UK makes ‘game-changer’ decision on storage subsidies

The first energy storage sites to be supported by the Renewables Obligation scheme could prove decisive for the UK’s 550MW pipeline.

The UK’s energy regulator, Ofgem, has for the first time accredited co-located battery storage projects under the Renewables Obligation subsidy scheme in a decision billed as a “game changer” for the market.

Three 5MW solar sites owned by developer Anesco have been equipped with a 1.1MWh battery and will benefit from the Renewables Obligation Certificates the existing solar park is eligible for.

“This decision is a game changer for the UK’s energy storage market,” said Steve Shine, Anesco’s executive chairman. “We will very soon be talking to all our existing solar sites to offer investors the opportunity to improve their IRR by providing the flexibility the UK energy network needs.”

Earlier this year, Anesco teamed up with mid-market investment manager Ancala Partners to complete the first portfolio-scale deployment of co-located batteries, although these are not among the sites accredited by Ofgem.

Ofgem said decisions such as these are currently being made on a case-by-case basis, although it plans to publish further guidance on the matter later this year. Ofgem and Anesco declined to disclose the specific criteria fulfilled by the plants to qualify for accreditation but the regulator said further details will be announced before the year end.

“There has been a continued question mark around the role battery storage could play in increasing revenue streams from existing solar farms and other renewable energy projects because of the potential impact on the project’s entitlement to ROCs,” said Maria Connolly, partner at law firm TLT. “We would expect this announcement to act as the impetus for a number of developers to follow in Anesco’s footsteps and, as a result, to see a significant increase in the number of co-located schemes coming forward within the next 12 months.”

Ofgem says there is about 550MW of storage contracted to come online by 2020, with a sizeable amount expected to be co-located with existing renewables sites. Anesco says it has 28 operational sites totalling 29MW of capacity and this figure is expected to exceed 185MW by the end of next year.