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Energy Storage System Policies

Info: 4777 words (19 pages) Introduction
Published: 10th Jun 2021

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Tagged: Energy

Chapter One



Energy systems will undergo fundamental changes over coming decades, if present ambitions to energy mix and to ease fossil fuel dependency are to be achieved. Oman has set itself challenging targets to decarbonize the energy system until 2050 (energy Policy 2015) and renewable generation is expected to play a major role in achieving these objectives). The transition towards such a future energy system requires policy makers to consider three competing objectives of ensuring that energy can be provided sustainably, affordably and securely .Displacing conventional fossil fuel based thermal generation affects the balance of these objectives and will have knock on effects for system integration more widely. Thermal generation can respond flexibly to system demands and fossil fuels provide a convenient, abundant and low cost form of storage. Renewable energy resources, on the other hand, tend to have intermittent or poorly controllable temporal profiles. These sources effectively displace energy output from conventional generation. However, due to their variability, they are less effective at displacing generating capacity. To ensure security of supply, some capacity has to be held in reserve. For low penetrations of renewables (with less than 20% of energy provided by renewables), the additional costs of system integration remain modest. Higher levels of penetration could, however, result in load factors for conventional plant of less than 10% (from presently over 50%)1. This would lead to a substantial increase in the cost per unit of energy from such plants if these were to remain in operation 2. However, the integration of rapidly expanding RETs into the power system can pose challenges to the electrical grid for several reasons. First, renewables such as wind power and solar are variable renewable energy (VRE) sources: simply speaking, there is limited predictability as the wind does not always blow and the sun does not always shine, or shine brightly enough Balancing the variable and non-dispatchable supply with also fluctuating demand in the grid, for instance at times with excess energy production when there is more energy from VRE available than is actually needed (or the exact opposite with low VRE supply and peak demand), requires a well-coordinated interplay of various market actors and an adequate technological infrastructure with high flexibility3. Secondly, the spatially distributed nature of VREs, compared to the more centralized location of fossil fuel and nuclear power plants is another important aspect that needs to be dealt with when integrating increased amounts of VRE into the grid. Moreover, the sometimes geographically remote location in areas with favorable weather conditions (i.e. wind and sun) further adds to the complexity of integrating VRE into the grid Lower VRE penetration levels of about 5-10 % are normally not a significant technical barrier for grid integration. Some practical examples of countries like Germany, Denmark, Sweden, Spain Portugal, Ireland or the UK, which already reach or even exceed such penetration levels show that the grid integration has not been a major issue so far 4. Some studies show that grid integration for VRE penetration levels over 30 % are not only feasible but also come at modest costs increases to the power system in the future32.

However and seen as a whole, these changes constitute a destabilization of the existing energy regime and the emergence of a new energy landscape. This energy system transition challenges the conventional structure of the grid in a technical sense. It also threatens established business models and capacities of utility companies and other electricity market actors. Therefore, they are required to adopt fundamentally new and comprehensive ideas and solutions in order to cope with the transformation that is underway. Moreover, updated policies and regulations with the right incentives need to be adopted to account for the rapid changes on the energy landscape in order to enable a smooth transformation in a cost-efficient manner. The new energy landscape will most likely be more decentralized, interconnected, flexible and smart, much like the internet 56.A transition away from traditional nuclear and fossil fuel based energy systems towards completely renewable energy systems with the entire demand and supply based on renewable energy requires profound and well-synchronized changes in the following areas 7demand response technologies related to energy savings and conservation (e.g. demand-side management), efficiency improvements in the supply system (e.g. combined-cycle gas turbines CCGT, combined heat and power CHP plants), and the integration of VRE sources.

