Precis:

It is now certain that offshore renewable energy will supply a high proportion of primary energy in Northern Europe and other regions. Most forms of that energy are intermittent and there would be strong advantages to implementing energy storage alongside the energy harvesting. This event will explore how well existing policy and market structures can encourage the development of suitable technologies and projects and will attempt to set out how these structures might change for the better in the future.

Discussion areas:

It is beyond doubt now that offshore wind will become a major source of primary power for Northern Europe in the coming decades and it will be important in many other regions also. Wind power is obviously intermittent and some means must be found to reconcile the demand for electricity with its supply. Other forms of offshore renewable energy will also contribute and most of those also introduce intermittency. Energy storage provides one of the main solutions for managing the instantaneous mismatch between resource availability and natural demand and storage is rightly attracting huge attention across the globe now.

Storing energy locally at offshore sites where renewable energy is collected has several obvious potential benefits. These include

(a) the marginal cost of ground area is relatively low,

(b) implementing solid-state thermal storage may be significantly less expensive offshore than onshore for two separate reasons,

(c) there is virtually infinite availability of thermal ballast in the form of sea-water,

(d) there may be deep water or offshore salt deposits available to assist pressurised gas/air storage,

(e) the utilisation of power transmission lines from site to shore can be improved,

(f) there are at least some ways in which energy is collected from the renewable resource in a form that is directly compatible with storage and the conversion to electricity can be performed in response to the demand for electricity – saving both capital costs and power conversion losses

There is no suggestion here that all energy storage should be implemented offshore – onshore storage will certainly have a major role also. There is also no suggestion that long-distance power transmission, including HVDC transmission, does not have a major role – it will. Producing hydrogen offshore and exploiting that process for both conveying energy as well as for storage will obviously play an important part too. Similarly, demand-side management will contribute. Notwithstanding these other possible ways to provide flexibility, local offshore storage could still offer significant system benefits.

One objective of this session is to identify the benefits for implementing energy storage at offshore locations and to evaluate whether the associated challenges and costs can be justified based on current evidence. The primary purpose is to examine whether existing policy and market mechanisms might be suppressing developments that might otherwise find strong commercial traction by contributing very cost-effective functionality to the electricity systems to which they are connected. One useful case-study is the scheme for “contracts for difference” (CfDs) auctions. The CfD mechanism has been exceptionally successful in providing developers with the confidence to invest in low-carbon generation projects up to now but it primarily rewards powerplant operators in direct proportion to the energy exported (largely*) independent of how valuable that energy is/was to the system at the time it was exported.

We therefore seek to answer the following questions:

(1) Are the benefits and costs of offshore energy storage sufficiently understood?

(2) Do existing policy and market mechanisms for incentivising low carbon generation in various countries actually provide suitable incentives for project developers to incorporate storage at offshore generation sites if that would bring overall system benefits,

(3) Will “merchant trading” (simply selling electricity onto the wholesale markets) eventually provide the commercial pull for such systems if their benefits are sufficient,

(4) If existing policy mechanisms will not elicit good market behaviours and if the merchant trading prospect is still some way off, what intermediate steps might be taken by governments to sustain at least some appropriate technology development in the meanwhile.

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