Arbitrage Pricing

Over the last few years, markets have appeared to contradict predictions that the differential between peak and off-peak pricing will grow. However this is not the whole story, and not the story as it relates to Storelectric.

  • First of all, there has been a levelling of average prices for sale and purchase of electricity. This is because of smart metering, DSR and similar services. But that levelling has been downwards, meaning that our charging costs have reduced.
  • Secondly, we plan to trade only at the extremes of high and low prices. These have indeed been increasing as forecast, and because (as we have been saying consistently) the technologies that are levelling the average pricing are small-scale short-duration technologies whose capabilities are exceeded quite quickly by the increasing intermittency of generation and variability of demand.
  • Thirdly, the cost of electricity plays an increasingly minor role in the cost of electricity: it is already below 50% and decreasing. The remainder is largely levies and charges that pay for poor regulatory design and the increasing amounts of balancing, ancillary, stability and other services that our plants offer. These are not only growing but also increasing in number, with National Grid engaging in numerous Pathfinders for new contract grids, and Distribution Network Operators (DNOs) starting to invite tenders for flexibility and restoration services.

Therefore, despite the dreadful Ofgem decision to mis-classify storage as generation, our business case remains intact and strong. And their constant tweaks of the regulatory system just proves what we have been saying all along: the only way to mitigate regulatory risk is to have the most flexible plant, able to accommodate any changes in commercial arrangements – and we know of no plant more flexible and capable than ours.

Offshore Wind Growth

The Prime Minister’s anouncement that the government will support an acceleration of offshore wind deployment in the UK is perfect for Storelectric’s business case:

  • The increasing intermittency increases the need for storage, especially of a scale and duration such as ours, able to accommodate multiple gigawatts of output changing with the weather;
  • All this wind generation is DC connected, greatly increasing the need for real inertia on the grid; already “National Grid ESO awarded £328 million worth of contracts to six companies to provide inertia without generating power”.
  • Storelectric’s CAES can greatly benefit offshore wind farms – if their grid connection runs through our storage, we can:
    • Halve the size of grid connection and thereby greatly reduce its capital costs and related grid reinforcement – or double the amount of wind connected to an existing connection;
    • Eliminate grid access charges for electricity sales from the wind farm;
    • Meanwhile, our plant would benefit from a free grid connection and levy-free purchased electricity;
    • Therefore the returns on both projects are greatly enhanced.

 

National Grid’s Winter Outlook Report 2020-21

National Grid’s Winter Outlook Report this year shows a de-rated capacity margin of 4.8GW or 8.3% (p7). This looks healthy, though neighbouring countries’ grids target 10-15% margin. However there are a number of concerns with it in relation to their analysis techniques, the sources of generation on which they are relying, and reliance on interconnector flows (for which, see the blog below). This merely emphasises the need for lots of large-scale long-duration storage.

See the analysis here.

Summary of Storelectric

If you wish to know more, please also see this one-page summary of Storelectric’s business and technologies. Some of our designs’ most notworth features is that they are: Simplifications (not complications) of existing plants – Green CAES ™ is a simplification of Huntorf, CCGT CAES is a simplification of McIntosh; Use existing equipment of any frame size; Validated by numerous engineering multinationals; Cheaper, more efficient and more cost-effective than competitors; Lower technology risk than almost any other innovative solution in this field.

 

Read Summary

Thought Leadership Blog

This month, Mark writes very briefly about interconnectors and imports. To summarise, by 2040 the energy transitino plans of most European countries rely on imports during largely concurrent times of system stress. If nearly all are importing, who is exporting? Without sufficient large-scale long-duration storage, widespread black-outs and brown-outs are inevitable.

 

Read The Blog

Another Award – CorpToday

Storelectric has won another award, Most Outstanding Compressed Air Energy Storage Specialists 2021 from CorpToday magazine / plarform. We have been winning all manner of awards since 2013. All we need now is the investment to build a plant…