Historically, most of the electricity was provided with centralized non-renewable energy sources, such as nuclear and fossil fuel based thermal power plants plus hydropower, which all where to a certain degree dispatchable and only had to deal with fluctuating demand 8. Nowadays, managing the more variable electricity supply still heavily relies on dispatchable power plants to maintain grid flexibility. The IEA 9suggests that first system-friendly deployment of VRE sources (i.e. timing location, technical capabilities, design and curtailment) should be considered, then overall system and market operations can be improved and lastly new investment in further flexible resources should be made. Research from Bloomberg New Energy Finance 10 predicts that the global need for flexible capacity will be almost 15 times higher at approximately 858 GW in 2040. Besides using conventional power plants for more flexible production, there are three low- carbon options available to grid operators and other market actors to deal with the integration and balancing of supply from VRE to maintain grid flexibility One alternative is to enhance networks, which can help to connect areas with spare capacity to distant regions at periods of high demand. The larger, and less contained such a network is, the more opportunities for spatial arbitrage exist. Temporal arbitrage is, however, not possible with networks alone. The third option demand-side management (e.g. load levelling via smart meters and/or time-dependent price differentiation), is a departure from the present ‘predict and provide’ paradigm, by engaging the demand side to participate and respond to system stresses by reducing or shifting loads. Lastly, there is energy storage (at various scales and technologies).Many of the challenges of integrating renewables into the energy system would be solved if electricity could be stored. Technically this is of course possible, but critics claim that electricity storage is ‘too expensive’ 11. Up until today, market actors often preferred the first two options because of familiarity, experience, cost-effectiveness, and existing grid infrastructure that is already in place 9.However, energy storage technologies are becoming more and more cost-competitive on the market and are therefore expected to play a more important role in the future 12,13. While some countries and regions in the world may not yet have the urgent need for energy storage solutions for various reasons, others have already taken measures to incentivize energy storage installations in order to accommodate increasing volumes of electricity from VRE sources. For instance in the USA, the U.S. Federal Department of Energy (DOE) has a multi- million US$ funding Programme in place that helps to foster research, development and demonstration (RD&D) of energy storage solutions 9,14,15. Other countries that started to promote energy storage solutions through regulations and incentive schemes include Germany, Italy, the UK,india,  Japan, or South Korea 14. Yet, in the Oman, no significant electricity storage capacity has been commissioned on the national grid over the past three decades, since the days of centralized, publicly owned and vertically integrated businesses. Might the prospect of more wind and solar generation in the Oman constitute a turning point for electricity storage in liberalized markets?

The arguments put forward by proponents of storage tends to be qualitative. Storage is  seen as an ‘intuitively good idea’ and it is widely accepted that storage has ‘a role to play’ 16Subsequently there are calls on policy makers to provide support 17. For policy makers to decide on support for storage, two questions arise: 1) Does the presence of storage provide benefit to the energy system in excess of its costs, and 2) are there reasons why the market would not deliver this value unaided? At least one official has remarked that, especially on the second question, policy makers are ‘hurting for objective evidence’ 18. Present market arrangements were not designed with electricity storage in mind. It is therefore unclear whether present market structures will bring forward storage in the first place, and whether such capacity would be aligned with the wider long term system interest. Part of the problem, as this thesis will argue, is that storage is a complex componenof the energy system and has evaded many of the models informing future scenarios and policy. High temporal resolution is required to capture the balancing requirements, which storage is likely to contribute to. Furthermore, a range of stakeholders is affected by the operation of storage. Operating strategies that favour some, may incur additional costs for others or challenge established practices. Such tradeoffs are not always captured in optimization models. In the absence of easily comprehensible evidence for the value of storage—or the cost penalty of its absence—indecision may lead to a missed opportunity and potentially higher long-term system integration costs. Electricity storage may thus constitute both a commercial proposition to investors as well as offering ‘common good’ characteristics for future energy systems as a whole. Both aspects will be considered in this thesis. The commercial value considerations give an indication of likely investment behavior going forward, whereas the ‘common good’ perspective allows this thesis to identify wider benefits, barriers and tensions between different interest groups and to offer tentative policy suggestions.

For some; electricity storage is the ‘holy grail’ of our sustainable energy future (Ellis, 2012). Many of the challenges of integrating renewables into the energy system would be solved if electricity could be stored. Technically this is of course possible, but critics claim that electricity storage is ‘too expensive’ (APS, 2007).

