University of East Anglia
Government subsidies should be used to encourage investment in
energy storage systems if renewable power is to be fully integrated into the
sector, according to researchers at the University of East Anglia (UEA).
Variable output renewable energy systems, such as wind turbines
and solar panels, are growing across Europe and contribute to supply and price
volatility in electricity markets.
Systems for energy storage, for example reversed hydro power
plants, large scale compressed air systems and batteries, provide ways to
compensate for this variable power supply by storing excess power and releasing
it when there is a production shortage.
However, the researchers argue that as the amount of renewable
energy entering national power grids increases, so does the potential impact of
volatility and therefore the need for storage.
As subsidies for setting up
renewable energy projects are gradually being removed, because they are
reaching market maturity, these funds should instead be used to develop storage
systems that could provide viable investment opportunities.
The study, led by Dr Dimitris Zafirakis and Dr Konstantinos Chalvatzis of UEA's Norwich Business School, explored the potential of energy storage systems to return profits by buying when energy is cheap and selling when it is expensive, known as arbitrage.
They tested this in a number of
European electricity markets and matched various trading strategies and storage
technologies with market characteristics.
The researchers found that this buy cheap, sell expensive
approach alone cannot provide adequate revenue to justify investment.
However,
if the decarbonisation of electricity is to be achieved by increasing
renewables, investment in storage has to be encouraged, for example through a
combination of arbitrage and state subsidies.
The findings are published in the journal Applied Energy.
Dr Chalvatzis, a senior lecturer in business and climate change,
said: "It is good to adjust subsidies for renewable energy technologies
that have reached maturity, but you have to start thinking about subsidising
storage, as this can take us to using 100 per cent renewable energy sources.
"We need sufficient storage and more investment in storage
systems in order for renewable energy to reach its full potential. Subsidies
would encourage investment, which in turn would enable further integration of
renewables into the energy sector.
"The fact that for some days countries such as Germany and
Portugal are running their entire electricity network exclusively on renewable
energy shows how far we have come to rely on it as a power source and this will
continue to increase."
Despite this, investment in energy storage has been limited
until now, largely due to the high capital costs of most systems.
Therefore the
researchers suggest that the main focus should be on multiple grid services and
associated welfare effects, such as reduced consumer energy costs and increased
energy security, that energy storage technologies can provide, triggering in
this way state support and market incentives.
The study focused on two types of storage systems -- pumped
hydro storage (PHS) and compressed air energy storage (CAES) -- examining
different energy trade strategies and representative European power markets,
including the APX Power UK.