Wind & Solar: The £1bn cost of the UK storage shortage

• ‍UK wind curtailment due to lack of storage cost £1bn in last three years
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• ‍More storage would mean savings on constraint payments
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• ‍Long-duration storage attractive option for mitigating curtailment costs

Building wind and solar projects without accompanying energy storage capacity not only leads to costs running into the hundreds of millions, but also does damage to the reputation of the renewable energy industry. If we take the example of the UK, data shows that the National Grid paid £215 million to wind generators in 2022 in return for them curtailing the amount of wind power they produced. And this was just the latest large bill for renewable energy curtailment – prior to 2022, it was shown that wind farms across the UK received a total of £806 million in curtailment payments during the years 2020 and 2021 (incidentally 82 per cent of that sum was paid to generators in Scotland). Why is wind power curtailed? A key objective of the National Grid electricity system operator (NGESO) is to ensure that the stability of the grid system is maintained – for example, when there are physical constraints on the network (specifically, when the network cannot transfer the power from one region to another). In such circumstances, the NGESO asks generators to reduce their output in order to ensure grid stability and manage the flows on the network. In return for reducing their output, energy generators are compensated via a constraint payment. One of the key reasons why this system is in operation is that the NGESO claims that the alternative is “building more infrastructure at a significant cost, meaning higher bills for consumers”. 

It's important to note here that while the wind industry is often severely criticised for costing the government hundreds of millions in constraint payments, other energy sources also end up costing taxpayers vast amounts of money. Keeping the focus on the UK, it was recently reported that the UK government has given £20bn more in support to fossil fuel producers than renewable energy producers since 2015. Furthermore, wind is not the only type of renewable energy that faces the challenge of curtailment. Let’s look at the example of the Californian energy market. Studies have shown that 9.2 per cent of the output generated by an expansion in California’s utility-scale solar capacity will be curtailed, far exceeding California’s average solar curtailment rate of 4.3 per cent.

Going back to the UK market, one of the major problems facing the wind and solar industries is that renewable energy is always the first to get axed when supply exceeds demand on the National Grid. This is despite the fact that electricity generated from wind/solar/hydro/marine sources contributed 31 per cent of the UK’s electricity generation in 2022 – by way of comparison, gas accounted for 38 per cent and nuclear accounted for 15 per cent (with coal and oil accounting for 2 per cent). To see a real-time breakdown of the UK’s energy mix, click here

Why does the NGESO’s grid-balancing strategy favour fossil fuels and nuclear generation, rather than renewables? In a nutshell, supplies from distributed generation through renewables are more intermittent, that is, the generation of such power is always dependent on either the prevailing climate or the time of day. Consequently, they are not considered predictable or reliable enough to supply the national network with the base load power that is needed.

As a result, the wider deployment of energy storage in the UK would solve two key problems facing the renewables industry, and particularly the wind sector. Firstly, if more wind energy could be stored for use at a later time, potentially hundreds of millions could be saved in curtailment payments. Secondly, energy storage would mean that both wind and solar energy could be stored and dispatched during periods when there is less wind and sun, thereby eliminating the intermittency that makes the NGESO place more faith in the fossil fuels and nuclear generation industries. The wider deployment of storage would also offer the wind industry, in particular, an added benefit. The high costs of curtailment payments are used by some sections of the media to berate the wind industry, accusing it of being particularly costly, economically unsound, and undependable. This does not help the cause of those wishing to foster the wider development of wind energy.

'Critical' need for long-duration storage

In recent months calls for an increase in the amount of energy storage deployed in the UK have grown. In light of the high curtailment payments to wind farms, Scottish First Minister Humza Yousaf called on UK Prime Minister, Rishi Sunak, to upscale the deployment of storage, saying that “large-scale, long-duration energy storage is also absolutely critical to achieving our collective goals”.

A report focused on renewable energy curtailment published last year by data-driven energy transition research consultancy LCP Delta highlighted large-scale long duration storage as “one of the most attractive” options for mitigating renewables curtailment costs. “In 2020 and 2021, 58 per cent of periods with significant wind curtailment lasted more than three hours,” the report said. “This points to the need for longer duration electricity storage, which can store excess renewable generation and discharge the power in later periods, reducing GB’s reliance on gas.” 

This is not to say that short-duration does not have a valuable role to play. Lithium-ion batteries, which charge when there is excess renewable generation and then offset gas generation in the discharge period. “This has the potential to reduce overall curtailment and costs, and there is already a large amount of battery storage capacity in the pipeline, with around 3.3GW clearing in the 2022 T-4 capacity auction,” the LCP Delta report said. However, the report added that many of the periods of curtailment last for long periods (with a total of 58 per cent lasting longer than three hours), which will limit the effectiveness of shorter duration storage in reducing wind curtailment. This is where long-duration storage has the edge, in that it would be more effective during the long periods of consecutive hours of curtailment that were observed in 2020 and 2021 – furthermore these periods are expected to increase in length in the coming years unless there is substantial investment in the UK’s transmission infrastructure.

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