ENERGY STORAGE

UK government’s attitude to energy storage investment ‘distressing’

A parliamentary committee this week made three recommendations for increasing energy storage deployment after accusing UK government of dithering over storage investment

BEN COOK

March 14, 2024

  • UK ill-prepared for energy supply shocks, says parliamentary committee
  • Scale of UK government’s energy support package relative to GDP is among highest in Europe
  • UK government dithering over energy storage investment that would insulate economy against energy supply shocks
  • Science and tech committee makes three recommendations for increasing storage deployment

The UK government’s failure to devise plans for insulating the country against energy supply shocks and adopt a clear policy on energy storage investment is “distressing”, a parliamentary committee concluded this week. A report from the House of Lords Science and Technology Committee stated that deploying long-duration energy storage technologies at scale is “critical to ensure the UK can maintain energy security and reach net zero”. The report added that long-duration energy storage technology would allow more of the UK’s renewable electricity to be used and “help insulate the economy from energy supply shocks such as the crisis following the invasion of Ukraine”.

The consequences of failing to prepare for energy supply shocks had been starkly illustrated by the recent energy crisis, the report added. “In light of the huge economic damage this has caused, it is distressing to see that the Government seems to lack a clear plan for energy supply risks and indeed is still deliberating over investment in storage to prevent future crises”, it concluded.

Supply shocks: UK ‘particularly vulnerable’

The UK is particularly vulnerable to global energy supply shocks. As the report highlighted, the energy crisis that began in 2021 resulted in the UK spending £265 billion on energy in 2022 (of which £100 billion was spent on oil and gas imports). This compared to a total UK energy spend of £159 billion in 2010. Meanwhile, according to the Office of Budget Responsibility, UK government support for energy bills alone totalled £78.2 billion from 2022 to 2024. Analysis by the IMF has shown that the gross size of the UK government’s energy support package relative to GDP is one of the highest in Europe (see chart below).

 

 

Source: UK Office for Budget Responsibility

 The House of Lords Science and Technology Committee report said that it can take seven to ten years to build long-duration storage facilities, which require up-front capital investment. “Developers need a clear business case, supporting infrastructure such as grid connections, and financial support in order to invest,” the report added. The committee noted that the government has a goal to decarbonise the electricity system by 2035, but warned that if long-duration storage is to scale up in time, “it is clear that construction needs to start as soon as possible”. It added: “The committee is concerned that this is not being treated with sufficient urgency.”

The report made three specific recommendations in relation to energy storage:

1. Set an explicit minimum target for energy storage

The UK government should assess and acknowledge the likely minimum scale of storage across different durations needed to balance the energy system, the report said. This will set the scale of ambition that policies to support storage must meet. It will enable the UK to move forward now with “no-regrets” infrastructure that will be needed by 2035 regardless of how the energy system evolves. “The government cannot allow the perfect to be the enemy of the good,” the report added. “If it waits until it knows precisely how much storage is needed, it will be too late to build it.”

2. Set out the details of its long-duration storage business model

This should include the scale of funding that will be made available, the amount of storage the scheme will support and clarity on how it interacts with hydrogen support mechanisms. The model should support a range of technologies, not just lithium-ion batteries.

3. Support ‘no-regrets’ investments for hydrogen and clarify its intended role

A large-scale storage project that combines electrolysis, hydrogen storage and electricity generation would provide a model for other projects to follow, the report said. It added that hydrogen is likely to play a crucial role in “strategic energy storage”, so energy storage and hydrogen policy must be connected. Clarity on which applications the government expects hydrogen will be used for would increase confidence. The UK must also secure sufficient electrolyser capacity in the face of full order books and global competition for clean technologies.