1.2.  Energy Policy Objectives

Global concerns over climate change, growing energy demand and security of supply have stimulated the search for renewable pathways. In addition to emitting less greenhouse gases (GHG) and creating other environmental benefits, it is desired that these contribute to social and economic development. Policy for energy storage is justified based on the widely recognized benefits of energy storage services /application over conventional energy sources – such as improved security of supply, reduction of GHG emissions and creation of employment opportunities In addition, energy storage is more adaptable and diverse than any other VRE sources in terms of scale and their use; it is also the most complex due to its numerous interlinkages . Energy storage is an inter- departmental issue, touching on many policy areas. Thus, while led by renewable energy goals, the task of promoting energy storage both merits and requires an inter-departmental response.

Noting these points, it is argued here that the use of energy storage requires more planning effort than many of renewables. Certainly, it can be questioned if other RE policy fields have to account for so many areas. Energy storage seems nevertheless to be rather unique due to its cross-sectoral, multi-level and multidisciplinary nature. In addition, it is only recently when we actually start to see the true interlinkedness of such areas in real time.

Consequently, planning for change would seem essential in order to deal with the potential for negative impacts as early as possible and to balance the trade- offs between environmental, social and economic impacts. A planning framework can also serve the purpose of facilitating maximization of the benefits of energy storage . It may also allow for a more swift response to unforeseen changes. Thus, planning is about dealing with uncertainty, e.g. through learning both about the past and the future (Hutter & Schanze, 2008). It can be argued that uncertainty is an unavoidable component of policy  process – however, this is especially important in the case of decision-making touching upon environmental matters due to the complex interactions pertinent to large-scale natural systems (Sigel, Klauer, & Pahl-Wostl, 2010). At any rate, the realisation of the impacts is largely reliant on two things at the policy level; as United Nations Environment Programme (UNEP, 2010d, p. 1) puts it, “it all depends how energy storage development is designed and implemented”. As an additional support for planning, energy storage policy benefits from better policy-making and design like any other public policy field. Status of energy policy

Energy storage policy, strategies and action plans have been established in several parts of the world, and many countries have identified energy storage -derived energy as one of the pathways to achieve their Kyoto Protocol obligations. Different kinds and levels of specific energy storage strategies have been made in (at least) Japan, India, and china, the US, Canada, Germany, Austria, Netherlands, Spain and the United Kingdom.

It should be noted that the absence of a formal plan or its preparation does not necessarily indicate the lack of other energy storage activities or planning in the country. Finland and Sweden for example have highly advanced energy storage industries, which have been supported by other means than action plans. In addition, while energy storage use related planning can take place independently (i.e. as energy storage -focused policy  – called ‘specific policy ’ in this study) as indicated here, it can also occur as a part e.g. of energy, renewable energy  and/or climate strategies and plans (called ‘package policy ).


Against the background described above, ESS is not a new concept and there is much research on the topic. However, a literature review academic, industrial and policy documents highlights that ESS policy is an understudied area within the field, with the majority of previous studies focusing on ESS trials, utility programmes and modelling the potential of ESS. The previous research that has been conducted on the policy side of ESS has concentrated on the quantitative impacts of implemented policies, particularly in terms of energy and carbon savings and cost-benefit analyses. However, going beyond impacts to look at the mechanisms behind how and why policies performed as they did is a much under-researched area. Thus, the thesis has the following research aim and research questions.

 Research aim:

      To determine the mechanisms behind ESS policy success and failure

Research questions:

 1. What ESS policies have been implemented around the world with high quality documented evaluations?

2. How and why do ESS policies succeed or fail, and what policies have been successful?

The literature review identified that the quality of the evidence base for ESS policy evaluation has not been established and this is the justification for research question one. The research question aims to map out the countries that have implemented ESS policies and produced high-quality evaluations of those policies. Research question two forms the central part of the thesis and aims to determine the key factors that cause different types of ESS policy to succeed or fail. The research question also seeks to identify how successful different types of demand-side policies have been around the world.


This research deals with a range of issues related to energy storage policy. Along with the features of sound policy-making, the focus is on structuring the policy planning process and deepening the understanding of policy coordination in the energy storage policy context. The scope is narrowed down to seek answers to what energy storage  policy  should contain in order for them to be described as ‘better’ plans, and how energy storage  policy  should be formulated and executed for it to be more coordinated and coherent.

