Government urged to incentivise energy storage and demand side response

Subsidies to reduce the risk of electricity blackouts should focus on energy storage and demand side response, according to MPs.

These smart technologies could make the UK’s energy grid cleaner, more flexible and secure, the Energy and Climate Change Select Committee said in its final report.

The report suggests that the current minimum-cost policy on backup winter power favours fossil fuels over technology that reduces demand. But a smart energy revolution would save more money and emissions over the long term, the MPs contend.

If current regulatory barriers to energy storage were removed, consumers could benefit from an estimated £7bn of annual savings. Changes to regulations on demand side response would help ease pressure on the grid, curb the use of diesel generation plants, lower carbon dioxide emissions and reduce bills.

Committee chair Angus MacNeil said: “The Government must get a move on and encourage the energy market to embrace smart technological solutions like energy storage and demand side response. There is an incredible opportunity for the UK to become a world leader in these disruptive technologies. Yet our current energy security subsidies favour dirty diesel generation over smart new clean tech solutions.”

The report calls for the subsidy scheme, known as the Capacity Market, to be redesigned to incentivise both energy storage and demand side response. The Government should also consider a possible subsidy framework for energy storage to accelerate deployment, the Committee said.

“The Government needs to tackle the issues making the economics of energy storage and demand side response challenging,” MacNeil concluded. “We need to learn from California where strong public financial support and clear legislation have helped develop a storage industry and integrate storage infrastructure into the grid.”

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