Energy storage in its many forms – such as pumped hydro-power or battery storage – is not new.
According to the Renewable Energy Association, as of April 2015 there were 27 installed energy storage projects in the UK, the majority of which relied on battery storage technology.
That said, it has long been the case that hydro-power stations have been called on to generate power at times of peak energy demand.
Following the former Energy Secretary’s announcement of a proposed consultation on the closure of coal fired plants by 2025 (a consultation that has been delayed but may be honoured by the new cabinet), and coupled with the early closure of the Renewable Obligation (RO) scheme to small scale solar with effect from 22 July 2015 and Feed in Tariff review, energy storage has certainly been brought to the forefront of politics.
A solution to a difficult problem?
Energy storage appears to be a suitable response to the “energy trilemma” of reducing carbon emissions, curbing energy costs and ensuring security of energy supply.
By addressing the intermittency of renewable energy generation, energy storage promotes the wider use of renewable energy technologies, which in turn assists in the reduction of carbon emissions. Further, the ability of storage technologies to quickly respond to changes in grid frequency and balance it at 50Hz (enabling National Grid to comply with its legislative obligations) contributes towards the security of our energy supply.
Finally, domestic and commercial-level energy storage (for example, battery storage technology installed in close proximity of a large factory or warehouse unit) can also assist in the reduction of consumer bills as the stored energy is consumed at peak times when electricity is more expensive to import from the National Grid.
Who needs lawyers?
Energy storage projects lend themselves to complex legal considerations:
- Securing the necessary land rights is particularly important with key emphasis being placed on the environmental contamination clauses of the lease as well as the rent mechanism;
- The contractual arrangements for the import and export of power also have to be reviewed carefully; these will differ depending on whether the benefits of energy storage are provided to National Grid (under a short term contract) or whether a Power Purchase Agreement (PPA) with an offtaker or aggregator is in place.
- Environmental considerations also feature highly on the agenda; the legislative regime governing the decommissioning of batteries is complicated and costly and this needs to be factored in the developers’ balance sheets.
- Financing energy projects is a far more complicated proposition – specialist skills and knowledge are needed for this.
The general consensus within the industry is that, although it is not yet fully mature, energy storage technology is here to stay and will only get cheaper and more efficient. Even Brexit does not appear to have affected this view, with many developers considering that, if anything, Britain leaving the EU may well lead to much needed de-regulation allowing innovation within the industry to flourish.
Aliki Zeri is a paralegal and Chris Pritchett is a partner at Foot Anstey