting technologies that are not compatible with national strategies and goals;
• ‘national’ technological deployment strategies overlooking local specificities and priorities.

10. The scoping study found wide variation, and a pattern of weak cross-scale links, in research generation, exchange and use for decision-making at different scales. Whole systems analysis typically ‘belongs’ to a particular scale and is seen as marginal by those working at other scales. In-part, weak cross-scale linkages reflect the limitations of analysis and models to operate well across scales, but it also reflects divergent policy concerns and needs (and institutional capacities), and the lack of strong cross-scale intermediary and advisory bodies.

11. Our research highlighted the importance of better processes for knowledge intermediation and effective institutions to translate knowledge across scales.

How the development and deployment of technology can best be supported, and the extent to which the Government should support specific technologies or pursue a ‘technology neutral’ approach;

The energy technology innovation system

12. Deployment of new technologies requires support across the innovation process, with a combination of support for early stage R&D, demonstration activities and market mechanisms. This is a complex, non-linear process, with feed-backs and feed-forwards, described by the Energy Research Partnership in the diagram below (Energy Research Partnership, 2007).

Figure: The ‘innovation funnel’ described by the Energy Research Partnership [ref].[2]

13. The UK’s energy technology innovation system has been regularly reconfigured, with little sign that it has improved from the observations in 2014 that it suffers from “fragmentation, low transparency and weak links to the research evidence base” (Winskel et al, 2014). As the paper describes, the UK’s technology neutral principles shifted towards technology-specific regulation during the 2000s to support technologies most relevant for the UK.

Technology-neutral vs technology-specific

14. At the deployment stage in particular, a ‘technology neutral’ approach may be preferred in principle; for example, the ‘Smart System and Flexibility Plan’ states that energy storage “needs a level playing field to compete”, implying that the market should choose the ‘best’ solution. However, this may not be appropriate when applied to a system that contains multiple market failures and is already subject to various governmental interventions that implicitly or explicitly favour particular technologies. For example, a lack of a strong carbon price signal (now or in the future) makes fossil-fuel generation more attractive compared to low carbon alternatives

15. The markets may be constructed to meet a system need, but also reflect the ability of the sector to meet that need with the appropriate technology. For example the Enhanced Frequency Response (EFR) market was opened in 2016 and gave battery technologies (which had been developed and manufactured largely for auto applications) an opportunity to earn revenue as they were capable of meeting the sub-second response time.

16. The challenge lies in giving a market signal that encourages the development and commercialisation of technologies at an earlier stage of innovation to meet an anticipated future need and drive cost and performance improvements. Subsidies and support for renewables have shown how effective this can be with price drops in generation from wind and PV. Our analysis of the energy system through the 2020s suggests that technologies that can store large quantities of energy (100s MWh), both electrically and thermally, will be important. Batteries may play a role, but it is likely that other ‘decoupled’ energy storage technologies (Xie et al, 2018) could be more cost effective at scale.

17. Our review of international energy storage policies for the Roadmap suggests that direct technology support for energy storage has been effective at increasing deployment in a number of markets. Such support has taken a number of forms including direct support for capital investment in energy storage devices, mandated targets, and co-subsidies for renewables with energy storage; forms of which have been seen in Germany, Japan, and states in the US.

Governance

18. Deployment of smart energy technologies is likely to be more decentralised, recognised by the government’s £102m investment in Prospering From the Energy Revolution challenge. This will increase the importance of policy and regulation at a local level, and a number of cities/regions are implementing their own energy innovation initiatives. For example, Energy Capital[3] in the West Midlands, H2 Aberdeen[4], Energy Estuary[5] in the Humber.

19. However, there has been little consideration of the governance framework through which a more decentralised system can be coordinated. For a system in which heat, power and transport are increasingly integrated and driven by local supply and demand, but with technology that enables aggregation at a national and large-scale generation from off-shore renewables and nuclear, a regulatory approach that is based on consumption of fuels or vectors appears out-of-place. The case for new national governance for energy has been well-made through the IGov project[6] (and Kuzemko, 2016).

20. Deployment at scale of technologies, regulation and policy that emerge from local initiatives should be coordinated, and a new governance framework established, to maximise the national benefits. Not doing so could lead to inter- and intra-scale conflicts, with different priorities at different scales, and sub-optimal outcomes.

The relative priority that should be attached to developing new technologies compared to deploying existing technologies, including consideration of the costs and pollution involved in the decommissioning of technologies or infrastructure;

Examples of specific technologies whose development and deployment have been effectively supported so far, as well as those that show particular promise for meeting the Government’s carbon emissions targets or supporting the UK’s economy, or which would benefit from specific Government action, in the future; and

21. Late stage innovation support appears to be focused on near-term returns, with significant investment targeted for battery technologies that are primarily aimed at establishing the UK auto sector as a global leader in EV manufacturing. Such battery technologies are competitive in some electricity markets, especially providing quick response to maintain frequency on the electrical grid, especially needed due to the reduction in ‘system inertia’ as conventional thermal plant is reduced.

22. However, our analysis for the energy storage roadmap shows that through the 2020s there are additional services that become important. With continuing increases in generation from off-shore wind that cannot be dispatched to meet demand, flexibility will be needed for inter- and intra-day balancing. In the longer term, towards the end of the 2020s, the seasonality and scale of supply and demand for decarbonised heat becomes the dominant challenge.

23. To meet these challenges, new technologies and systems could provide energy system flexibility. Li-ion batteries, increased interconnection and demand-side measure may play a role, but other energy storage technologies are also promising:

• Large-scale electricity storage, including flow batteries, liquid air energy storage, compressed air energy storage, that can provide intra-day peak shifting, inter-day levelling, black start provision and network deferral.
• Thermal energy storage for daily and seasonal peak shifting of electrical and heat demand.
• Hydrogen, which has multiple potential applications in heat, power and transport as an energy vector and storage medium.

24. If such technologies are not supported then there is a risk of jurisdictional arbitrage; technical development and value from early stage innovation will flow to other markets where a value proposition exists. In the US, the ARPA-E GRIDS (Grid-Scale Rampable Intermittent Dispatchable Storage) programme has been recently launched for “developing storage technologies that can store renewable energy for use at any location on the grid at an investment cost less than $100 per kilowatt hour. Flexible, large-scale storage would create a stronger and more robust electric grid by enabling renewables to contribute to reliable power generation.”[7]

References

Carbon Trust (2016) ‘Can storage help reduce the cost of a future UK electricity system?’ https://www.carbontrust.com/resources/reports/technology/energy-storage-report/

Energy Research Partnership (2007) ‘UK Energy Innovation’ http://erpuk.org/project/uk-energy-innovation-2/

Kuzemko C, Lockwood M, Mitchell C, Hoggett R (2016) ‘Governing for sustainable energy system change: Politics, contexts and contingency’ Energy Research & Social Science, 12, 96-105 https://doi.org/10.1016/j.erss.2015.12.022

Winskel, M., Radcliffe, J., Skea, J., Wang, X. ‘Remaking the UK's energy technology innovation system: From the margins to the mainstream’, Energy Policy, 68 (2014), pp. 591-602 https://doi.org/10.1016/j.enpol.2014.01.009

Xie, C., Hong, Y., Ding, Y., Li, Y., Radcliffe, J. (2018) An economic feasibility assessment of decoupled energy storage in the UK: With liquid air energy storage as a case study, Applied Energy, 225 pp 244 – 257 https://doi.org/10.1016/j.apenergy.2018.04.074

October 2018