U.K. grid operator National Grid has just put its money behind one of the world’s single largest procurements of energy storage. Late last week, the owner and operator of the transmission grid in England and Wales announced 201 megawatts of winning bids of its first-ever tender for “enhanced frequency response.”
Out of a list of some 64 pre-qualified bidders, National Grid picked eight vendors with a combined 201 megawatts of projects, ranging in size between 10 and 49 megawatts apiece, with a total value of £66 million ($86.4 million).
The biggest winner was EDF Energy Renewables, which won a £12 million ($15.7 million) tender for a 49-megawatt project at its West Burton natural-gas-fired power plant -- just under National Grid’s 50-megawatt cap for the program. Vattenfall won a £5.75 million ($7.5 million) tender for a 22-megawatt project at the Welsh Pen y Cymoedd wind farm, and E.ON U.K. won a £3.89 million ($5.1 million) tender for a 10-megawatt battery at its Blackburn Meadow combined heat and power plant.
Other winners included Low Carbon Storage Investment with a combined £15.35 million ($20.1 million) tender for two separate projects of 10 megawatts and 40 megawatts each; Element Power with a £10.1 million ($13.2 million), 25-megawatt project; Belectric with a £4.2 million ($5.5 million), 10-megawatt project; and Renewable Energy Systems with a £14.65 million ($19.2 million) 35-megawatt project. (RES’ new project is on top of a previous 20-megawatt project announced earlier this summer.)
All told, it’s one of the biggest energy storage procurements announced so far this year, and certainly a big step forward for the U.K. storage market. To date, the country’s biggest battery deployment has been U.K. Power Networks’ 6-megawatt, 10-megawatt-hour lithium-ion system to help support a local substation. Like the other grid batteries deployed in the U.K., it’s been centered on testing storage as a distribution grid improvement, as part of the U.K. Office of Gas and Electricity Markets' Low Carbon Networks Fund.
But last week’s awards are the first step in what could become a much larger market for battery vendors and storage project developers. The U.K.’s Department of Energy and Climate Change (DECC) has stated that the energy storage market is forecast to reach $17 billion in 2020, and nearly $30 billion in 2030.
National Grid’s announcement represents the end result of a process launched in Sept. 2015 to procure a specialty grid service needed to keep grid frequencies as close as possible to normal operating range -- in the U.K.’s case, 50 cycles per second. This kind of service has traditionally been performed by power plants, but in the past decade, we’ve seen grid batteries, flywheels and other energy storage systems step in as competitors in the field.
In fact, frequency regulation has driven the growth of grid batteries in the U.S., with mid-Atlantic grid operator PJM’s frequency regulation market now being served by hundreds of megawatts of lithium-ion systems, capable of responding within 4 seconds to grid-balancing commands.
The U.K. requires about 2 gigawatts of frequency response for a system with nationwide peak demand of about 45 gigawatts. National Grid spends between £160 million and £170 million ($212 million to $225 million) per year to manage this need, and has previously relied on slower-reacting assets for frequency response -- either 10-second primary services, or 30-second secondary services, which can react to correct frequency excursions after they’re wandered outside their boundaries.
But assets that can respond in less than a second can step in to “improve management of the system frequency pre-fault,” or before frequencies go out of range, National Grid notes on its EFR web page. That’s important for a grid operator that’s seeing more and more volatility due to its increasing share of intermittent wind and solar power, and could help save National Grid about £200 million ($262 million) over the four years of the contracts it’s awarded.
There were a handful of non-battery projects bidding for this procurement, including aggregated thermal energy storage from Open Energi and generators from Drax Power Ltd. But 61 of the 64 projects on the final list were battery-based systems, a nod to the fact that batteries are well-suited to sub-second responses.
National Grid’s open tender included some valuable data on what it’s paying for each project, in terms of the costs per hour of enhanced frequency regulation -- a measurement that allows an apples-to-apples comparison for projects of different size. The winning bids’ prices ranged from £7 ($9.16) to £11.97 ($15.67) per megawatt-hour of enhanced frequency response.
The projects are set to come on-line between April 2017 and March 2018, and their contracts are for four years of service. While it’s the first procurement of its kind, it likely won’t be the last.
“We are seeing a requirement for this type of service increasing over the next few years, therefore we intend to run regular tender events on an enduring basis,” National Grid wrote in a March presentation.