Lithium net news: the recent development of the UK energy storage industry has attracted the attention of more and more overseas practitioners, and has made great strides in recent years. According to Wood Mackenzie forecast, the UK may lead the European large storage installed capacity, which will reach 25.68GWh by 2031, and it is expected that the UK's large storage is expected to take off in 2024.
According to Solar Media, by the end of 2022, 20.2GW of large storage projects have been approved in the UK, and construction could be completed in the next 3-4 years; about 61.5GW of energy storage systems have been planned or deployed, and the following is a generalised breakdown of the UK energy storage market.
UK energy storage 'sweet spot' at 200-500 MW
Battery storage capacity in the UK is growing, having gone from under 50 MW a few years ago to the large-scale storage projects of today. For example, the 1,040 MW Low Carbon Park project in Manchester, which has recently been given the go-ahead, is billed as the world's largest lithium battery energy storage project.
Economies of scale, supply chain improvements, and the UK government's lifting of the Nationally Significant Infrastructure Project (NSIP) cap have collectively contributed to the growing scale of energy storage projects in the UK. The intersection of return on investment and project size for energy storage projects in the UK - as it stands - should be between 200-500 MW.
Co-location of power stations can be challenging
Energy storage plants can be located adjacent to various forms of power generation (e.g. photovoltaic, wind and various forms of thermal power generation). The advantages of such co-location projects are many. For example, infrastructure and ancillary service costs can be shared. Energy generated during peak generation hours can be stored and then released during peaks in electricity consumption or troughs in generation, enabling peak shaving and valley filling. Revenues can also be generated through arbitrage at storage power stations.
However, there are challenges to co-locating power stations. Problems may arise in areas such as interface adaptation and the interaction of different systems. Problems or delays occur during project construction. If separate contracts are signed for different technology types, the contract structure is often more complex and cumbersome.
While the addition of energy storage is often positive from a PV developer's perspective, some storage developers may focus more on grid capacity than on incorporating PV or other renewable energy sources into their projects. These developers may not locate energy storage projects around renewable generation facilities.
Developers face falling revenues
Energy storage developers are currently facing declining revenues compared to their highs in 2021 and 2022. Factors contributing to declining revenues include increased competition, falling energy prices, and declining value of energy transactions. The full impact of declining energy storage revenues on the sector remains to be seen.
Supply Chain and Climate Risks Persist
The supply chain for energy storage systems involves a variety of components, including lithium-ion batteries, inverters, control systems and other hardware. The use of lithium-ion batteries exposes developers to fluctuations in the lithium market. This risk is particularly acute given the long lead time required for the development of energy storage projects - obtaining planning permission and grid connection is a lengthy process. Developers therefore need to consider and manage the potential impact of lithium price volatility on the overall cost and viability of their projects.
In addition, batteries and transformers have long lead times and long waiting times if they need to be replaced. International instability, trade disputes and regulatory changes can affect the procurement of these and other components and materials.
Climate change risks
Extreme seasonal weather patterns can present considerable challenges for energy storage developers, requiring extensive planning and risk mitigation measures. The long hours of sunshine and abundant light during the summer months are favourable for renewable energy generation, but can also make energy storage more difficult. Elevated temperatures have the potential to overwhelm the cooling system within the battery, which could lead to the battery entering a state of thermal runaway. In a worst-case scenario, this could lead to fires and explosions, causing personal injury and economic loss.
Changes to fire safety guidelines for energy storage systems
The UK Government updated the Renewable Energy Planning Policy Guidance in 2023 to include a section on fire safety developments for energy storage systems. Prior to this, the UK's National Fire Chiefs Council (NFCC) published guidance on fire safety for energy storage in 2022. The guidance advises that developers should liaise with their local fire service at the pre-application stage.
Post time: Aug-14-2024