Challenge #2: Defining Storage, Bureaucratic Box-checking or Important Tool?

Alicia Carrasco, FifthVolt

At first blush, developing a definition may sound like a mundane and bureaucratic sort of task. But think about how annoying it is when people have different definitions of what it means to be on-time. For some, being on-time means that when a meeting is scheduled for 9:00, you show up at 9:00. For others, being on-time means being 15 minutes late. This creates frustration for all parties and may lead to poor outcomes.

Likewise, if an investor is going to pony up money for a project, they need to know what exactly it is. Would you invest in a product or service that everyone defines a little differently? No, you wouldn’t do that. This is the problem facing energy storage in the EU today. Lack of a legal definition has led to an underinvestment in the industry and is a roadblock to integrating it into the clean energy system. Only on this basis can formal legal regulations ensure legal certainty which is indispensable for significant market-based investments.

What is holding up the legal definition energy storage? How difficult could this be? Given the multitude of its uses for, coupled with the traditional physics of electricity systems, several issues have emerged that make defining energy storage a challenge.

Listed below are four pillars of consideration when debating the definition of energy storage.

  1. Consumption-and-Production-Only Electricity System

The electricity system has been designed based on production and consumption units only. This means that at any asset on the market must “fall” into one of those two categories. Classifying batteries into one of those two options is proving to be less than optimal solution.

  1. Multifaceted Value of Storage

Storage is not just for 1 or 2 applications or customers. Storage brings value to all different layers of the electricity sector, such as expanding grid services by way of primary, secondary, and tertiary control, adding storage capacity to generation units, providing backup power for commercial and industrial sites, and enabling the end-user or consumer to store. In short, this makes defining storage a complicated issue.

  1. Innovation

The innovation of battery storage has grown by leap and bounds over the last several years and, for the electricity industry, is a very new tool. Given the battery’s relatively new presence in the industry explains why a definition has not been previously established by the current legal framework.

  1. Clean Energy Transition

Today’s energy transition comes in response to trends towards the clean energy economy through renewable electricity and energy efficiency. Consumers are empowered as never before with data, choice and market participation, and the electrification of heating, cooling, and transport. Thanks to technology and digital innovation, the cost of the technologies that facilitate the energy transition is decreasing while allowing new business models to thrive. This creates a need for regulations and market changes to provide competition and fairness when integrating renewables, active consumers, new uses of electricity, and new business models. Converted into well‐expressed frameworks, the energy transition aims to drive policy, regulations, roles, and business models, towards decarbonization, digitalization, and distributed energy resources.

These 4 pillars of consideration are slated to be addressed in the Clean Energy for All Europeans package, also known as the Clean Energy Package (CEP). Embedded in the CEP are new proposals and a prescribed definition for energy storage: “Energy storage in the electricity system means the deferring of an amount of the energy that was generated to the moment of use, either as final energy or converted into another energy carrier.”

We are moving to a market-based approach for storage where grid operators will procure flexibility, including aggregated storage facilities. With this in mind, there is space to add additional details to the scope of the EU’s energy storage proposals. The EU needs to recognize and facilitate all values of storage while aiming to advance an electricity system that is free from barriers to energy storage.

 

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