Global Energy Storage Trends in the EU, Türkiye, and the UK

Trends in energy storage around the globe include regulations and initiatives in the European Union, incentives in Türkiye, and the UK government’s push for new energy storage projects.

European Union

EU energy storage initiatives are key for energy security and the transition toward a carbon-neutral economy, improving energy efficiency, and integrating more renewable energy sources into electricity systems. Balancing power grids and saving surplus energy are key aspects of improving energy efficiency and integrating more renewable energy sources into electricity systems. Onsite energy storage (batteries) is another important element. The EU has a comprehensive database of the European energy storage technologies and facilities.

Energy storage also plays an important role in the European Green Deal and the Fit for 55 green transition package, a set of policy initiatives aiming at ensuring the EU gradually becomes climate neutral. The Green Deal envisages that the regulatory framework should foster the deployment of innovative technologies with energy storage.

The European Commission published a working document on the role of electricity in energy storage in 2017, and subsequently reflected these principles in the Clean Energy for All Europeans package in 2019.

In 2020, the European Commission published a study on energy storage, which summarized some previous studies and reports, explored current and potential energy storage markets in Europe, and set out policy and regulatory recommendations for energy storage. Since 2020, the European Commission has published progress reports on the competitiveness of clean energy technologies on an annual basis, including in respect of technologies and solutions for energy storage and power systems integration.[1]

According to one such report published in 2022, Europe is a leader in renewable fuels, batteries, and storage technologies, and storage and system integration are key elements of clean energy technologies and solutions.[2]

Key Regulations and Initiatives

The key regulations relevant for energy storage in the EU include the following:

• Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (the EU Electricity Directive)
• Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity initiatives (the EU Electricity Regulation)
• European Parliament resolution of 10 July 2020 on a comprehensive European approach to energy storage (2019/2189(INI))
• Council of European Energy Regulators (CEER) regulatory white paper on long-term storage: CEER “European Green Deal” White Paper series (paper I) relevant to the European Commission’s Hydrogen and Energy System Integration Strategies
• Proposal for a Regulation of the European Parliament and of the Council concerning batteries and waste batteries, repealing Directive 2006/66/EC and amending Regulation (EU) No. 2019/1020
• REPowerEU, amended on December 14, 2022 by the European Parliament; modifications concerned the amendments to the Renewable Energy, Energy Performance of Buildings, and Energy Efficiency Directives and included all energy storage projects under the new permitting rules for renewables projects
• The Renewable Energy Directive, the revision of which is expected to positively impact the energy storage industry by accelerating projects development across the EU

Focus of EU Regulation

There is no unified regulation on energy storage; rather, regulation of energy storage is spread across a number of regulatory acts (most of which require implementing at the level of the EU member states).

In brief, the EU regulation in respect of energy storage appears to focus on the following:

• Public support, strategy, and other policy aspects (for more information on EU state aid to energy projects, see Cross-Border Energy Projects in Times of Crisis: Is EU State Aid a Solution for Green Transition?)
• Permitting
• Effectiveness of energy markets and capacity mechanisms, including establishment of the European entity of distribution system operators (EU DSO)
• Grid aspects
• Tariffs requiring the EU member state not to discriminate against energy storage projects in its tariffs’ regulations
• Batteries: “[G]iven the important role they play in the roll-out of zero-emission mobility and the storage of intermittent renewable energy, batteries are a crucial element in the EU’s transition to a climate neutral economy”

The implementation practices and policy approaches in respect of current EU regulation still vary among the EU member states. Further development of energy storage regulation at the EU level is likely to be in line with its energy security and energy transition goals. One might also expect that such further developments will be in a spirit of solidarity demonstrated by the EU in respect of its gas storage amid the energy crisis, which would imply a greater alignment among member states.

Türkiye

A number of amendments have recently been made to the Electricity Markets Law and applicable regulations in Türkiye (the Amendments) to allow existing license holders of wind and solar power plants to establish electricity storage units within their generation facilities, and for investors to apply for preliminary licenses to establish new wind and solar power plants with storage units.

The Amendments introduced a number of notable changes:

• For greenfield projects, a single pre-license/license (issued by the Energy Market Regulatory Authority (EMRA)) will be sufficient for wind and solar power plants with electricity storage units to conduct both electricity generation and storage activities. Brownfield projects may apply for a capacity increase under their existing pre-license/license up to the installed power of the associated electricity storage unit(s).
  
  For a pre-license/license application in connection with a greenfield or brownfield project incorporating both electricity generation and storage activities, the following conditions will need to be satisfied:

• The installed capacity of the generation unit cannot be higher than the installed capacity of the storage unit.
• Minimum installed capacity for (1) wind power plants is 20 megawatt electric (Mwe), and (2) solar power plants is 10 Mwe. The maximum installed capacity for a wind or solar power plant is 250 Mwe.
• The capacity of the storage unit must be equal to or more than the installed power of the storage unit.
• The storage unit must be located in the same land as the power plant.
• The mechanical installed power of the power plant cannot be two times higher than its electrical installed power.

