Solar project owners are wary of making changes that might affect incentive payments.
PV is now producing more electricity than coal in the U.K. But don’t expect a storage boom to follow.
According to GTM Research’s Global Solar Demand Monitor, the U.K. has become the largest market for solar demand. But concerns over the eligibility for subsidies are forcing asset owners to delay adding storage to PV projects, said Jill Cainey, director of the Electricity Storage Network.
The U.K. PV industry is largely supported through a Renewables Obligation Certificates (ROC) scheme that was designed before the advent of solar-plus-storage plant designs.
PV asset owners wishing to add storage to their plants would have to reapply for ROC accreditation with their distribution network operator. Payments under the ROC scheme would then be suspended pending the outcome of the accreditation process.
Even though any interim payments would still be awarded once the accreditation was granted, the temporary halt in cash flow “is something an investor would not be excited about,” Cainey said.
This month, she attended a U.K. renewable energy trade show, Clean Energy Live, and “there were no solar farms deploying storage.”
At the same time, the U.K. market for residential solar-plus-storage looks unlikely to take off in the near future because of unfavorable economics.
Recent research by Delta Energy & Environment suggests the payback time for U.K. residential PV-plus-storage could be 16.9 years for a new system and 24.5 years for a retrofit, not taking subsidies into account.
This compares to 12.3 years for a new system and 21 years for a retrofit in Germany, or 13.7 years and 20.5 years in Italy, respectively.
Adding subsidies into the equation would cut payback times by a couple of years across the board, Delta said. But that still means U.K. consumers are looking at 15 years or more to get their money back on a solar-plus-storage installation.
Consequently, said Cainey, solar-plus-storage “is a lifestyle choice” — not an economic decision.
The technology pair is likely to account for a relatively small section of the residential solar market for some time to come. Delta estimates the tipping point for residential solar-plus-storage adoption across Europe will be when payback times drop to around five years.
This could be the case for new systems in Germany and Italy by 2020, because of the relatively high cost of electricity in those countries.
But the payback period for the U.K. is only forecast to drop by about 20 percent by 2020, which means solar-plus-storage systems will remain a luxury unless the companies commercializing the technology can find other ways of bringing in revenue for customers.
Only one company in the U.K., Moixa Technology, is doing this by aggregating behind-the-meter storage to provide grid ancillary services and then sharing some of the profits with its residential customer base.
A solar-plus-storage boom is unlikely in the U.K. anytime soon, despite the fact that PV contributed more to the energy system than coal in the six months running up to September.
In fact, a short-term boom of any form of storage could be in question given current currency fluctuations triggered by Britain’s decision to leave the European Union.
Nick Heyward, head of energy storage at Origami Energy, developer of a demand-side response flexibility and energy storage management and optimization platform, said recent declines in the value of sterling compared to the euro and dollar could damage the economics of projects in progress.
This could include plants awarded under a National Grid tender this year. “We knew Brexit could lead to a big currency risk, and that’s really significant now,” he said.
“A few of those with winning projects are probably looking at the risks involved because most of the equipment is not coming from the U.K.”
Despite these challenges, most observers believe that the long-term outlook for storage remains strong in the U.K., and may even be helped by the country cutting its ties with Europe.
It is not clear, for example, how Brexit might affect the U.K.’s connections to the single European energy market. If energy flows are hampered, “it probably does make new investment in storage a more attractive option as a source of flexibility,” said Heyward.
Post source : greentechmedia.com