According to Cornwall Insight, degradation is a key issue for batteries competing in the UK’s capacity market. (The CM is a government scheme to ensure security of supply through competitively arrived at agreement where capacity providers receive a regular revenue in exchange for being available at times of system stress.) But owing to degradation over time, it is currently not possible for batteries to have long-term agreements and be paid for their total capacity in the CM without risking significant fines.

Current options available to batteries:

  • ‘Overbuild’ and have a higher battery capacity than the “connection capacity” such that it will still be able to deliver 95% of the total stated in its CM agreement for the entire duration stated in its CM agreement.
  • Enter a 15-year agreement with a lower capacity/duration that the asset would always be able to achieve.
  • Take rolling 1-year contracts rather than a 15-year contract and enter the capacity/duration that the battery can achieve at that point in time.

James Cunningham, Consultant at Cornwall Insight, commented:

"Batteries are exposed to unique risks when providing security of supply because of the degradation of the cells as they are cycled. Furthermore, the contribution towards security of supply is non-negotiable as falling duration would mean capacity has to be re-procured, in all likelihood at higher prices.

“Therefore, the cost of managing this risk is a key consideration for the future of the CM, and the transition to net zero as batteries (especially lithium-ion) are likely to be a keystone technology in our future electricity system. As part of the [process] of aligning the CM with net zero, it is worth considering other ways to manage the anticipated duration of battery technologies over their lifetime.”

In “Lithium ion battery degradation: what you need to know”, a paper published in 2021 by the Royal Society of Chemistry, its 20 authors considered in considerable depth the five principal mechanisms of degradation and 13 secondary mechanisms resulting from them. The aim was to provide better understanding of these mechanisms as commercial large scale installations became more numerous, and to provide a basis for studying how Li-ion cell life might be extended. 

It found that in general terms a cell would rapidly lose about 7.5% of its discharge capacity (measured as Ah/square metre) by the completion of 40-50 discharge cycles, then level off into a slow decline, going to around 30% of its discharge capacity after 600 cycles, and falling more rapidly to about 30% after 900 cycles.