AFRY Breakfast on Energy Storage - ATA Insights · power and possibly for solar PV - Probable transition from merchant developments to 100% of target capacity under RES auctions -

AFRY Breakfast on Energy Storage

14 February 2020

Agenda

2020-02-14 | COPYRIGHT AFRY | AFRY BREAKFAST ON ENERGY STORAGE2

PNIEC challenges2.

Economics of storage3.

Regulatory framework4.

Long term perspective5.

Takeaways6.

About AFRY1.

In 2019 ÅF and Pöyrybecame AFRY

- In February 2019 ÅF and Pöyry joined forces in order tobecome an international engineering, design and advisorycompany, driving digitalisation and sustainability for theenergy, infrastructure and industrial sectors all over theworld.

- In November 2019 ÅF Pöyry launched a new commonbrand, AFRY. The name is a combination of the letters in ÅFand Pöyry: AF+RY [eɪːfɹi]

- With a strong focus on sustainable solutions we bring thebest from ÅF and Pöyry into the new brand AFRY.


OUR VISION

Providing leadingsolutions forgenerations to come

Making Future


OUR MISSION

We create sustainable engineering and design solutions


Globalisationand Urbanisation Digitalisation

Climate change Sustainability


Our solutions respond to global trends

SMART CITIES ANDINFRASTRUCTURE

FUTUREMOBILITY

INDUSTRIALDIGITALISATION

CHANGING ENERGYMARKETS

TRANSITION TOBIOECONOMY


PROCESSINDUSTRIES

INFRASTRUCTURE

INDUSTRIAL &DIGITAL SOLUTIONS

ENERGY

MANAGEMENTCONSULTING

TransportationBuildingsProject ManagementWaterEnvironmentArchitecture & Design

Advanced AutomationAutomotive R&DConnected ProductsExperience DesignFood & PharmaIT SolutionsSpecialized Tech ServicesSystems Management

BioindustriesChemicalsPulp, Board, paper & tissueMetal & MiningSmart solutions:– Health & Safety– Environment– Smart Site TM &

Digitalisation

Thermal Heat & Power,Renewables & EnergyMarketsHydroT&DNuclearContracting

Energy Central &Northern EuropeEnergy Western Europe& ROWCapitalOperational ServicesIndustryNorth AmericaConcept Development

Five divisions


Nordic base withstrong globalpresence

Our presence

IndustryInfrastructureEnergy

Offices incountries: 50Approx.

annualrevenue:

1.9 bEUR

No. ofemployees: 17,000


Agenda


About AFRY1.




Takeaways6.

PNIEC challenges2.

PNIEC targets raise technical, economic and regulatory challengesPNIEC CHALLENGES

Scenario 0 1 2 3<5€/MWh 22% 27% 35% 38%

• 0: NECP (8GW Spa-Fra, 3GW Nuclear, +3.5GW PSH +2.5GW Batt.)• 1: NECP (5GW Spa-Fra)• 2: NECP (5GW Spa-Fra, 6GW Nuclear)• 3: NECP (5GW Spa-Fra, 6GW Nuclear, +1GW PSH + 0GW Batt.)

- Very frequent hours of RES curtailmentand low market prices

- Destruction of 'grid parity' for windpower and possibly for solar PV

- Probable transition from merchantdevelopments to 100% of target capacityunder RES auctions

- Required oversizing of RES capacity

- Required incentives for thermal plantsincluding nuclear capacity to keep the'lights on'

- Required incentives for new storage

- AFRY considers scenarios 2 and 3 moreprobable than 0 and 1

Price Duration Curve

11 2020-02-14 | COPYRIGHT AFRY | AFRY BREAKFAST ON ENERGY STORAGE

PNIEC CHALLENGES

PNIEC targets raise technical, economic and regulatory challenges

1 Curtailed energy over Wind + PV resource | 2 Resource Weighted Average captured prices

- Very frequent hours of RES curtailmentand low market prices

- Destruction of 'grid parity' for windpower and possibly for solar PV

- Probable transition from merchantdevelopments to 100% of target capacityunder RES auctions

- Required oversizing of RES capacity

- Required incentives for thermal plantsincluding nuclear capacity to keep the'lights on'

- Required incentives for new storage

- AFRY considers scenarios 2 and 3 moreprobable than 0 and 1

• 0: NECP (8GW Spa-Fra, 3GW Nuclear, +3.5GW PSH +2.5GW Batt.)• 1: NECP (5GW Spa-Fra)• 2: NECP (5GW Spa-Fra, 6GW Nuclear)• 3: NECP (5GW Spa-Fra, 6GW Nuclear, +1GW PSH + 0GW Batt.)

