Battery storage technologies entering the UK’s capacity market auctions early next year will face more stringent de-rating factors after the government confirmed on Monday it will act on a consultation launched earlier this year.
It means a “significant chunk” of the 4.6GW of batteries that prequalified for the auction delivering for 2021-22 could be unsuccessful in securing contracts, according to one source.
National Grid, which administers the capacity market, published a list of prequalifying capacity for both the T-1 2018-19 auction and T-4 2021-22 auction late on Friday (click here to read story). Both auctions will be held in early 2018.
However, the 227 projects totalling 4.6GW of battery capacity will now face more stringent de-rating factors when entering the auction in early February.
A de-rating factor is a measurement of how often a piece of capacity is generally able to generate if called upon at any one time. For example, nuclear plants have a high derated load factor as they tend to run as baseload and so are only unavailable to generate when out for planned or unplanned maintenance.
Variable renewable power has a much lower derated load factor to reflect a higher degree of unavailability.
All storage assets had previously enjoyed a 96% derating factor, which is higher than most conventional generation. This is to reflect the reliability of pumped storage assets providing electricity when needed.
However, storage assets unable to discharge for a continuous period of four hours and above will now receive lower de-rating factors, according to the minimum duration they can generate (see table). This follows recommendations made by the UK energy department BEIS in July in response to fears that battery technologies could be overcompensated for failing to provide guaranteed availability during a system stress event.
According to UK Power Reserve, which prequalified 400MW of battery storage for the 2021-22 auction, the late changes to the capacity market rules could have an adverse impact on projects bidding for contracts in next February’s auction.
“I would expect a significant chunk of the batteries to be unsuccessful in the auction,” director of policy and regulation Michael Jenner told ICIS.
However, developers still have time to adjust their projects. “Investors have until 9 January to say what the [battery] duration is,” Jenner added. “They can change any plans and invest in a longer duration battery. There’s value to be had in a bankable fifteen-year contract.” firstname.lastname@example.org