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UK told electricity reforms must include storage

Wednesday, 10 Oct 2012 | 7:13 AM ET

LONDON, Oct 10 (Reuters) - Britain needs to create a market in which electricity storage can make money rather than adding costs to consumers if it is to successfully integrate renewables into the power grid, S&C Electric said on Wednesday.

The call comes after a group of seven multinational companies, including leading wind turbine producers Vestas

and Gamesa , told the government on Monday that they could halt their investments in green energy if there was not enough support for renewable energy in the upcoming overhaul of the UK's electricity market.

"There is no recognition of more than one revenue stream - power on/off - at the moment, so there have to be some market changes to accommodate new technologies, such as electricity storage, and offer return of investment," Andrew Jones, Managing Director for Europe, Middle East and Africa of U.S. based S&C Electric told Reuters.

"Storage today isn't recognised as an asset, so there is no return on investment at the moment."

S&C Electrics integrates electricity storage units into the grid for utilities and other large-scale power users.

Renewable power sources such as wind and solar can be intermittent and Jones said electricity storage capacity needs to make up 10 to 15 percent of installed renewable power capacity in order to stabilise the power grid.

The government has launched a wide-reaching Electricity Market Reform Bill (EMR) designed to spur the 110 billion pound ($175.98 billion) investment it says is need to build low-carbon electricity generation like wind farms, to replace aging power plants.

The support is expected to come through so-called contract for differences (CfDs), which amounts to a long-term price contract for the electricity although the government has yet to decide exactly how much these contracts will be worth.

Jones said the company was working with the Department for Energy and Climate Change (DECC) see if CfDs could be used to help pay for its electricity storage solutions.

However, if support is not forthcoming, S&C said it could rethink its UK operations and focus on other emerging markets such as Africa and the Middle East.

"If the UK government gets it wrong there are other markets that will get it right," he said. ($1 = 0.6251 British pounds)

(Reporting by Susanna Twidale and Henning Gloystein, editing by William Hardy)

((henning.gloystein@thomsonreuters.com)(+44)(0)(207 542 6659)(Reuters Messaging: henning.gloystein.reuters.com@reuters.net))

Keywords: BRITIAN/POWER STORAGE