Software platform provider Arenko has announced that the Reserve from Storage trial, which it pioneered throughout the summer of 2020 with the UK’s National Grid ESO, has proved highly successful.
Having originally proposed the service, Arenko designed it in collaboration with National Grid, optimising 41MW of batteries in all three trials.
The trials concluded that:
- Batteries can effectively provide sustained reserve allowing competition with other market participants to meet energy imbalances and driving cost efficiencies for the end consumer;
- Providing reserve from batteries will deliver increased operational resilience and support National Grid ESO’s wider ambitions of operating carbon free by 2025;
- £0.7m saving to the consumer was realised by using batteries participating in the trial versus the alternative solutions throughout the 20-day trial in Q3 2020. Using a linear scaling, which may not fully capture the true value for the consumer, a potential annual saving of £195m could be realised if current demand for reserve was met using batteries;
- Consumers made a 40% saving by using batteries to provide Reserve compared to ‘business as usual’;
- Batteries were cost effective and represented value in 80% of all settlement periods (half hour periods) during the trial;
- Over the course of the trial, steady value to the consumer was realised at all times throughout the day demonstrating value in a range of market and operational conditions;
- National Grid ESO confirmed its ambition to procure Reserve from batteries going forward.
- There is significant potential for this model to be exported to other markets.
National Grid ESO’s System Operability Plan (SOP) indicated an ongoing requirement of up to 2 GW of reserve, which historically has been procured from traditional thermal power plants and CCGTs. If this requirement were to be satisfied from batteries, the evidence from this trial suggests that consumers would benefit from annual savings of c.£195m if the savings announced following the trial were linearly scaled over the course of a year.
Demand for electricity dramatically dropped as a result of pandemic lockdown restrictions which substantially increased the proportion of renewables such as wind and solar on the system. Arenko’s analysis suggests this drove up the requirement for National Grid ESO to procure reserve to about 5GW, representing a view of the future electricity grid’s needs in a high renewable penetration environment.
Over the next ten years, National Grid (under its ‘Future Energy’ Scenarios) expects installed capacity of renewables to rise from 40 GW today to between 70 and 104 GW in 2030 (the onshore and offshore wind component represents a 2.1-3.0 times increase in capacity). At the same time, fossil fuels generation capacity will drop from 49 GW today to 24–40GW. This is likely to drive the requirement for reserve considerably higher than it is today.
National Grid forecasts that over the same timescale, batteries will grow from around 1 GW today to as much as 9 GW, in order to balance the increasing intermittency of renewables. As evidenced by the trial each new MW installed can offer an annual saving to the consumer of £97.6k per annum (£11.14 per MW per hour) which represents a 40% saving versus alternative sources of reserve.