Also of interest is why energy storage planning is currently being done (and why it should be done).

Policy: The term ‘policy’ has a variety of meanings. This thesis studies policy enfolding one renewable energy source and its implementation tools, hence the use generally applies to policy planning. While the work is relevant to the production and use of one type of (renewable) natural resource, it does not extensively discuss natural resource planning per se. While the thesis does not either seek to address other types of public sector policy  – such as spatial policy  (known also as urban or environmental policy ),Programme policy  or sustainable development policy  – let alone private sector planning, it does borrow concepts from and discusses theories and practices pertaining to all these spheres. This is to form a more complete picture of the useful concepts for energy storage policy (see Chapter 2 for further policy definitions).

Analysis approach: The examination of energy storage policy in overall world focuses on energy storage action plans at national and regional levels. It can also be called ‘evaluation’, but it should be noted that this work compare the promises of the policy to their actual outcomes or impact (‘outcome evaluation’).

Based in research papers: The research is founded upon five research papers. These are appended to this thesis. Reflecting the research aim and objectives, the papers focused on specific aspects of energy storage planning.

  • Paper I:Review paper  for Energy Storage application ,services & barriers
  • Paper II: examination of international energy storage perspective (content).policy  from the ‘what’ and how
  • Paper III : Presentation of Thesis questions and findings

Data sources and access: The study is based mostly on a desktop research of official policy documents, but includes data sources ranging from business management papers to public policy literature (see Chapter 3 for further research methodology) .

Temporal bounds: The thesis work has covered a period of circa five years. The temporal scope of this work is narrowed primarily to the period before the introduction of new Oman energy strategy establishment. Therefore, the recently prepared energy strategy have not been included in this research. The work focuses on the current energy planning documents and views on the planning processes.

Sample size and heterogeneity: The work underpinning the Papers II included official policy documents in each jurisdiction participating in this work. While the small sample size of the policy  under examination may not be representative of the whole set of policy  activity in globe , they were perceived to represent the jurisdictional energy storage  policy stance and vision, and thus important indicators of the view on energy storage policy .Moreover, the jurisdictions vary greatly in terms of geographical size and population. Thus, the comparability varies – for example, from region to region, and due to differing policy parameters. It should also be noted that many policy documents do not fully explain procedural/process dimensions of planning (i.e. how policy has been done), but rather reflect policy outcomes of planning (“what” aspects). These limitations have been worked with. It is held that these limitations do not prevent from the generation of insights into, and enhancing understanding of the energy storage policy content and processes. Indeed, the limited suite of polices that were studied allowed a more thorough, in-depth analysis assisting this task.

1.5.  About the overarching research fields

In general, terms, the research has been framed by two major fields: policy research and (policy) planning. While policy research is held to be devoted to changing the world and providing ‘knowledge for action’ (Etzioni, 2006; Hakim, 2000), Friedmann and Hudson (1974) indicate that planning acts as a link between knowledge and action. Both frameworks and their role in shaping the research are discussed more closely in the Chapters 2 and 3

Policy research differs from theoretical research in that it is multidisciplinary, multidimensional and focuses on ‘actionable factors’ rather than theoretical constructs. Both can examine causal processes, but those related to policy research are often more complex (Hakim, 2000). The audience of policy research generally encompasses a variety of actors from policy-makers and non-governmental organisations to private sector (see the next section for the audiences of this study). As this research is targeted to actors involved in or informing planning and policy-making in the energy storage  field, it primarily concerns creating knowledge for action than producing understanding specifically for social science. This implies that – as Patton (2002) purports when the audience consists of policy-makers – the research results will be judged by the relevance, clarity, utility and applicability instead of the standards of basic research, i.e. research rigour and contribution to theory.

