As the electricity grid becomes more decarbonised the UK will need more energy storage.

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1 APPG n Energy Strage Event Ntes Ntes frm event: Building energy strage, creating energy security APPG n Energy Strage, 10:00am in the Attlee Suite, Prtcullis Huse Key Pints Panel Greater amunts f energy strage will be needed n the UK grid in the cming years. Deplying strage at a range f scales will save mney and develping a technlgy base will result in a sectr with internatinal exprt ptential Pumped hydr strage is the ldest frm f electricity strage in the UK. A number f sites have been identified fr new deplyment particularly in Sctland and Wales, with SSE and ScttishPwer prjects representing hundreds f millins f punds f investment. Gvernment plicy change needed t supprt new develpment, the ptential intrductin f a price flr culd assist. Peter Aldus MP (Chair f the APPG n Energy Strage) Esther Dudek (Senir Cnsultant at EA Technlgy) Rss Galbraith (Head f UK Hydr at ScttishPwer) Kate Gillingham (Senir Plicy Manager at SSE) Peter Taylr (Chief Executive f Quarry Battery Cmpany) Nte: slide pack available nline here (drpbx). Intrductin frm the Chair - Peter Aldus MP As the electricity grid becmes mre decarbnised the UK will need mre energy strage. There has been a past emphasis n battery strage but a wide range f ther technlgies als exist. Need fr large-scale strage such as pumped hydr, flw batteries, and cmpressed air. Large and smaller scale strage cmplement each ther rather than cmpete. Internatinally, strage at a range f scales will be needed in the cming decades and the technlgy represents an exprt pprtunity. China has annunced a $361bn renewable funding prgramme t 2020 Saudi Arabia has annunced an up t $50bn plan t 2023 t diversify away frm il using renewables India has a target f 100GW f slar PV by 2022 (by cntrast the UK has arund 10GW installed) Many ther regins, including the US, Sutheast Asia and in Africa will need greater amunts f strage as renewable deplyment cntinues t expand Page 1 f 6

2 APPG n Energy Strage Event Ntes UK can becme a leader internatinally if it deplys strage technlgies dmestically nw, and exprts the expertise in the cming years. Panel Discussin Esther Dudek, EA Technlgy EA Technlgy is emplyee-wned and has extensive experience wrking acrss the energy industry. In the UK there is a need t better balance demand t match supply. Current fcus in energy strage is n frequency respnse extremely shrt, quick discharges which is dne largely by batteries. Lnger-term strage slutins are needed in the future as mre aspects f the ecnmy becme electrified (eg heat and transprt). Benefits f strage: 2.4 t 7bn savings by 2030 as strage reduces the need fr upgrades t the electricity netwrk and reduces the need t build fssil pwer statins. 99% f existing energy strage n the UK grid is pumped hydr. Batteries are rapidly deplying but are small t medium scale strage. Batteries wrk well fr strage n-site, such as at a slar farm r t supprt a business. Large-scale strage technlgies: Flw machines- liquid electrlytes that are scalable Thermdynamic- liquefactin f air, then strage and release thrugh a turbine Highview pwer strage develping this technlgy Cmpressed Air Energy Strage- air r gas cmpressed in a chamber (such as a salt cavern) and released when needed Technlgy being develped by Strelectric Pumped hydr- pumping water up a hill when electricity is cheap (and abundant) and releasing the water during perids f high demand Recent funding frm BEIS and cnsultatins frm BEIS/Ofgem ffer prmise fr the sectr. Rss Galbraith, ScttishPwer Iberdrla (wner f ScttishPwer) perates 11GW f hydrelectric pwer statin capacity glbally. Cruachan pumped hydr strage plant was built in 1965, there is significant knwledge and experience available in the UK t develp this technlgy. Page 2 f 6

3 APPG n Energy Strage Event Ntes Cruachan- 440 MW fr 14 hurs in the Scttish Highlands. Flexibility is key and the demand fr strage services has increased significantly in recent years. Visual and envirnmental impact is very lw Visitrs centre attracts 60,000 visitrs per year which benefits the lcal ecnmy 10% f water in reservir cmes frm surface run-ff frm the muntain. The remaining 90% f water is pumped frm a lwer reservir when electricity prices are lw. Cruachan can ramp up and dwn quickly- can g frm zer electricity prductin t full lad in 30 secnds. 440MW capacity is the equivalent t the whle f Edinburgh Cruachan cmes n and ff 12,000 times a year Cruachan 2 the prpsed upgrade f the existing site C2 can be designed in a similar way s that it has a very lw impact and ftprint Wuld require 300 wrkers during cnstructin perid Expansin ptins (see slide pack fr further details) Main challenge f develping new pumped hydr strage: Civil engineering wrks are capital intensive and have a lnger cnstructin time than ther renewables T make the prject viable there needs t be a cnsideratin f the different surces f revenue, such as selling electricity at peak prices and buying when lwest. Gvernment supprt is needed Plicy suggestins A methd t mitigate the risk f lng lead time prjects shuld be cnsidered. At present the capacity market needs cntracted capacity t be deplyed in a shrter time that it takes t develp a new pumped hydr strage facility Risk mitigatin fr develpers and investrs is essential fr hydr Kate Gillingham, SSE The riginal design f UK s existing pumped strage was largely fr shrt term variatins in generatin and demand Benefits f large scale strage are evident but there has been n new prjects built in the UK fr decades 2006 SSE cmmissined a study t identify ptential new pumped hydr strage sites 7 Sites identified fr mre detailed assessment and 3 further develped frm there Shrtlist 1. Sly cnversin, 60 MW 8 GWh - Planning cnsent granted September 2010 Page 3 f 6

