For our model we used an ideal scenario where there is complete data sharing amongst energy storage assets together with the site demand and local generation data, which enables optimization to happen similar to a micro-grid/ local energy network (like Cornwall local energy market).

With that scenario, gross benefits of up to £70,000 can be realised for every 1 MW of peak demand, and with current UK demand (60 GW) this works out as £4 billion/year.

These savings come mainly from the National Grid not having to pay out high prices for peaking plants, balancing services and reduced losses through local generation and distribution. But on top of this there will be huge savings to the system derived from reduced infrastructure costs and investments. For the storage asset owners/investors, new revenue streams will be opened up rather than heavy dependence on DSR (demand side response) revenues.

These savings could be realised from the growth of energy storage and increase in distributed energy networks with high levels of data sharing amongst them. But if there is low data sharing, though the energy storage projects will doubtless increase in number and volume, the system benefits will not be fully realised, meaning that the true value of the developments may not be reflected in the potential savings to the customer on energy bills.

The financial benefits we have calculated corroborate with the Carbon Trust report data. The other point to note is flexibility as a whole includes storage, plus DSR and CCGT, so it is difficult to consider energy storage alone, but there can be no doubt that higher levels of data sharing will produce much greater system efficiencies, whether this is derived from flexibility generally or from storage assets alone.

The net benefits of deploying flexibility technologies, inclusive of the costs of deployment and implementation, are in the range of £1.4-2.4 bn/year in 2030, assuming an electricity carbon emissions intensity target of 100 g/kWh in 2030. For comparison, a recent Committee on Climate Change study found a gross benefit from deploying flexibility technologies of £3-3.8 bn/year in 2030, the additional benefit being largely explained by this being a gross saving, i.e. not including the cost of the additional flexibility technologies deployed. Similarly a report by the National Infrastructure Commission states that gross benefits could range from £2.9- 8.1 bn/year in 2030. In this case the difference is largely explained by these again being gross not net benefits and by this analysis assuming an emissions intensity target of 50 g/kWh in 2030 for the high end of the range. (1).

Though Carbon Trust claims, Under the National Grid’s ‘Gone Green’ scenario the addition of energy storage can unlock system cost savings of up to £2.4 billion a year by 2030. And if just 50 percent of this saving was passed on to domestic customers it could reduce the average household electricity bill by up to £50 a year. (2)

(1)

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/568982/An_analysis_of_electricity_flexibility_for_Great_Britain.pdf 

(page 5-6)

(2)

https://www.carbontrust.com/resources/reports/technology/energy-storage-report/

Thank you to QBots for supporting us with our financial modelling.