The Long Duration Energy Storage (LDES) market needs more than ambition, it needs a strategy
By Tim Field, Director, Net Zero Transition
We’re at a pivotal moment for the UK Long Duration Energy Storage (LDES) market as it moves from a somewhat theoretical part of the net zero debate into a defined area of energy policy. This is one that sees LDES as essential infrastructure in a renewables dominated system. However, the precise structure of this market, the mechanisms for delivering it and the subsidies/incentives used to encourage it will all play a fundamental role in how and where it succeeds.
I chaired our latest Madano breakfast roundtable last week with leaders from a range of companies engaged in this sector, including technology creators, developers and financiers to discuss this shift and what’s needed from policy and regulation.
The discussion began with some scene setting from our Senior Advisor, Prof. Paul Monks, former Department for Energy, Security and Net Zero Chief Scientific Advisor. The following discussion highlighted areas that require a course correction from the Government if it is to deliver investor confidence, drive project delivery and progress from LDES to very long duration energy storage (VLDES).
Government can be technology agnostic, but it still needs to own a strategy
The current 8-hour definition has catalysed projects into the current ‘Window 1’ bids for development but what’s needed is a whole-system strategy that enables different technologies and a mindset of days and weeks or Very Long Duration Energy Storage (VLDES). The warning was that by trying to not pick winners, the Government risks only supporting established technologies rather than enabling a multi-purpose LDES market.
The cap-and-floor scheme must shift from technology or quantity to use-cases and locational signals
This will require a much clearer direction of travel to be established by Government, but will allow a range of technologies to provide the best LDES options in the right places and improve the corresponding view on where value comes from for developers.
Subsidy-free storage will require better and clearer margins
Transparency and greater detail of the process for cap-and-floor is critical as developers are needing to stack revenues to make their projects viable. At different durations for different technologies, margins plateau or fall away, something that use-cases could resolve as developers would align with those.
The Government should procure for duration, not just capacity
This was a key policy ask as it will provide much greater benefit for what the Government needs from LDES as strategic energy infrastructure that have multiple uses and further helps align the capabilities of each technology.
Funding needs to become more sophisticated
The current cap-and-floor scheme helps projects get off the ground but doesn’t do enough to support newer, homegrown technologies or make them competitive. The bigger challenge is what happens once a project is built and no longer has government backing: developers are essentially betting that the market will still work in their favour years down the line, which is a hard ask when the energy landscape shifts so quickly.
The supply chain needs nurturing and skills are a concern
Competition for materials and engineers impacts the LDES sector in the same way as the rest of the industry. Over the timeframe of development for some of the ‘Window 1’ projects this strain will become more acute with grid, nuclear power plants and renewables all drawing on a similar pool of suppliers and workforce in the UK, which itself is competing in a global market.
There are clear asks of Government, most of which orbit around the need for a clearer strategy that addresses the potential LDES/VLDES market with more sophistication, but in doing so gives greater clarity and transparency about what is needed, when and how it delivers value for developers.
The unanimous answer was use-cases aligned to spatial planning or locational signals. As the decision on ‘Window 1’ projects draws closer, the outcome of that and the discussions around ‘Window 2’, need to frame a debate on how to improve the process and where the Government can pivot now to achieve the strategic infrastructure potential that LDES and VLDES can provide for energy security and independence in a renewables dominated system.
Thinking about what the shift to LDES means for your organisation? Get in touch with [email protected].