The government has launched a consultation, seeking evidence on large-scale and long-duration electricity storage (LLES).
Published on 20 July, BEIS outlined how LLES could play a crucial part in decarbonising the energy system, owed to its ability to provide storage over different durations, helping to balance the system across longer periods of lower generation or higher demand. Specifically, it is seeking information to build understanding on barriers within the current market for large-scale and long-duration electricity storage, how they could be addressed and the risks that may be associated with potential interventions to support deployment.
The consultation does acknowledge a role for hydrogen as an LLES technology, providing system flexibility through electrolysis. However, the lack of a market to which interventions could apply and the fact hydrogen projects will require a range of interventions in the long-term across the value chain mean the challenges it will not face the same financing challenges as other LLES technologies that have a clearer path to market.
Although hydrogen storage is a mature technology, it has not yet been well demonstrated as an option to deliver grid scale electricity storage. Furthermore, there are potential innovation barriers it could face, as well as financing ones. The consultation suggested a Cap & Floor approach could prove a potential solution in the longer-term, once a hydrogen market is in operation, though noted this will be dependent on how other parts of the hydrogen value chain develop. Information gathered through the call for evidence will help to inform the government’s work to clarify how to best address hydrogen.
A Cap & Floor approach has proven effective for interconnectors and could in theory do likewise for LLES technologies. The element of merchant exposure can incentivise developers to optimise storage assets in a way that generates most value, while the fact it retains a developer-led approach and that costs to consumers would be low were also cited as benefits, with it not necessarily paying out a subsidy.
The consultation will close at 11:45PM on 28 September.