Dr Philipp Grunewald, EPSRC Fellow. ECI, University of Oxford

Electricity storage has long been argued to be highly valuable to future low carbon energy systems. The underlying assumption is that storage is used for the common good and the benefit of the system. In this paper we will explore what could possibly go wrong. What if storage is not deployed under economically optimal conditions? What if storage operation fails to consider potential downsides for stakeholders, who have no influence over it, but might suffer costs of its impact on the system? The rapid fall in costs of both PV and storage technologies could lead to an unanticipated defection from grid supply in favour of ‘self sufficiency’. Such moves may still be economically disadvantageous for individuals and are often driven by ideological motivations. Their impact on grid utilisation and the allocation of network charges could however be dramatic. Distributed generation and storage outside the control of system operators could make load prediction and plant scheduling more difficult in future. Furthermore, storage could open opportunities for gaming and abuse within ever more regulated (and therefore distorted) markets. We combine early adoption examples with a fundamental discussion of the split system value of storage and estimate the scale of the problem associated with poorly regulated storage. Our paper concludes that market design for storage is a challenging and complex task. Not only does this new and disruptive technology require support to aid its deployment, failure to provide appropriate frameworks in a timely manner could lead to significant systems costs and poor asset utilisation.

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