Long-duration storage is the next frontier in the UK’s energy storage leadership

Robust business models are needed to encourage development of the long-duration storage solutions needed to reconcile energy sustainability and security

Callum Coghlan
Milo Boirot

For centuries, we have benefitted from conveniently packaged energy stored in fossil fuels, available to simply extract, transport anywhere, and burn for fuel anytime. However, our critical need to transition to net zero necessitates relinquishing this inherent storage and rapidly developing lower-carbon alternatives that can just as effectively secure supply, integrate renewables, and manage system constraints.

The UK is currently one of the leaders in the accelerating global race to develop and deploy energy storage. Favourable regulations and a rapidly maturing flexibility market with revenue diversification opportunities across multiple products have attracted a record-breaking 34.5GW pipeline of storage developments with ever-growing project capacities. Aiming to capitalise on this success, the Electricity System Operator is constantly seeking ways to develop more targeted flexibility products and widen access for distributed battery storage providers, for example by reducing procurement timescales and availability requirements, and changing rules for battery aggregation.

Despite this positive momentum, the existing pipeline is not fit for delivering a net zero energy system. It consists mostly of short-duration technologies, largely lithium-ion batteries. Whilst mature, relatively affordable, and agile, they can only store energy for durations in the order of hours. They cannot maintain secure supply during cloudy, windless winter weeks in a future energy system dominated by renewables capacity, which could feature peak demands exceeding 110GW by 2050.

Nor can Britain rely wholly on interconnectors, a prescient concern given Norway’s recent pushback on the new Scotland-Norway connection, citing energy security and cost concerns.
Maximising pumped hydro storage through projects like the newly announced 1.5GW pumped hydro scheme in Scotland – Britain’s largest in 40 years – will be key, but geographic constraints limit additional capacity.

A critical enabler of net zero will therefore be the emergence and maturation of innovative longer-duration storage technologies.

To its credit, the UK’s Longer Duration Energy Storage Demonstration competition has made £68 million available to 39 demonstration projects covering emerging options like pumped thermal energy storage and compressed air energy storage. The latter presents a particularly compelling case for providing day-length storage, with a levelised cost of storage competitive with lithium-ion, and a growing global pipeline of projects, some claiming to offer multi-day capacities.

Nevertheless, a convincing business case is currently lacking for large-scale, longer-term storage. A recent government consultation concluded that there are significant barriers to deployment under the current market framework due to high upfront costs and a lack of reliable revenue streams. Policies de-risking investment for large-scale projects are expected by 2024, potentially including a cap and floor mechanism and capacity market reform.

One of the most promising holistic options for long-duration storage in the UK is hydrogen, particularly given its extensive underground salt cavern potential for hydrogen storage during times of low demand and favourable weather conditions, to be released largely during winter. Guidehouse’s recent study found that up to 95GW of hydrogen storage could be needed by 2050 to support the energy system during windless winter days. At this rate with current UK gas storage levels, all reserves would be depleted within two weeks. Anticipating that supply shortages could exceed this period, for months or even years, available storage volumes must be planned accordingly.

However, similar to other long-duration storage, the business case remains unattractive. Efforts to create robust options are complicated by the lack of a mature hydrogen market. With the government aiming to finalise business models for hydrogen transport and storage infrastructure by 2025, the outcome of its recent consultation on business model options is keenly expected.

To conclude, long-duration energy storage is increasingly being recognised as an indispensable element of a secure, future low-carbon energy system. In the UK, whilst many innovative technologies will play a role, hydrogen storage will be a key element to reconcile energy sustainability and security at a reasonable cost, thus alleviating the energy trilemma. To deliver this, the Government needs to provide development certainty through upfront financial support and clear and robust business models, ideally in advance of its 2025 target, given long lead times for the resulting infrastructure projects.

For further information, visit: guidehouse.com