Virtually everyone now accepts that, as more and more intermittent renewables come online, mass energy storage is essential for balancing the grid. But while the UK debate is focused on the need for industrial and utility-scale batteries plus hydrogen — still a tiny but growing proportion of our energy storage requirements — Germany sees things differently. The Germans include domestic and Electric Vehicle (EV) batteries as part of their overall energy picture.
According to RWTH Aachen University (graph below), Germany had 72GWh of installed battery storage at the end of 2022, including 65GWh in EVs and 5.2GWh in domestic batteries. Both markets are growing rapidly. Industrial and utility-scale batteries lag way behind at less than 2GWh, although this sector is also expanding fast.
The bottom line is that Germany regards its total installed battery capacity as part of its national energy strategy — an enormous resource that can be used intelligently to integrate renewables, flatten spikes in demand, reduce energy bills and cut carbon emissions.
The situation in the UK is far less clear, either in terms of market data or government strategy. The trade body Solar Energy UK told us that, surprisingly, there are no official figures on the size or growth of the UK home battery market. But it estimates that 50% of all new solar installations include a battery (nearly 80% in Germany) — and existing solar owners are increasingly retro-fitting storage. Anecdotally, many of us know people who are either getting or thinking about a battery.
The UK Government’s position, laid out in the Smart Systems and Flexibility Plan 2021, is, as yet, a long way short of a strategic policy. It says that market-wide half-hourly settlements and smart tariffs will help drive battery uptake, adding: “We will consider options for removing final consumption levies on electricity imported by domestic storage for the purpose of re-exporting back to the grid. We will also consider this for vehicle-to-grid technologies.”
Meanwhile, both consumers and electricity suppliers are driving change on their own initiative. Smart tariffs from the likes of Octopus mean that there is an increasingly powerful business case for consumers to purchase solar/battery installations and add batteries to their existing arrays. Even with costs of around £1,000 per kWh of storage, the sums add up when many tariffs top 70p per unit. And if the UK’s promised battery giga-factories ever materialise and prices fall, they will become even more attractive.
Octopus, for example, offers customers a range of smart tariffs including Outgoing Agile, which enables them to benefit from half-hourly wholesale prices, typically charging 0-35p, but uncapped. Octopus also offers smart tariffs specifically for EV users, as do others. In some cases, home and EV batteries can be kept charged for almost nothing, then used to replace mains supplies when prices are high.
Smart Export Guarantee payments range from 15p to less than 2p per kWh returned to the grid, depending on supplier. By shopping around and choosing the best deals, the canniest consumers can dramatically reduce their electricity bills by juggling when and how they use power, with solar inputs and storage in both their EV and domestic batteries, plus export. Even without batteries, consumers can save money and help balance the grid with smart tariffs and smarter consumption.
While some consumers are already balancing their electricity use between car and home batteries, it’s interesting to note that many new EVs are being marketed with ‘battery to load’ capability (that is, the ability to trade power directly with the grid). So, the grid would tap some power from the car at times of peak load, then top it up when demand was low. The potential to exploit this capability is in its infancy, but assuming the UK will have 10 million EVs in a decade or so, each with an average 50kWh battery, that’s a whopping 50GWh of energy storage to play with.
All this is good news for balancing the grid — and for consumers who can afford the £40-£60k+ investment for a new EV, solar array and decent-sized storage battery, then spare the time to choose tariffs tailored to their needs. Sadly, the relatively affluent and market-savvy will be richly rewarded for their battery investments, while the relatively poor will continue to struggle with high energy bills and hopes for even more government support, which may be unsustainable.
The government’s record on incentivising consumers to make their electricity consumption greener has been chequered to say the least. This includes, in 2020, dropping the over-generous Feed In Tariff payments in favour of the Smart Export Guarantee scheme, with many suppliers paying pitiful amounts to customers for the electricity they generated. This instantly made solar uneconomic for most consumers and devastated the industry. Only now is the combination of cheaper panels, home batteries, smart tariffs and rocketing energy prices reviving its fortunes.
Given the state of the UK’s public finances, we can hardly expect the range of incentives and subsidies that German citizens enjoy to go green. For example, Germans pay around £11k for an entry-level EV whilst UK motorists pay nearer to £22k. Right now, it is the UK’s affluent early adopters and the electricity industry itself who are driving growth in the domestic battery market — almost, it would seem, without the government noticing.
It would be useful if pronouncements on home and EV battery storage in the Smart Systems and Flexibility Plan 2021 were to become part of an actionable, national energy strategy, not least for their potential to flatten supply and demand curves, hasten renewables uptake and reduce the cost of grid reinforcement. In other words, incentivising and enabling consumers to make their batteries part of the grid could be a sound national investment. But where are the analyses and figures on this?
A good place to start would be to recognise the energy storage gap that exists between the UK and countries like Germany, take a long hard look at what others are doing — and learn from their examples.
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