Network operators seek freedom to invest in and manage energy storage

Energy network operators should be allowed to own and operate batteries and other energy storage, the Energy Networks Association (ENA) has said in a response to the government’s consultation on an industrial strategy.

Energy networks are currently barred from commercial generation and supply of power, which would be required to operate storage at scale, because they are regulated businesses – although it is not clear that the companies could not set up unregulated businesses to compete in this sector as they do, for example, in the unregulated connections sector.

ENA says there is “There is ambiguity within the existing framework as to whether DNOs can own and operate storage assets where that involves buying and selling energy into the market.”

Commercial storage operators fear that if network companies can trade storage assets it will stifle a new fast-growing market and hinder innovation. ENA says its members support flexibility, including storage, being procured from the competitive market place as a commercial service. “However, we do not yet know if the commercial market place can provide viable storage services in the highly location specific manner networks may need.” It says it wants to operate storage “where the market place cannot provide it”.

The ENA also noted “In some cases, bidirectional electricity storage (e.g. batteries, but not exclusively), because of its need to charge and discharge, can increase rather than reduce network loading where other solutions (such as energy vector – heat or hydrogen) do not. We need to ensure that the market place provides equal and fair access and charging arrangements for all types of flexibility without artificially distorting the market to certain types.” It said to maintain investor confidence “It is essential that the networks have a fair and consistent regulatory framework for all forms of flexibility providers.”

The questions over storage reflect the changing role of network companies who are preparing to take on a more active system management role in response to the growth of distributed generation. In its consultation response ENA said, “As we transition to a low carbon economy, the networks are encouraged to take more risks… It is important that this additional risk is recognised within the regulatory regime.”

It also said, “It is important that the network companies are well capitalised to secure scale of investment needed over coming years, including attracting inward investment.”

Further reading:

What is the future for distribution networks?

OPINION: Local authorities should join the battery gold rush

OPINION: Energy networks are making too much profit

Ofgem raises concerns over Scottish heat networks proposals

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