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DNV GL, Berenschot, and TU Delft present energy storage roadmap in the Netherlands for Topsector Energie

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Opportunities for energy storage systems in the Netherlands to be used for operational reserve and ‘behind the meters’ of end-users.
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  • Keywords: Energy
  • Flexibility in the electricity system is needed to accommodate the increasing quantity of variable sources such as wind and the sun
  • Current market structure does not sufficiently value flexibility, including the use of energy storage
  • In certain cases, there are already favourable prospects for storage applications for operating reserve; market for storage ‘behind the meters’ of end-users expected after 2020
  • Encouragement of research and development in reducing the costs of storage technology and system integration is desirable

Arnhem, 24 April 2015 – In the years up to 2030, there will be opportunities in the Netherlands for energy storage systems to be used for operational reserve (used to combat imbalances caused by rapid changes to capacity as a result of wind or solar energy, for example) and ‘behind the meters’ of end-users. The government must take an active role in clearing obstacles if it wishes to fulfill its ambitions regarding far-reaching penetration of variable and renewable energy sources. The current market model and regulations should be amended to allow the flexibility of storage systems to be better valued. Additionally, the government should encourage research and development that facilitates revenue models for supplying flexibility, reduces the costs of energy storage, and promotes system integration. This is set out in the ‘Routekaart Energieopslag Nederland 2030’ (‘roadmap to energy storage in the Netherlands 2030’), drawn up in a partnership between DNV GL, TU Delft, and Berenschot for the Topsector Energie. Together with three other studies, the roadmap serves as input for the TKI Systeemintegratie 2015 programme.

Opportunities for energy storage technologies
As 2030 approaches, and looking ahead to 2050, there is a need for energy storage systems with a very short response time, a storage capacity of four to six hours, and the ability to supply large quantities over a longer period of time. These storage systems are needed for a far-reaching integration of variable and renewable sources in the electricity system. Three markets have been identified in which the best opportunities for energy storage techniques exist in the period leading up to 2030. These are (1) the wholesale market, (2) the market for operational reserve, and (3) the market for energy management ‘behind the meters’ of end-users.

However, an economic analysis for the wholesale market suggests that not one of the storage technologies under consideration has a positive business case at current cost levels. The prospects for operational reserve and use ‘behind the meter’ are more favourable. The economic analysis of operational reserve points to a positive business case for a number of technologies, assuming prices are at current levels. Although the economic analysis for energy management behind the meter is currently negative, a future with more and more storage behind the meter is not inconceivable, thanks to the falling price of storage systems and the ‘emotional value’ of being independent from a central electricity provider. One of the observations is that net metering, where the consumer receives the same price for electricity provided by him to the network as he pays for the electricity he uses, will have to be gradually reduced in the next few years, at a speed that is in keeping with the increasing number of solar panels. Provided they are operated correctly, storage systems used by end-users will gain a financial boost as a result and make it possible to enhance the quality of the local network. 

Gap analysis and market consultation
From an outline description of the situation, it appears that the available storage technologies are in principle suitable for providing the required services, even though the business case for the wholesale market is lacking due to insufficient electricity price volatility. In addition, regulation and the market model are causing obstacles because they undervalue flexibility. If the value of flexibility of energy supply and demand were better incorporated in market prices and system rates, this could produce the right incentives to invest in flexibility, including energy storage. The market consultation revealed a number of specific opportunities, such as the development of services and system integration solutions for energy storage behind the meter, the application of compressed air energy storage, the development of Power2Gas in the long term, and innovative enterprise by anticipating the demand for flexibility. The development of technology, the modification of the market model, the limiting of investment risks, and the encouragement of demonstration projects are important for the purpose of exploiting these opportunities.

Plan of action
To achieve these ambitions, government intervention is needed. The government should be encouraging research and development, especially if it involves reducing the costs of energy storage technologies and the smart integration of these systems in the energy supply. The government also has a role in encouraging and facilitating new business models for the use of storage. It can also remove unnecessary obstacles to energy storage for trading on the operational reserve market, and it can encourage the deployment of energy systems behind the meter in such a way that they not only serve the end-user, but also help make the entire system more efficient. The price could be made time and location-based in order to stimulate the local deployment of sustainable energy to the maximum degree.