RES Curtailments Wholesale market prices


2 2

1

What is the reference scenario for investments with merchant exposure?PNIEC CHALLENGES

WIND + SOLAR PV CAPACITY IN SPAIN (MAINLAND)

0

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160

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2020

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2024

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2038

2040

Political Market driven (AFRY estimate)

RES PENETRATION IN SPAIN (MAINLAND)


0%

10%

20%

30%

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50%

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70%

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90%

100%

2000

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Political Market driven (AFRY estimate)

(€/kW/year, real) GW

Agenda


About AFRY1.

PNIEC challenges2.



Takeaways6.


Cannibalisation of revenues from day-ahead marketECONOMICS OF STORAGE

GROSS MARGIN OF STORAGE TECHNOLOGIES IN 2030 AS AFUNCTION OF ADDITIONAL STORAGE CAPACITY



* CAPEX OF 4-Hour batteries. Assumed OPEX of €10k/MW/year, 8% IRR, 15 year payment

(€/kW/year, real)

The storage capacity at utility scale is likely to be determined by the Government through support schemes,regardless of the Capex reduction of any storage technology

€3000/kW

0

5

10

15

20

25

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45

50

0 10 20 30 40 50GW

4hBat - AFRY Central

4hBat - PNIEC 3)

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50GW

4hBat - PNIEC 3)

10hPSH - PNIEC 3)

(€/kW/year, real)

Battery gross marginscannibalize rapidly withadditional storagecapacity.

Referencescenario matters

Efficiency of the roundcycle and energy capacity,both matter

0102030405060708090

100110120

0 10 20 30 40 50GW

4hBat - AFRY Central

4hBat - PNIEC 3)

0102030405060708090

100110120

0 10 20 30 40 50GW

4hBat - PNIEC 3)

PSH - PNIEC 3)

Cannibalisation of revenues from day-ahead marketECONOMICS OF STORAGE




* CAPEX OF 4-Hour batteries. Assumed OPEX of €10k/MW/year, 8% IRR, 15 year payment

(€/kW/year, real)

The storage capacity at utility scale is likely to be determined by the Government through support schemes,regardless of the Capex reduction of any storage technology

(€/kW/year, real)

@Capex €350k/MW*

@Capex €130k/MW*

@Capex2020 €1000k/MW*

Threat of massive deployment ofdistributed storage (improbable,uneconomic)

Revenues and missing money in the day-ahead market

- Different 'missing money':- Capex at investment- Opex- Storage efficiency- Lifetime- Degradation- Market operations- Reference scenario

GROSS MARGINS OF STORAGE TECHNOLOGIES IN 2030 1


1 ILLUSTRATIVE FIGURES for 1GW in 2030 in scenario PNIEC 3), depending on technology evolutions and capex by 2030

(€/kW/year, real)

0

100

200

300

400

500

600

2h Battery 4h Battery PS Hydro Solar CSP

Missing Money (high CAPEX)Missing Money (low CAPEX)Market Gross Margins

350€/kW600€/kW 900€/kW

3000€/kW

450€/kW

750€/kW

1200€/kW

4000€/kW

Market seems insufficient for any type of merchant storage by 2030

2500€/kW

ECONOMICS OF STORAGE

- Over a 'base case' with no additional storage, we have modelled 12 scenarios with various types and capacities of storage, imposing atarget 77% RES-Electricity

- Different storage options have offsetting impacts and costs on the wholesale market and the regulated system costs

ECONOMICS OF STORAGE

Why storage? How much? Which type?

