UK energy storage pipeline report 2023

RenewableUK EnergyPulse report - December 2023

Foreword by Yonna Vittonova, Senior Policy Analyst

The pipeline of battery storage projects has skyrocketed again, from 32GW in March 2022 to 84.8GW in December 2023. This edition of the EnergyPulse report on Energy Storage shows there is 7.2GW of batteries in operation and under construction and more than 24GW projects have been consented. The momentum around battery storage development puts us well on track to delivering the forecasted 30GW of flexibility by 2030 in the DESNZ Smart Systems and Flexibility Plan.

The gold rush for battery storage has been powered up by plethora of routes to market in the form of grid services making the most of the asset competitive edge: fast acting flexibility. Despite the staggering growth in the market currently, the business case for projects is still underpinned by uncertainty and the need to access lower cost of capital. Plans have also been put forward by NGESO to address barriers to participate in the Balancing Mechanism going forward, which will be critical to address the risk of oversaturated grid balancing markets where batteries have been the key success story. This growth in storage capacity has also driven up the connections queue, and we have recently seen the NGESO and Government respond with a series of regulatory changes, in particular non-firm access for batteries to mitigate some of these impacts. The Energy Act introduced a welcome separate category for storage and a key priority for Government and Ofgem should be to amend transmission charging in line with this category.

There has been a shift towards larger and longer duration projects, with the average project size increasing to 80MW in 2023. The Capacity Market remains the key long-term contracting option for batteries with the much sought-after 15-year contracts. However, an enduring solution to manage asset degradation needs to be implemented for projects competing for multi-year CM contracts. Industry is still waiting for the Government consultation on the case for revenue stabilisation mechanism being introduced to support investment in large-scale long-duration electricity storage. This is urgently needed to avoid a weakening of investor confidence and unlock opportunities across a range of technologies.