Insight 21: Batteries in Stationary Energy Storage Applications
Summary
Battery energy storage is becoming increasingly important to the functioning of a stable electricity grid. As of 2023, the UK had installed 4.7 GW / 5.8 GWh of battery energy storage systems, with significant additional capacity in the pipeline. Lithium-ion batteries are the technology of choice for short duration energy storage. However, they are not as cost-effective for long duration storage, providing an opportunity for other battery technologies, such as redox-flow or sodium-ion, to be deployed alongside clean technologies such as hydrogen storage.
Focus of the Insight
This Insight focuses on the role that energy storage, particularly electrochemical energy storage, or batteries, can play in delivering flexibility for decarbonised electricity system. First, the role of energy storage in a net zero energy system is outlined. Next, the market for energy storage globally and in the UK is presented, with a particular focus on batteries. Key characteristics of different battery technologies are reported, providing insight into which battery technologies are best suited to which applications. Finally, the energy storage policy landscape is discussed.
Conclusion
Batteries will soon be the most widely deployed energy storage technology globally, supporting the rapid increase in renewable energy generation as the technology of choice for SDES and BTM applications, thus helping to decarbonise electricity supply. Lithium-ion, and in particular LFP-type batteries, are driving this deployment, thanks to their low cost and long cycle life. Next-generation technologies such as flow batteries or sodium-ion will displace legacy battery technologies and could compete with lithium-ion batteries in certain market sectors. However, efforts must be made to continue to reduce capital costs of these technologies, opening up opportunities in LDES applications. Ambitious targets have been set for the deployment of renewable energy generation in the UK, as the Government aims to make the UK a clean energy superpower. Policies such as the Government’s proposed cap-and-floor mechanism will help encourage the deployment of SDES and LDES systems. To ensure that battery energy storage meets the needs of a future grid, the following will be required:
- Reform grid connection processes by adopting a ‘First Ready, First Connected” approach to speed up BESS deployment of SDES.
- Continue to support the installation of BESS in BTM applications to enable distributed energy systems across the UK.
- Reduce battery skip rates on the Balancing Mechanism to improve the use of BESS.
- Prioritise research into next-generation battery technologies, such as sodium-ion, redox-flow and metal-air, to lower capital costs for BESS, improve performance, and accelerate their deployment in SDES and LDES applications.
- Engage with fire safety services and the public to provide accurate information on the safety of BESS and procedures required to ensure their continued safety.
- Implement cap-and-floor financial mechanisms to de-risk investment in LDES and expand pilot projects for batteries and other technologies to demonstrate commercial scalability and market viability.
- Investment in LDES and seasonal storage technologies to deliver ~25,000 GWh of strategic reserve (significantly larger than the market size for EV batteries in the UK).
Given the importance of battery for grid stability and renewable integration, it will also be crucial to establish domestic battery manufacturing capacity to reduce reliance on imports and ensure security of supply. Although the UK is expected to have around 67 GWh of lithium-ion battery production capacity by 2030, this is to supply the UK’s automotive sector. The demand for SDES could therefore justify the construction of a dedicated gigafactory. Energy storage will be critical in ensuring a net-zero future by providing stability and flexibility to the electricity grid. While batteries will not be the only solution in providing LDES storage solutions, they could play a vital role in meeting the growing demand for energy storage across all durations. Continued investment, innovation, research and policy support will be essential to unlocking the full potential of battery technology for grid storage applications.