Battery storage is the —Holy Grail— of the modern electrical landscape, serving as a vital partner in harnessing and expanding renewable energy sources…

Numerous nations, including China, Germany and India, are actively pursuing initiatives to promote energy storage systems.  Nevertheless, more suitable regulatory frameworks and effective pricing signals are needed to ensure the progress of energy storage solutions.  These two factors widen the gap between the supply and demand for various energy technologies.  

At the same time, increasing electricity demand has resulted in an overproduction of energy discharges, leading to the wastage of renewable energy. This issue is especially acute during midday when the gap between the deployment of photovoltaic systems and other energy technologies exacerbates the situation. As a result, electricity prices tend to fall during times of high photovoltaic generation.

Energy storage has been recognized as a critical technology for innovation.  However, under existing regulatory frameworks, a swiftly evolving array of storage technologies may struggle to compete with traditional generators in delivering electricity system services, potentially stifling innovation.  Barriers to investment, particularly regulatory obstacles, hinder the implementation of energy storage technologies in electricity markets.

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The primary regulatory obstacle is the existing classification of energy storage as a “generation asset”.  Furthermore, the merit order framework of balancing and ancillary markets hampers the constraints of capacity technologies to recoup their high comparative cost, while markets penalize expenditures.  

Current initiatives include implementing flexible connection agreements, advancing enhanced frequency responses and aggregating fast reserve services. 

To eliminate the identified barriers, one must establish a market structure that recognizes the value of the flexibility provided by storage, perceiving it as an imperative complement to, rather than a competitor with, network and generation assets.  

In the past, energy storage in the electricity system has focused mainly on the raw materials used for generating electricity, such as coal and natural gas.  Flexible generation capacity has been used to meet high demands in certain periods.  With the growing use of renewable energy sources that depend on the weather and inflexible nuclear power plants in the electricity generation market, there are expected to be more frequent instances of excess supply during times of low demand.  

Electrical energy storage technologies can capture and utilize this surplus energy to meet demand peaks, thereby enhancing stability and fortifying the resilience of low-carbon electricity systems.  Energy storage's unique characteristic lies in its ability to decouple electricity generation from consumption, which facilitates improved grid management, optimizes the utilization of existing resources and supports the integration of large-scale renewable energy sources.  

(1) Energy storage is considered a crucial technology for the future.  The UK government has committed to a research and innovation programme in this field.  Practical innovation is essential to lower the costs of technology and allow energy storage to be competitive with other electricity generation methods in the market.

Energy storage systems compete with other generation sources to sell electricity in various markets.  However, the high capital costs and regulatory barriers associated with energy storage render it uncompetitive in most markets.  The current regulatory framework surrounding the definition of energy storage is one of the significant barriers regarding network operators' ownership and operation of storage systems, especially in the issues associated with balancing ancillary services and capacity markets.   In conclusion, governmental authorities in several countries are exploring alternatives to enhance the implementation of energy storage through modifications to existing regulatory frameworks.

Recalling the developments in the electrical market prior to the 1990s is essential, most electricity companies were state-owned, and pricing was heavily regulated.  Following the liberalization of OECD member countries, large consumers procured electricity via contracts, while other generation methods were regulated by market mechanisms.  The dynamics of pricing were influenced by high storage and generation costs, variable demand, and the necessity for a dependable system.

Additionally, energy storage systems have the potential to provide services in various ancillary markets, such as fast reserve and grid stability services, where they may become increasingly competitive in the near future.  Furthermore, energy storage is anticipated to play a critical role in the wholesale energy market over the long term, with aggregators expected to facilitate the integration of smaller-scale technologies. 

Again and again, energy storage technologies have the potential to make significant contributions throughout the electricity system.  This includes their applications for generation, where they can assist with balancing and providing reserve power; in transmission, where they can aid in frequency control and defer investment; in distribution, where they can facilitate voltage control and support capacity; and at the end-user level, where they can enable peak shaving and contribute to cost reduction and management. 

It is therefore, that impostargable, modifications to electricity markets aimed at promoting energy storage are intended to achieve two primary objectives: (i) stimulate innovation that will lead to a reduction in prices in the short term and (ii) facilitate optimal deployment that accurately reflects the increasing value of energy storage within the system over the long term.  A more comprehensive understanding of the prospective value of energy storage to the broader energy system is essential.  

(1) https://www.bakermckenzie.com/en/-/media/%EF%AC%81les/insight/publications/2022/01/battery-storage-a-global-enabler-of-the-energy-transition.pdf

Vietnam explores battery energy storage systems to strengthen renewable energy sector

IntelliNews by BNO - Bangkok Office, September 23, 2024

As Vietnam’s renewable energy sector expands rapidly, experts are advocating for the adoption of battery energy storage systems (BESS) to enhance energy security and stabilise the national grid, as reported by Tuoi Tre News.

Pham Dang An, deputy general director of Vu Phong Energy Group, stated that BESS is crucial for optimising renewable energy use and ensuring a reliable electricity supply. He urged the government to establish policies that support financial and technical standards for energy storage development. Sunita Dubey, regional lead at the Global Energy Alliance for People and Planet, highlighted the need for Vietnam to adapt its energy strategies as global companies increasingly commit to renewable energy.

She noted that a pilot project integrating BESS into the national grid is underway, targeting a storage capacity of 300 MW by 2030. Experts agree that implementing BESS will enhance grid flexibility, reduce carbon emissions, and lower electricity costs. This strategic move could position Vietnam as a leader in the renewable energy sector, aligning with global trends toward sustainable energy solutions. The successful integration of BESS is seen as a vital step in ensuring a reliable and sustainable energy future for the country.