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Overcoming Barriers to Electrical Energy Storage

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  • Francisco Castellano Ruz
  • Michael G. Pollitt

Abstract

Multiple market drivers suggest that electrical energy storage (EES) systems are going to be essential for future power systems within the next decade. However, the deployment of the technology is proceeding at very different rates around the world. Whereas the sector is progressing quickly in California, it is not gaining much traction, so far, in Europe. This research aims to examine the prospects for viable business models of EES to emerge, by focusing on the value proposition, value creation and value capture aspects of the technology. The market and regulatory framework in California and Europe are analyzed critically, and changes to overcome the main barriers are recommended. The research shows that the main barriers to viable business models are: inadequate definition and classification of EES in legislation; lack of markets for some ancillary services; inadequate market design that benefits traditional technologies; and the lack of need for EES in some jurisdictions. The prospects are better in California because regulation is more advanced and favorable for the technology, and regulators are collaborating with developers and utilities to analyze barriers and solutions for the technology. In Europe, there is a need to study more deeply the necessity of EES, to clarify the definition of EES, create new markets for ancillary services and design technology-neutral market rules.

Suggested Citation

  • Francisco Castellano Ruz & Michael G. Pollitt, 2016. "Overcoming Barriers to Electrical Energy Storage," Competition and Regulation in Network Industries, , vol. 17(2), pages 123-149, June.
    • Handle: RePEc:sae:crnind:v:17:y:2016:i:2:p:123-149
    DOI: 10.1177/178359171601700202
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    References listed on IDEAS

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    1. Michael G. Pollitt and Karim L. Anaya, 2016. "Can current electricity markets cope with high shares of renewables? A comparison of approaches in Germany, the UK and the State of New York," The Energy Journal, International Association for Energy Economics, vol. 0(Bollino-M).
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    Cited by:

    1. Newbery, David & Pollitt, Michael G. & Ritz, Robert A. & Strielkowski, Wadim, 2018. "Market design for a high-renewables European electricity system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 695-707.
    2. Greve, Thomas & Teng, Fei & Pollitt, Michael G. & Strbac, Goran, 2018. "A system operator’s utility function for the frequency response market," Applied Energy, Elsevier, vol. 231(C), pages 562-569.
    3. Csereklyei, Zsuzsanna & Kallies, Anne & Diaz Valdivia, Andres, 2021. "The status of and opportunities for utility-scale battery storage in Australia: A regulatory and market perspective," Utilities Policy, Elsevier, vol. 73(C).
    4. Anaya, K. & Pollitt, M., 2018. "Storage Business Models: Lessons for Electricity from Natural Gas, Cloud Data and Frozen Food," Cambridge Working Papers in Economics 1810, Faculty of Economics, University of Cambridge.
    5. Ahmed Gailani & Tracey Crosbie & Maher Al-Greer & Michael Short & Nashwan Dawood, 2020. "On the Role of Regulatory Policy on the Business Case for Energy Storage in Both EU and UK Energy Systems: Barriers and Enablers," Energies, MDPI, vol. 13(5), pages 1-20, March.

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