Norwegian state-owned utility Statkraft is active in a number of markets for battery storage. In the UK and Ireland, it is both building assets and, under the Statkraft Markets moniker, optimising assets, as well as being set to participate in Ireland’s DS3 scheme.
It also runs a virtual power plant using its Unity platform, comprising a range of technologies, including battery storage, renewables and flexible gas.
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Nick Heyward, head of UK energy storage at Statkraft Markets, spoke to Alice Grundy about the short term opportunities for storage in Ireland, the importance of market access and which of those markets hold the most promise for storage.
This is the final edition in our speaker interview series held to coincide with – and illuminate – the Energy Storage Summit, which was held in London last week and hosted by our publisher, Solar Media. Topic-wise, it also neatly dovetails on from the 24 February interview regarding ultra-fast responding battery storage in the DS3 market with Dr Marek Kubik, market director at Fluence – technology provider to Statkraft and grid operator Eirgrid for the recently commissioned 11MW Kilathmoy battery storage project.
Energy-storage.news: What is Statkraft Markets’s involvement with the DS3 market?
The history of Ireland and Statkraft goes back a year and a bit to Oct 2018, when we acquired a company called Element Power that was quite active in wind and battery development across Ireland and the UK.
Statkraft Markets started looking at the DS3 market about the same time from an optimisation point of view, and clearly to be providing DS3 services you need to be a market participant and you need a route to those wholesale markets as well to manage the power if, for instance you’re a windfarm providing those services, or if you’re a battery charging and discharging and potentially provide some extra value from optimising the battery around DS3.
DS3 is a really interesting market. It’s been quite interesting to draw on what we’re doing already for batteries in terms of optimisation and routes to market in the UK and seeing how we can replicate that and do that best alongside DS3 in Ireland. It’s almost a better market because the DS3 services have been designed well for fast acting flexible assets like batteries; they’ve been able to design them from the ground up with a view to enabling a high proportion of renewables. I think in the UK it’s been more of an incremental tweaks here and there approach. DS3 as a market is really well suited to storage and well designed to bring forward a good amount of storage flexibility.
What opportunities for energy storage do you see in Ireland?
In the short term there’s a really good outlook for storage in terms of the value available. But the big caveat to that is provided you can get onto the grid and get operational in a pretty short time scale, kind of within the next 12-18 months. The challenge beyond that is there still isn’t a huge amount of clarity of what the enduring arrangements for procuring DS3 look like and whether that’s purely auctions like the capped auctions that just happened or a combination of auctions and some tariff based, more flexible availability routes to market. There’s not a lot of certainty about beyond 2023 when the tariff arrangements notionally come to an end.
It is a bit trickier to say in the longer term, but that said, all of the regulatory and policy rhetoric supports a very positive strong market for storage. It’s much more driven out of the climate action plan there. Reaching 70% renewables by 2030 – that’s a very strong message that there’s going to be a need for quite a significant amount of zero carbon flexibility to do that. So that sends, albeit at a high level, a good, clear message that there’s going to be a big place for storage to play its part. How that translates into projects getting in the ground is a little less certain because there are these challenges around grid connection timings and what’s happening beyond the regulatory arrangements at the moment.
What would you say are some of the more lucrative revenue streams for battery storage?
We’re managing approaching 300MW of flexible assets in the UK, not just batteries but gas included within that. And the revenue streams, or the opportunities, are similar across those. There’s still a preference to have battery assets in particular in the frequency response markets, ancillary service side of things. Those are still offering decent value where there’s a requirement, but I think where we’re adding value to a lot of developments is being able to provide an alternative and more consistent revenue stream from the trading side, so the optimising in the short-term power markets. A lot of that value at the moment is in the intraday and imbalance market. We’re starting to see some more appetite from the Balancing Mechanism (BM), as well. We have developed strategies to take our first few assets into the BM last year. We already have some gas engines operating well there and we think that will be more important over time.
Fundamentally for us, we’re a market access provider and we recognised several years ago the way to do that effectively, and the route to market for batteries, is really all about breadth and depth of market access. You need to have that ability and agility to move between the various value pools that are available and those providers that are just offering a single or limited few value pools, ancillary service management for example, while a couple of years ago that was probably okay, it’s no longer really enough. You need to be able to take assets where the value is at any one time.
Statkraft also has a virtual power plant (VPP) in operation in the UK, as well as Europe and other global markets, using the Unity platform. Is there any potential for that to feed into the work you’re doing in Ireland?
Unity is really just our set of central platforms that we use to manage the flexibility from any kind of renewable or battery or gas asset, whether that’s in the UK, Europe, or elsewhere.
We use Unity to manage the optimal scheduling dispatch of things like battery assets where there’s a continual re-opitmisaiton of what is the optimal charge and discharge of this asset, what it should be doing on a five minute basis and reoptimizing that every few minutes. To execute the final trades that we want to deliver as part of that optimal schedule we offer an algorithmic trading that actually refines and puts those trades into the market.
So now for Ireland as well, we’re able to redeploy that there, for example to help manage recharge around DS3 services. If you have a capped contract, for example, there’s not a huge amount of revenue stacking you can do around that because you have to have really high levels of availability in that service. What you can do is control and manage more smartly the times that you’re recharging the battery after a frequency event, so that’s something we would plan to use Unity for. For people accessing the uncapped contracts, we have some more freedom to optimize and trade the extra energy capacity using Unity, and in some cases we are even able to provide some revenue certainty for providers.