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H IGH L EVEL R OUNDTABLE
19 May 2015
The roundtable on Energy Storage brought together key actors participating in the energy system as operators, producers, regulators, consumers and academics. The discussions focused on the role of flexibility and storage in the electricity grid and the interlinks between different sectors of the new energy system. There was wide agreement regarding the need to further develop the market and legislative framework, thereby enabling the necessary flexibility solutions in the energy system. The challenging market and insufficient regulatory environment were identified as common obstacles for the deployment of optimal flexibility solutions irrespective of the technology employed. It also concerns both new investments and existing assets.
A keynote message was delivered by the Director general for Energy of the EU Commission,
Dominique Ristori, who pointed that storage has been under-appreciated in the past and that it needs to be brought to the foreground, being amongst the key solutions in the new energy system. A similar message echoed from the European Parliament, Paul Rubik calling for a better integration of renewables and higher appreciation of the related opportunities, asking for a contribution from all stakeholders to build a common vision of the future energy system.
In the session "Storage in the new energy system" the main message from the speakers was that the different energy networks and sectors should be integrated to achieve an efficient and economically viable transition to a low-carbon energy system. The rapid technological development and innovation, both for mature technologies such as pumped hydro, but also for batteries and for new technologies such as Hydrogen and P2G, makes the case for an improved regulatory framework. The regulatory and market mechanisms would need to be designed to create viable markets for all type of flexibility and storage solutions over the energy system. Flexibility solutions will be needed at all levels of the electricity grid and significant benefits could be found in the integration of the power, industry and transport sectors, by interlinking the gas, heat and gas networks.
The shift towards a low-carbon energy system will change the perspective on the strategic conventional reserves. Therefore the regulatory and market approach to the strategic reserves needs to integrate the characteristics of the new low-carbon energy system.
Storage and flexibility needs a market access that is suitable for the low-carbon energy system. In the new energy system the value for the market would be better reflected by a combination of the
length of services based on credible events on the grid and the associated capacity. A low-carbon energy system appears to be cheaper with storage than without storage.
In the session on "Energy storage markets" the need for a clear regulatory framework which allows storage to compete for grid services was emphasised. Defining services rather than technologies or
ownership would allow for a more purposeful market for the services required. These markets

should be designed to favour solutions lowering emissions and enabling higher share of renewables in the grids. The market for these flexibility services should be open to all market operators, allowing everyone to participate and balance the electricity grid. A European level approach is needed also for distributed generation and distributed self-generation.
Several of the participants underlined that the flexibility/storage solutions shared a common major obstacle of high grid fees and levies in the electricity grid. These costs were initially designed for consumption and generation and are as such not adequately transferred to the new energy system, which entails a new framework of technical solutions and operational needs. Investments in an optimal energy system are hold back by these costs, which also dilutes the efficient allocation of
investments that a well-functioning market otherwise would promote.
Storage, and possibly other flexibility service providers should potentially be classified as a new element in the electricity system with associated adequately design of fees and levies, which would also allow interlinks to other energy networks and sectors. Well-functioning flexibility markets and a market value on low-carbon energy could contribute to reduce the emissions in the industry and mobility sectors, those being large energy consumers. In industrial processes the renewable power based chemicals could be used as feedstock, in addition to power. This would allow for further flexibility in the electricity grid and promote decarbonisation of sectors facing challenges with the transition to a low-carbon energy system.
Several remarks were also made on the need to address the fragmentation of the European markets.
The technology providers have to respect a large diversity on national and regional level. An EU level
framework should fill the gaps and ensure that the market hurdles are removed.
The session "Financing and Further Actions" explained that financing is looking into low risk and stable revenue streams. The current centralised storage projects are driven by the rapid expansion of renewables. At the same time the overcapacities from thermal power stations is reducing, which could create opportunities for storage as service provider. The economics are influenced of course by the CO2 price. Biggest risks in investments relates to political and regulatory uncertainties, complexity of approval procedures, changes in long-term investment framework and changing competition over the investment period.
A better market design was mentioned as a key aspect in integrating the EU wide markets. These markets should provide transparency towards all marker players. The diversity in European markets is still too high and that prevents a good functioning of the internal markets and introduction of
financial instruments that could be used to control the investment risk.
Cooperation of all actors (industries, TSOs, DSOs, etc.) is needed to be able to consider the whole energy system in the planning. Long-term investments are currently considered as very risky and are therefore mostly not done. From system point of view, investments in flexibility solutions could be
cheaper than relying on other solutions but individual actors do not have sufficient incentives from the markets to actually do these investments.
Storage can provide both ancillary services to the grid, increased energy security and facilitate integration of renewable energy sources. This variety of services, if adequately rewarded, would enable the business case for energy storage. In particular it was noted that both for storage and strategic reserves review of regulations would be required, as security is a public good and the market mechanisms are not providing incentives in the current energy system. In future the security of supply needs to be valued by the markets.