Power Law: Editorial February 2024

Energy storage technologies

At the IBA Annual Conference in Miami in 2023, Sarah Fitts, then Co-Chair of the Power Law Committee, led an engaging discussion on the role of energy storage in the balancing of renewable energy featuring speakers from Peru, Netherlands, India, Japan, the US and Canada.

This edition of the Power Law Committee newsletter continues this theme, exploring the rise of utility-scale energy storage technologies on the global power sector, with insights from Canada, Italy, Mexico, Pakistan, Poland, Portugal, Switzerland, Thailand and Turkey.

As these articles explain, energy storage is nothing new: pumped hydro has been around for decades.

This has led to its own challenges.

As explained by Mathieu Simona and Alexandra Schuvalov, Switzerland has been relying on pumped storage for decades. However, the authors identify that certain stakeholders have raised concerns around discriminatory practices favouring pumped storage over other storage technologies, for example exemptions from network fees or the payment of net consumption fees.

In Portugal, Tiago Corrêa do Amaral explains that Portugal’s existing energy storage capacity stands at 4,164 GW, primarily due to hydro pumping. Portugal’s storage framework is also evolving to become more technology agnostic with two critical priorities: expanding to include wind and solar production solutions and increasing diversity between ‘autonomous’ and ‘associated’ storage.

The range of potential energy storage technology options have increased considerably to include: electrochemical storage (lithium-ion and non-lithium-ion), mechanical storage using air or other gases, power-to-gas-to-power and other types such as electrostatic and mechanical, electromechanical flywheel storage.

These utility scale energy storage technologies stress existing dichotomies. They are both a load and a generator. They can be connected directly to the grid (autonomous), or behind-the-meter as part of either a load or a generation facility (associated). They can act as a capacity and ancillary services on the grid, in competition with other generation technologies, or they can serve traditional grid functions as a non-wires solution.

This has led to interesting debates around the world.

In Poland, Krzysztof Cichcoki (Communications Officer) explains that energy storage provisions have been a part of Polish law since 2021, and while renewable energy projects bear 100 per cent of the costs to interconnect to the grid, energy storage projects only pay 50 per cent if those costs. The other half is born by the applicable transmission system operator/distribution system operator, presumably to reflect assumed grid benefits.

In Canada, my partner Kristyn Annis and Chair of Energy Storage Canada, focuses on Ontario, which is procuring new storage (interestingly) to address the forthcoming refurbishment or retirement of Ontario’s nuclear facilities (which provide more than half of Ontario’s baseload power). Ontario has not adopted specific legislative amendments, but instead implemented a series of discrete regulatory changes as well as targeted procurements with long-term (17-21 year) contracts, with 989 MW has been contracted to-date and an additional 1.6 GW targeted in a tender process which closed in December 2023.

In Italy, Tiziana Fiorella explores the legislative response which proposes to tender long-term energy storage contracts. The proposed regulation (known as MACSE) distinguishes between technologies focusing on lithium-ion batteries (12-14-year contracts) and pumped hydro energy storage (up to 30-year contracts). The first auctions are expected within six months of MACSE’s approval.

In Turkey, Mehmet Feridun Izgi and Miray Tezcan echo the importance of appealing contract markets to drive battery storage innovation. Like in Poland, procurement is primarily focused on enhancing grid stability. Regulatory amendments in 2022 have spurred energy storage development via licensing incentives, namely the notable Silivri Lithium-Ion facility with a connection capacity of 250 MW and energy storage capacity of 1000 MWh.

In Mexico, Ariel Garfio and Alejandro Beas illustrate the need for clear regulation governing energy storage, despite their need due to reliance on solar and wind power. In spite of this regulatory gap, various entities have independently developed and installed storage systems to improve costs and stability. 

In Pakistan, Sahar Iqbal explores the increased use of energy storage technologies in Pakistan under The Alternative and Renewable Energy Policy, 2019 which specifically mandated legislative provisions and incentives for utility scale power storage technologies. Notable projects include the National Transmission and Dispatch Corporation Limited of Pakistan’s 20 MW energy storage project as part of a substation investment.

Finally, in Thailand, David Beckstead (Diversity and Inclusion Officer) describes the current reliance fossil fuel generation technologies, meaning there isn’t yet a critical need for storage technologies. However, between commitments under the Paris Agreement and forthcoming revisions to Thailand’s Power Development Plan, renewables are targeted at 68 per cent of output by 2040, suggesting that energy storage’s role may yet increase.

John Vellone

Partner and National Leader, Energy, Resources and Renewables Sector

Newsletter Editor, IBA Power Law Committee

Borden Ladner Gervais

jvellone@blg.com