Technology Pros Cons 1GW 5GW 10GW

No storage No incentive to storage High curtailments, RES oversize

Battery (2h) Low Capex per MW Low Security of Supply 1 5 9Battery (4h) Higher SoS High Capex per MW 2 6 10PSH (10h) High SoS and known technology Long development, EIA 3 7 11CSP (with 9h) RES + -cheap- storage Very high Capex, few plants 4 8 12Flywheels Cheap frequency control Little energy only for f control

Compressed Air Cheap storage and modular Low efficiency

Thermal storage TBC TBC

Other TBC TBC


Illustrative 77% scenarios – RES capacity and curtailmentECONOMICS OF STORAGE

0%

2%

4%

6%

8%

10%

12%

14%

0

10

20

30

40

50

60

70

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Solar capacity Wind capacity Curtailment %


Modelling on Scenario PNIEC 3) | Curtailment ratio over total wind and solar resource

More and larger storage allows lower curtailments and lower oversizing of wind + PV capacity to reach 77% RES-E

GW

INSTALLED CAPACITY AND CURTAILMENTS IN 2030

Illustrative 77% scenarios – Baseload and capture pricesECONOMICS OF STORAGE

0

5

10

15

20

25

30

35

Basecase 2hBat1GW

4hBat1GW

PSH 1GW CSP 1GW 2hBat5GW

4hBat5GW

PSH 5GW CSP 5GW 2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Baseload Solar PV Wind


Modelling on Scenario PNIEC 3) | Captured prices per unit of resource

More and larger storage increase market prices and captured prices, hence reducing incentives

BASELOAD AND CAPTURE PRICES IN 2030

€/MWh, Real

Illustrative 77% scenarios – Thermal back-up capacityECONOMICS OF STORAGE


Modelling on Scenario PNIEC 3)

More and larger storage implies lower missing money to nuclear, and less capacity of CCGTs for back-up providedthat storage has sufficient energy (>2h)

0.0

0.2

0.4

0.6

0.8

1.0

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Nuclear CCGT

ANNUAL PAYMENTS TO THERMAL TECHNOLOGIES IN 2030

billion €, Real

Illustrative 77% scenarios – Total system costsECONOMICS OF STORAGE


Figures are illustrative, assuming an incentive scheme period of 10 years

-1

0

1

2

3

4

5

6

7

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Storage

More and larger storage brings higher missing money to higher storage capacity, which increases total incentives

TOTAL ANNUAL SYSTEM COSTS

billion €, Real




-1

0

1

2

3

4

5

6

7

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

New RES

Storage

More and larger storage brings lower missing money to RES and less RES capacity, which decreases RES incentives


billion €, Real




-1

0

1

2

3

4

5

6

7

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

CCGT

Nuclear

New RES

Storage

More and larger storage reduces total incentives to back-up capacity


billion €, Real




-5

0

5

10

15

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Pool

CCGT

Nuclear

New RES

Storage

More and larger storage reduces frequency of curtailments and increases wholesale 'pool' prices to consumers


billion €, Real




-5

0

5

10

15

20

25

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Networks

Pool

CCGT

Nuclear

New RES

Storage


billion €, Real

More and larger storage possibly reduces network costs given its impact on lower RES installed capacity required




-5

0

5

10

15

20

25

Basecase 2hBat1GW

4hBat1GW

PSH1GW

CSP1GW

2hBat5GW

4hBat5GW

PSH5GW

CSP5GW

2hBat10GW

4hBat10GW

PSH10GW

CSP10GW

Others

Existing RES

Networks

Pool

CCGT

Nuclear

New RES

Storage


billion €, Real

More and larger storage brings down the costs of incentives to existing RES given its impact on RES captured prices

Agenda


About AFRY1.

PNIEC challenges2.



Takeaways6.


WinterPackage

REGULATORY FRAMEWORK

Regulatory aspects to incentivise utility scale storage


- Europe prefers Energy Only Markets,accepts competitive capacitymechanisms

- Higher flexibility (interconnection,cross-border trading, DSR, storage)

- 'Storage' regulation to bedeveloped

- Technology specification andauctions design

- Existing storage?

- Prevent unfair competition across the EU- Cost beneficial policies

Need for a national regulatory framework enabling to incentivise storage, subject to national and EU constraints.Development of storage is likely to occur only after incentives are legally secured.