4 APPG n Energy Strage Event Ntes 2. Cire Glas, 600 MW, 30 GWh - Planning cnsent granted in December Balmacaan, 600 MW, 30 GWh - Put n hld at preplanning submissin stage Cire Glas the preferred site- up t 600MW capacity/ 30 GWh f strage capability 800m investment and 5-6 years fr develpment Wuld be able t mre than duble existing UK pumped hydr capacity. Benefits f the Cire Glas scheme and new pumped strage Flexible (but there is a need fr a range f technlgies acrss the spectrum) Prven technlgy Large scale, shrt respnse time Cire glas culd run fr hurs Helps facilitate fr renewables develpment Can prvide a brad range f ancillary services including frequency regulatin and vltage regulatin Reductin in variatin f csts. Minimises the need fr upgrading transmissin Barriers Large upfrnt capital csts Lng lead times Operatrs may recver marginal csts but nt initial investment Uncertainty f future gvernment energy plicy- culd change and make prject less viable Ancillary service cntracts are generally nly shrt-term ( 2-3 years) The full range f benefits which pumped hydr ffers are nt cmpletely rewarded Keen t wrk with Gvernment t find a slutin Peter Taylr, Quarry Battery Cmpany Glyn Rhnwy prject in Nrth Wales will utilise tw abandned quarries fr pumped hydr strage. 99.9MW prject/ 700 MWh strage Prject has secured final planning permissin frm gvernment. Envirnmental permits cmplete Grid cnnectin secured Hpefully financial clse by August 2018, then 2-3 years f cnstructin time identifies and uses existing brwnfield sites. is very clse t cnfirming funding fr prject deplyment Dn t have t be ne f the big 6 t develp pumped hydr New intermittent supply f energy requires greater emphasis n strage One f 7 disused quarries with 250m vertical change Page 4 f 6

5 APPG n Energy Strage Event Ntes Significant risk invlved fr smaller develpers- spent 5m befre getting planning permissin. All cmes frm private investrs Much f the private investment cmes frm ethical investment funds There was n business mdel that wuld guarantee revenue stream Pumped hydr is seen as a renewable technlgy but culdn t receive the same benefits as wind and slar technlgy Per 1 spent, pumped hydr stres much mre energy thrugh its lifetime because it has such a lng lifespan But, difficult t get if ff the grund if lenders need perate in 15 year investment windws. Slar gets subsidies difficult t persuade investrs t divert investments int pumped hydr That said, the pipeline f renewables prjects is nw drying up s capital is becming available Subsidies als guarantee revenue stream, n such plicy fr strage and the sectr faces the risk f cntinuing energy plicy change (and therefre changing access t revenue streams) Gvernment needs t give sme security t investrs arund the future f revenue streams. Questins t the panel Questin: Can yu speak mre t the Gvernment supprt yu are seeking? ScttishPwer Risk management system is needed t give cnfidence t investrs. Indicates supprt fr a cap and flr plicy. SSE The prject is lng term, with a lng lead time. Hw d yu mitigate this risk? Indicates that a cap and flr system might be useful, but that is nly ne pssible ptin. The Current fcus is n batteries but there needs t be plicy that recgnises that there is a rle fr different technlgies at different scales There needs t be a system that encurages the develpment f small pumped hydr n the market. Questin; Will the grwth in Lithium In battery use n the Grid cancel ut the current demand prfile that wuld make large scale pumped hydr prfitable? What is yur view f negative pricing? Negative pricing culd be very helpful Li-in is a wrry but ther battery frms are mre prmising and pumped hydr ffers a cmpletely different scale Page 5 f 6

6 APPG n Energy Strage Event Ntes EA Technlgy Li-in is nt scaleable t this extent. There are als many grid cnnectin issues. Questin: Will new pumped hydr be n virgin r brwnfield sites? Scttish Pwer Cruachan prject will use existing sites and try t minimise its impacts SSE Cire Glas is cnsent at a new site, at Sly cnsent is fr cnversin f an existing hydr site Only uses brwnfield sites Questin: What is the ptential UK capacity fr pumped hydr? ScttishPwer There are many ptential sites. Gegraphy f Sctland and Wales amenable t this technlgy. SSE Hw Gvernment plicy evlves, fr example in terms f renewables deplyment, will influence the ptential fr deplyment It wuld be mst useful t knw hw much pumped hydr strage the Gvernment wuld like t be delivered - it is likely that it culd then be fund. - Ends - Page 6 f 6