For brownfield projects, in addition to the conditions above, the following conditions will need to be satisfied in order to amend a license to reflect the proposed capacity increase:

• Receipt of an affirmative grid connection opinion from the electricity transmission system operator, Türkiye Elektrik Üretim A.Ş. (TEİAŞ).
• Evidence that the storage unit will be located within the project site area stipulated in the license.
• Receipt of an affirmative opinion from the General Directorate of State Hydraulic Works and a positive technical assessment.
• Payment of the minimum share capital.
• Receipt of the necessary permits within the scope of an environmental impact assessment regulation.
• For greenfield projects, electricity storage plant developers are able to apply for a pre-license to develop new solar or wind power projects within their project site without participating in grid connection competitions organized by TEİAŞ. This means that early applications are prioritized by TEİAŞ during the process of granting a connection opinion.
• Until June 30, 2023, the requirement to inject minimum capital and provide a security deposit/letter of guarantee in accordance with the applicable licensing regulations and determined by EMRA will not be applied at the time of application.
• Greenfield projects are also exempt from anemometric and heliographic data measurement requirements that normally exist for solar or wind projects.

Importantly, wind and solar projects with storage units will continue to be entitled to receive the feed-in tariff (Renewable Energy Support Mechanism or YEKDEM). Under the Renewable Energy Support Mechanism, renewable power plants commissioned between July 1, 2021 and December 31, 2025 will benefit from guaranteed price support by way of the following:

• A 10-year FiT based on Turkish lira-denominated prices that are subject to inflation and foreign exchange indexation on a quarterly basis by reference to an indexation formula. We note, however, that FiT prices quoted in Turkish lira cannot at any time be higher than the price caps expressed in Turkish lira based on the average of the monthly average USD/TL foreign exchange rates, which are in turn based on the foreign exchange rates announced by the Central Bank of Türkiye, for the three months that are two, three, and four months prior to the first month of the current tariff period.
• An additional five-year incentive for domestic production to foster the local manufacture of plant components that is paid on top of the amounts described in the previous bullet (subject to an independent board of auditors confirming that at least 51% of components in the plant are domestically manufactured).

These changes further integrate electricity storage into renewable electricity generation and will pave the way for new solar and wind power plant developments to be attractive to investors and financiers, thereby incentivizing investment in renewable power generation in Türkiye. To illustrate this point, EMRA has confirmed that there have been more than 2,750 applications, corresponding to more than 164 gigawatts (GW) in installed capacity, following the Amendments, which are under review by EMRA as of this writing.

United Kingdom

The UK is a leader in Europe with respect to energy storage projects. Harmony Energy Ltd.’s battery energy storage system (BESS), which went live in the United Kingdom in November 2022, was reported to be Europe’s largest BESS in megawatt hours (MWh) so far.

The UK is also moving forward with funding new storage technologies to maintain its leadership position. A few days after the Harmony project achieved commercial operation, the UK Department for Business, Energy & Industrial Strategy announced that five energy storage projects would benefit from a share of more than £32 million ($38 million) in government funding across the country. The funding targets cutting-edge technologies that can store energy as heat, electricity, or a low-carbon energy carrier, such as StorTea Ltd.’s liquid flow battery or EDF UK R&D’s hydrogen storage, whose demonstrator uses depleted uranium.

A report released by Renewable UK indicates that the total pipeline of battery projects has doubled from 16.1 GW to 32.1 GW between 2021 and 2022.

Regulatory Requirements

The UK legislative arsenal does not include a specific framework for energy storage. The Electricity Act 1989 is the main piece of legislation governing electricity in Great Britain, which defines “energy storage.” Ofgem, the Great Britain energy regulator, clarified in 2020 that electricity storage is deemed to be electricity generation for the purposes of the Electricity Act 1989. As such, any energy storage operator would require a generation license, unless an exemption applies. Under the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 (SI 2001/3270), the Class A so-called “small generators” exemption applies to sites producing no more than 10 MW, or 50 MW for a generating station with a declared net capacity of less than 100 MW.

When a generation license is required, the holder must comply with a number of industry codes (namely the Grid Code, Distribution Code, Balancing and Settlement Code, and Connection and Use of System Code) and with the license obligations in relation to all generation assets, including storage, that it operates.

Ofgem has introduced the following in the generation license standard conditions:

• A definition of electricity storage that is the “conversion of electrical energy into a form of energy which can be stored, the storing of that energy, and the subsequent reconversion of that energy back into electrical energy.”
• A new “E1” license condition requiring the storage provider to record and make available accurate information regarding its electricity storage facility to its relevant suppliers. The E1 condition aims to facilitate the correct application of final consumption levies, irrespective of the size of the storage facility.

Well aware that the absence of clarity on the regulatory definition of energy storage constitutes a regulatory barrier, the regulator is proposing in the (yet to be adopted) Energy Bill 2022-2023 to amend the Electricity Act 1989 to clarify that electricity storage is a distinct subset of generation and is defined as “energy that was converted from electricity and is stored for the purpose of its future reconversion into electricity.”

Nonexhaustive List of Technologies

Ofgem has provided a nonexhaustive list of technologies that fall within the scope of the regulatory definition of storage. These include electrochemical batteries (e.g., flow batteries), gravity energy storage (e.g., pumped hydro), air-based storage systems, kinetic energy systems (e.g., flywheels), thermal storage, chemical storage, or electromagnetic storage.

Application for a License

A standard license application form is available under the schedule to the Electricity Licence Application Regulations 2019.

Read our full report, Energy Storage: A Global Opportunity and Regulatory Roadmap for 2023 >>