State-AidGuidelines

NationalRegulation

Regulatory aspects to incentivise utility scale storageREGULATORY FRAMEWORK

Must have Can have Cannot haveCapacity adequacy

- Regional/National adequacy study (LOLE, VoLL)- Assess Strategic Reserves- Scarcity balancing- International, non discriminatory, Demandallowed

- Any duration, tending to 0 payment when thesecurity standard is reached

- Regulatory distortions (Cap/Floor, other CRM)- >550gr CO2/kWh

Renewable Energy Sources

- Minimise distortions- Exposure to market prices- Maximise production and RES integration

- Technology specific discrimination- Cross-border coordination- Fixed or sliding premium- €/MWh or €/MW

- Incentivise <0 bidding

Storage

- CBA study case by case

- TSO/DSO can develop if desert tender or tooexpensive- Support allowed if asymmetric costs vs.benefits

- Not owned/operated by TSO/DSO- TSO/DSO cannot buy/sell energy- Support incentive > Benefits


Incentivising storage is possible, with several potential frameworks. Which ones are likely to succeed?

- 'Storage' defined with 'Energy infrastructures' in State-Aid guidelines, (i.e. similar to Networks, not RES, not adequacy)- Winter package: 'energy storage services' should be market-based and competitive. No reference to explicit incentives.

Regulatory options to incentivise utility scale storageREGULATORY FRAMEWORK

Description Assessment Ease andefficiency

Option 0: No explicit incentive, enhance market signals- Modify DA pricing (remove all regulatory distortions and pressure)- Increase market signals such as 'shortage pricing' for balancing

- Uncertain outcome, bankability?- Very long development timings

Option 1: RES + Storage

- Complex technical specifications (capacity, energy, efficiency)- Complex modelling ex-ante or ex-post to compare bids

- Possible uneconomic constraints- ≠ timings for RES and storage need- More complex coordination of storage

Option 2: Capacity + Storage

- Complex technical specifications (capacity, energy, efficiency)- Complex modelling ex-ante or ex-post to compare bids

- Subject to adequacy problem- Possible uneconomic constraints- ≠ timings for capacity and storage need

Option 3: StorageOption 3.1: Market + Premium

- Market revenues with free bids + a €/MW/y premium- Requires modelling: CBA to compare project bids and system benefits

- Compatible with EU principles- Existing CBA framework for TYNDP's PRI- Requires modelling of system benefits- Legal changes + national CBA methodology- Allows competition of storage technologies

Option 3.2: Fully regulated (infrastructure asset)- Regulate planning and development (= T&D networks)- Regulated and pass-through of market revenues (= interconnections)

- Against EU 'winter package' and spirit- Re-regulation of new and existing assets


Illustrative example of 'storage auction clearing process'REGULATORY FRAMEWORK

PROJECT B: 500MW BATTERY- Capacity: 1000MW- Energy: 8h; 8,000MWh- Degradation: none- Efficiency: 75%- Development time: 8 years- Lifetime: 40 years- Capex: 900m€, 0.9m€/MW- Opex: 20,000€/MW/y- Required support: 60m€/y (60,000€/MW/y) during 10y, or 45m€

(45,000€/MW/y) during 20y. NPV2022@2%=641m€- Modelled benefits: 120m€/y during 20y, NPV2022@2%=1,708m€- Benefit to cost ratio: 1,708/641 = 2.66

-50

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150

2020

2025

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2050

CostBenefit

PROJECT A: 1000MW PUMPED STORAGE


The Regulator would choose Project B, as it provides higher value for money to electricity consumers

- Capacity: 500MW- Energy: 4h; 2,000MWh- Degradation: 2%/y- Efficiency: 85%- Development time: 4 years- Lifetime: 20 years- Capex: 300m€, 0.6m€/MW, 125€/kWh- Opex: 12,000€/MW/y- Required support: 22.5m€/y (45,000€/MW/y) during 10y, or 17.5m€

(35,000€/MW/y) during 20y, NPV2022@2%=277m€- Modelled benefits: 60m€/y (-2%/y) during 20y, NPV2022@2%=778m€- Benefit to cost ratio: 778/277 = 2.81