Within the realm of policy-oriented research, Rist (2003) argues that the manner in which policy research is done should be reformulated so that research can contribute to informed decision-making, i.e. the context in which to search for a linkage between knowledge and action needs to be redefined. He advocates seeing policy-making as a process – constantly evolving through cycles – instead of as a discrete event. This perspective coincides with regarding research serving an ‘enlightenment function’ as opposed to an ‘engineering function’.While the former view suggests that researchers work with policy-makers to create a contextual understanding about an issue and build lasting linkages, it contends with the latter point of view, which assumes that adequate information can be collected to support a policy initiative. In light of these perspectives, this work is in line with the ‘enlightenment function’, and views the energy storage  policy planning as a process, and seeks to generate a contextual understanding about it Related to this discussion is the way in which knowledge relevant to policy research is produced. Gibbons et al. (1994) have distinguished two modes of knowledge production: Mode 1 and Mode 2. Mode 1 describes a disciplinary, homogeneous problem solving driven by a mostly specific, mostly academic community. In turn, Mode 2 knowledge is produced in the context of application, and is transdisciplinary and heterogeneous in nature. This type of inter- and transdisciplinary approach is pertinent also to this research as it relies on a number of disciplines of social sciences, e.g. public policy and administration, urban planning and organizational management

1.6.  Intended audience

This thesis is intended to be relevant to a variety of audiences. A great asset in this regard is the set of peer-reviewed research papers that have the potential to facilitate wider spreading of the research. This work is targeted to actors involved in or informing planning and policy- making in the energy storage field. However, the findings are also expected to be of interest to the larger energy storage community. A number of intended audiences are described as follows.

Policy- and decision-makers dealing with energy storage use and renewable energy are the main audience of this thesis. This group includes both politicians and management the findings of the research are posed so that they can contribute to the design and implementation of improved energy storage policy and planning. Due to the ore holistic scope on energy storage use in this thesis – urging the consideration of other uses of aspects, the results of this work are also considered pertinent to practitioners beyond energy field. In addition, the findings are intended to be relevant to the actors responsible for regional and local level policy and planning; these factors include, among others, energy agencies, and regional and local authorities. This work is also relevant for industry actors in the energy storage and renewable energy spheres. They play a key role to both the delivery of renewable energy targets, and the process of ensuring that it is done in a sustainable manner. The work is applicable to researchers in the fields intersecting with energy storage and renewable energy as it synthesises a significant volume of knowledge published in the relevant planning areas and contributes to the body of knowledge on sound energy storage policy and planning. This knowledge is intended to stimulate, for instance, further research and analysis of the success of planning and plans, and their ability to steer energy storage use to a more economically, environmentally and socially sound path.

1.7.  Thesis outline

The thesis is split into six chapters. Chapter two discusses ESS policy theory. Firstly, it gives background to ESS in terms of the contested definitions of ESS , the benefits and challenges of ESS , the history of ESS  in policy and discusses current international experiences and the role of ESS  in the future smart(er) grid. Secondly, the chapter discusses policy theory from the political science literature before examining the theory and practice of ESS  policy evaluation.

Chapter three focuses on research design. Firstly, it details the research focus and the methodological approach underpinning the thesis. Secondly, the chapter outlines and justifies the methods and processes for data collection and analysis in order to answer the research questions.

Chapter four answers research question one on ESS policy implementation and evaluation. Firstly, it gives an overview of the data collection process for the primary and secondary methods. Secondly, the chapter gives overall statistics from the data collection before discussing the main spatial and temporal patterns for ESS policy implementation and evaluation. The chapter finishes with the main conclusions for research question one

Chapter five answers research question two on ESS policy mechanisms. Firstly, it discusses and justifies the definitions for policy success and failure. Secondly, the chapter details the results for success and failure in terms of the key overall success and failure factors, statistical associations between factors, the key success and failure factors by ESS policy, and the key success and failure factors by country/state. Thirdly, it identifies the countries that have experienced success with various ESS policies. The chapter finishes with the main conclusions for research question two.

Chapter six provides the main conclusions to the research. Firstly, it discusses the key findings for each research question and identifies the original contributions to knowledge in terms of conceptual, methodological and empirical contributions. Secondly, the chapter outlines the key policy recommendations of the thesis and identifies areas for further research.

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