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Implications of National Grid’s decision to use batteries to help balance the UK power grid

National Grid, the UK transmission operator, recently awarded seven providers, EDF, Vattenfall, Low Carbon, E.ON, RES, Element Power and Belectric, with four year contracts to provide 200MW of so called Enhanced Frequency Response power than can be dispatched quickly to keep the UK power grid in balance and stable. What was interesting about this award was that the major technology winner was lithium-ion batteries. They won these contracts in a competitive tender against demand response and thermal generation competition so this is highly significant. For a start, National Grid as one of the leading global grid operators is making a statement that lithium-ion battery technology is now mature enough that it can be used rather than conventional generation; they are also saying that it is cheaper to do so.  National Grid  believes that the use of batteries will enable them to reduce costs by £50m per year while at the same time supporting the decarbonisation of the energy industry.

This latter point is very interesting. The use of batteries will enable National Grid to not only better deal with the volatility in power supply caused by having large amount of intermittent renewables such as wind and solar in the system, but also increase the amount of renewables in the system!   Currently, conventional power stations need to run at a minimum level which is usually above 60% of their capacity, in order to provide the energy system with any balancing power that may or may not be needed. Unlike batteries, conventional power stations cannot be switched on or off easily and provide full power within 30 seconds as required for Enhanced Frequency Response. As a result a large number of conventional plants producing multiple gigawatts of energy are needed to be running constantly in order to stabilize the grid.

This was never a problem in the past but in the UK’s (and many others) power system which has a significant amount of renewable capacity, it makes sense to switch off the conventional generation when there is lots of renewable energy being produced. If conventional power plants “must run” to provide balancing power to the grid they can’t be switched off. In such cases any excess renewable power needs to be exported at very low power prices (which is what Germany does) or the renewable energy is curtailed (which is what China and the UK do). Both alternatives are pretty expensive solutions. The use of batteries will enable the “must-run” conventional power stations to be switched off and will allow the power system to integrate more renewable power, and to do so more cheaply than would otherwise have been possible.