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CostBenefit

million Euro million Euro

Implementation of a framework to incentivise storage in the Spanish marketREGULATORY FRAMEWORK

- Modelling data:- capacity / energy- lifetime / degradation- efficiency / ramp-rates- COD- Required premium: €/MW/y during 10/15/20/30 years

- Options for modelling benefits- Benefits considered: minimise incentives / total system costs- Horizon: 10 / 20 / 30 years? Generic / Technology specific?- Scenario(s) design: reference? Fixed / Dynamic capacity mix?- Discount rates- Modelling ex-ante / modelling ex-post price bidding- Model all submitted projects / model technology standards- Responsible entity, models

- Modelled projects:- Case by case basis (PS Hydro, large projects)- Pre-defined standards (modular technologies: batteries,other)- Auctioned volumes: Exact? Min/Max range?

- Award criteria- Only price: requires technology specific auction or pre-defined

penalty factors in the required premium?- CBA comparison: Benefit to cost ratio? NPV of net benefits?

1- BIDDING, MODELLING AND CLEARING OPTIONS


2- IMPLEMENTATION PLAN

0

1-Stakeholders discussion on storage framework- definition of storage throughout Spanish legislation- design of incentive scheme and storage auctions- legal process to validate storage auctions- organisation of storage auctions

3- Project development- Award- Permitting and Design- Finance- Build and operation

2- Calendar of auctions- CBA capacity- technology and costs- RES target projections

Agenda


About AFRY1.

PNIEC challenges2.



Takeaways6.


EU decarbonisation targets will mean significant renewable penetration – anda complete market shift from flexible generation to flexible demand

LONG-TERM PERSPECTIVE

- In order to meet the ambitious decarbonisation objectivesset at European level, electrification increases as well asthe share of renewable electricity

- This entails a shift from a market where flexible generationcapacity (mainly thermal) supplies an inelastic demand, toa new paradigm where flexible demand adapts to inelasticrenewable generation

- Making demand flexible is key to avoid curtailments,revenue losses for renewables and the oversizing of thegeneration matrix and associated electricity grids

- If grid-scale storage can help bringing flexibility to thepower system, AFRY’s modelling effort to simulate thedecarbonisation of the European economy has identifiedcompeting technologies to mitigate the risks of a – almost100% - renewable generation matrix in the long term

POWER GENERATION TRANSITION IN EUROPE1


1 Source: AFRY’s ‘Full Energy Decarbonisation study’, Zero-Carbon Gas scenario, 2018

TWh

Hydrogen can be used to balance seasonal energy demand and supplyswings – where batteries and flexible demand are only short-term


- For a global oil & gas company, AFRY developed in 2019 a‘Hydrogen Economy’ pathway to investigate the benefits ofa scenario where hydrogen production (either withelectrolysis or SMR+CCS) would be more competitive thangenerally expected

- One of the key results of this pathway is the coupling ofhydrogen and electricity markets, where hydrogen providesseasonality and offsets the availability profile of renewableresource

- The UK case is a good example: while hydrogen mainlysupplies heat demand in winter months when wind coversmost power demand, the sustained hydrogen production(backed with storage) supplies power generation duringsummer months when wind resource is much lower

- The hydrogen/electricity markets coupling will need large-scale hydrogen production and storage to be available, anda deployment needs to be starting from 2030 with large-scale conversion by 2040 to make coupling happen by 2050

MONTHLY POWER GENERATION AROUND 2050 UNDER AFRY’S‘HYDROGEN ECONOMY’ PATHWAY


Source: https://www.poyry.com/news/articles/utilising-versatility-hydrogen-fully-decarbonise-europe

TWh

Interconnections will be key to achieve an efficient decarbonisation, avoidingoverbuilding of generation capacity and optimising renewables’ revenues


- Our modelling of the full decarbonisation of the energysector by 2050 – which looks at how to reach the target ata lower cost – ends up with a total interconnection capacityin Europe of 250GW, i.e. around 3 times the existing one

- The figure shows Germany dispatch in a winter week of2050 in our models: while wind generation is well abovedemand during the first 5 days, allowing exports on someinterconnections, it gets much lower in the last 2 days andbalance is secured by imports

