Despite huge drops in costs, grid-scale batteries have had only a marginal impact on Britain’s electricity system to date.
Rather than stepping in to provide power to households, their main function to date has been the background task of balancing the grid’s frequency, which ensures electricity is safely and efficiently zipped around the grid. The National Grid compensates operators for this.
“Typically where batteries step in is where a big asset comes offline unexpectedly,” says Olly Frankland, of industry group Regen.
“That could be a big gas firepower station, or an interconnector that trips off for whatever reason, and then that impacts the frequency of the grid and batteries immediately respond to that.”
However, growing competition and better grid management means that battery sites are now finding it harder to see a return from balancing.
Battery farms’ revenues per megawatt reached record lows in January and February this year, according to Modo Energy, which monitors the battery storage market.
Wendel Hortop, an analyst at Modo Energy, says while that has eased prices for the grid, it has raised questions about operators’ viability. “It’s been good for consumers, but it’s not been so good for the operators of those systems,” he says.
“At the moment, the returns are not quite at the level which they need to be, but there’s a belief that with more renewables coming on to the grid, there’s inherently a greater need for storage, and that will result in essentially those systems earning enough and providing that kind of support for the grid.”
The investors backing new battery farms are confident this will change, as the decline of gas plants and rise of intermittent sources push up demand. Modo says battery operators’ revenues last month were the highest for almost two years.