Finance
Britain sets out funding model for renewable energy storage projects
Global Banking & Finance Review®
Company
By Susanna Twidale
LONDON (Reuters) – Britain will offer developers of renewable energy storage projects, such as pumped hydro, a guaranteed minimum income to spur investment in technologies that help the country meet its climate targets.
Britain is aiming to decarbonise its power sector by 2030. Meeting this target will require a large increase in renewable energy, such as wind and solar, as well as projects that store energy when there is insufficient wind or sun.
“With these projects storing the surplus clean, homegrown energy produced from renewable sources, we can boost our energy security by relying less on fossil fuels,” Energy Minister, Michael Shanks said in a statement.
Under the scheme, developers of long duration energy storage projects can apply for “cap and floor” contracts that provide a guaranteed minimum income in return for a limit on revenues.
A similar scheme is already used to help pay for interconnector power links with other countries.
Pumped hydro plants work by pumping water to a higher reservoir before releasing it to enable water to flow downhill through turbines to produce electricity when it is needed.
Developers of the technology say it can help to even out the renewable electricity on the power grid by pumping water uphill when demand is low so it can be released when demand is high.
Other long duration energy storage technologies include liquid air energy storage, compressed air energy storage and flow batteries.
Britain’s energy regulator Ofgem will design the scheme with the first round to be open for applicants next year, the government said.
(Reporting By Susanna Twidale; Editing by Christina Fincher)
Renewable energy is energy derived from natural processes that are replenished constantly, such as sunlight, wind, rain, tides, waves, and geothermal heat. It is a key component in reducing reliance on fossil fuels.
Energy storage refers to capturing energy produced at one time for use at a later time. This is crucial for balancing supply and demand, especially with renewable energy sources that are intermittent.
Pumped hydro storage systems are a type of energy storage that uses gravitational potential energy. Water is pumped to a higher elevation during low demand and released to generate electricity when demand is high.
A cap and floor contract is a financial agreement that provides a guaranteed minimum income for energy storage developers, ensuring they receive a set amount while limiting their maximum revenue.
Decarbonization is the process of reducing carbon dioxide emissions associated with energy production and consumption. It is essential for combating climate change and achieving sustainability goals.
Explore more articles in the Finance category
