Gain insight from this industry-shaping white paper on electricity storage.
Across the globe, governments are embracing green sources of power, a phenomenon which has resulted in the massive-scale implementation of renewables – predominantly wind and solar photovoltaic – in places like Germany, Japan, China and the United States, exerting a tangible effect upon the development of a crucial, related sector: electrical energy storage (EES).
Existing EES technologies include pumped hydroelectric storage, thermal energy storage, electro-chemical storage, electro-mechanical storage, cryogenic energy storage, and hydrogen energy storage.
Now, a white paper recently released by KPMG's Energy & Utilities Advisory practice in Budapest, in association with a leading independent international law firm Kinstellar which operates in nine jurisdictions in Emerging Europe, casts a favourable light on the potential of developing EES in countries in Central & Eastern Europe (CEE).
Entitled “Electricity Storage Insight – Delving into the key issues”, the KPMG-Kinstellar white paper provides a comprehensive overview of the multitude of electrical energy storage technologies and information on their stages of development, lists the challenges and opportunities of using electrical energy storage across the value chain, and delves into the legal aspects of EES projects, among others.
As the report notes, “Wind and solar PV had record increases in installed capacity for the second consecutive year, accounting for about 77% of new generation.” Solutions and appropriate measures are needed, it explains, to balance the supply and demand of energy.
KPMG's Csaba Kovács, Partner, one of the initiators of the study, points out that in the context of newly-emerging electricity systems, EES is crucial for their overall proper functioning, especially considering that they have practically been reinvented in light of the inclusion of renewable sources of power, which can be sporadic when the wind is not blowing or the sun is not shining. Generation support, grid support and consumer support are three aspects addressed by electrical energy storage.
“There is a need for balance of supply and demand, which is partially mitigated through the use of energy storage,” he says, adding that EES technologies help to provide reliable and stable operation of transmission and distribution (T&D) systems, can meet frequency control requirements and can provide “black start” capacity in case of total or partial shutdown of a transmission system.
Meanwhile, technological innovation of a smaller scale has also generated benefits for electrical energy storage. Mr. Kovács explains, “Because of the increased usage of battery technologies in consumer appliances, electricity storage technology is reaping huge improvements, as both types of storage are similar, just different in scale,” he says.
As those innovations continue, Kristóf Ferenczi, Partner and Firm-wide Head of the Energy Practice at Kinstellar points out that CEE countries are actually very well positioned and could actually blaze a trail for the further development of such EES technologies, but the region needs to take the lead in adapting their legislative frameworks.
“A European framework in this regard is lacking, so the first step would be making sure that any future legislation will comply with overarching European sector regulation,” he explains. “Once that is done, a country or countries within CEE could attract huge investments into electrical energy storage in our region. According to the conclusions we have drawn in our white paper, this approach could reap huge benefits in both technological development and investments.”
Still, Csaba Kovács admits that how exactly to do that is no easy task, especially without creating market distortions. Part of the dilemma, according to Mr. Kovács, is that countries in CEE need to define exactly what the role of EES in their systems should be.
However, that will be challenging, “Especially considering that currently there is no official definition of EES in EU energy legislation,” Mr. Ferenczi notes.
“But the lack of EU level harmonization also provides an opportunity for member states, including the CEE countries, to create a national regulatory framework which complies with the applicable EU regulations, but at the same time facilitates storage project development.”
Orchestrating such regulation, says Mr. Ferenczi, involves defining EES, including its role and status, within electricity market design; creating a regulatory framework which would render the development and operation of EES economically viable; and handling the challenges resulting from the mass deployment of EES.
Unbundling rules, he adds, also present challenges regarding the ability of TSOs and DSOs to participate in storage projects. “This depends on whether or not EES are considered network assets,” says KPMG's Csaba Kovács.
Meanwhile, new business models needed to be developed for EES, as in the past larger scale EES projects depended on the spread between off-peak and peak prices of electricity. “Spreads have decreased, so a new economic model will be required for energy storage going forward.”
Finally, the KPMG-Kinstellar white paper also outlines the challenges and opportunities of using electrical energy storage across the value chain, including those involving generation support, grid support and consumer support.
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