- Similar market behaviour might be observed in Spain ifinterconnections are sufficient; even if it is reasonable tothink that in Spain electrolysis could capture an importantpart of excess generation

- Even if it is well accepted that a substantial increase ininterconnection between EU markets is required for anefficient decarbonisation, this will require great cooperationbetween countries and complex negotiations on cost- andbenefit-sharing

HOURLY DISPATCH OF A WINTER WEEK IN 2050(AVERAGE HOURLY GENERATION/DEMAND)


Source: AFRY’s ‘Full Energy Decarbonisation study’, Zero-Carbon Gas scenario, 2018

GW

Distributed storage, enabled by EVs and smart grids, will be required tomake demand flexible enough to decarbonise the energy sector


- Flexible demand is key to allow a very high penetration ofrenewables, and thus the decarbonisation of the energysector

- We believe that smart grids and distributed storage will berequired to reach any ambitious decarbonisation target

- And we believe EVs is probably a sensible option to enabledistributed storage, as having them connected and readyto load from / unload to smart grids is not subject to pricearbitrage decisions – but probably subject to having usersembracing the flexible energy economy

FLEXIBLE EVS DEMAND BALANCES INTERMITTENT RENEWABLESIN A WINTER WEEK OF 2040


Source: AFRY’s ‘Full Energy Decarbonisation study’, 2018

Curtailment Load loss

With flexible EVs

LONG-TERM PERSPECTIVE - TAKEAWAYS

In a decarbonised economy, grid-scale storage will have to compete withhydrogen, interconnections and distributed storage to deliver flexibility

WHICH ROLE FOR GRID-SCALE STORAGE?INTERCONNECTIONS

DISTRIBUTED STORAGE - EVs

- Hydrogen coupling with electricitymarket can bring seasonal flexibilityand offset RES availability profile

- But this requires large-scalehydrogen production capacity andstorage

- In a decarbonised system wherehydrogen, reinforced interconnectionsand smart grids bring huge amounts offlexibility and enable demand to meetthe renewable generation profile, grid-scale storage will be mainly needed toprovide ancillary services

- However the pathway to get there isstill long and uncertain, and grid-scalestorage can play an important roleduring the transition

HYDROGEN

- Our modelling of the decarbonisingeconomy shows that a substantialincrease of interconnection capacitybetween countries is required, toavoid overbuilding of generation

- Smart grids can enable a hugeamount of flexibility to integratethe system, in particular allowing‘EV-to-grid’

- But significant enhancements of the gridsare required

2020-02-14 |39 COPYRIGHT AFRY | AFRY BREAKFAST ON ENERGY STORAGE

Agenda


About AFRY1.

PNIEC challenges2.




Takeaways6.

Takeaways


Energy storage is key to a reasonable achievement of the PNIEC 2030 and the wider Energy Transition.But it will not happen alone!

Storage is unlikely to be profitable regardless of Capex evolution without incentives on the wholesale market- Utility-scale storage capacity likely to be set by the Government through incentives or new market signals

Some additional storage allows reaching the PNIEC %RES-Electricity at lower total system costs- reduces RES curtailments, enables a lower 'oversizing' of RES capacity, reduces RES incentives to reach the PNIEC- high self-cannibalisation suggests an economic optimum to reach the PNIEC possibly in the range +5-10GW

Unclear winning storage technology, possibly several will coexist- Offsetting pros/cons of Capex, Energy, Efficiency, degradation, lifetime, development time- System needs likely to evolve as non-synchronous generation is phased out in the long term

New regulatory framework required to organise auctions for storage incentives- Several frameworks theoretically possible. The least problematic seems 'Market + Premium (€/kW/year)' based on CBA- Methodology for modelling of benefits will be key

Storage is likely to face strong competition in the long run in a decarbonised energy sector- Rise of flexible demand, hydrogen, interconnections and distributed storage will be key to achieve an efficient decarbonisation in a

new world of inflexible generation- Grid-scale energy storage is needed during the transition, likely to last 2 to 3 decades


Documents

AFRY Breakfast on Energy Storage - ATA Insights · power and possibly for solar PV - Probable transition from merchant developments to 100% of target capacity under RES auctions -