Wires

UK told electricity reforms must include storage

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

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

and Gamesa , told the government on Monday thatthey could halt their investments in green energy if there wasnot enough support for renewable energy in the upcoming overhaulof 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 marketchanges to accommodate new technologies, such as electricitystorage, and offer return of investment," Andrew Jones, ManagingDirector for Europe, Middle East and Africa of U.S. based S&CElectric told Reuters.

"Storage today isn't recognised as an asset, so there is noreturn on investment at the moment."

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

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

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

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

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

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

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

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

((henning.gloystein@thomsonreuters.com)(+44)(0)(207 5426659)(Reuters Messaging:henning.gloystein.reuters.com@reuters.net))

Keywords: BRITIAN/POWER STORAGE