Battery energy storage in France: where do we stand?

Illustration 3 questions about Battery Energy Storage

The battery energy storage market is booming worldwide. In Europe, Germany and UK opened the path but some significant projects tend to also emerge in France as well. Let’s ask 3 questions to Pierre Guillain, our technical expert to get further insights on the French market.

1. Grid scale and behind the meter battery storage markets are still growing very fast and remain very attractive to investors. Whereas in the meantime many projects developers seem to be struggling to set sustainable economic model. What’s your point on that paradox?

Considering the French market today, I would temper this a little bit. The battery energy sector is considered very dynamic because  historically there was only hydroelectric storage. The deployment of battery storage is indeed growing fast, but numbers remain modest for now. It is however very interesting to see that projects with high market and regulatory exposures are being financed. They even reach meaningful volumes in neighboring countries like the United Kingdom or Germany. This display of maturity proves that some actors are convinced that distributed storage will play an important role in modern electric systems.

Then, as usual in emerging industries or emerging markets, first movers take risks. They face moving environments, technologies and markets. When it comes to storage, choices concerning the system location, its sizing, the targeted applications impact the costs and revenues composing a business case and will determine its fate. Time will tell which positioning will be sustainable in a consolidated environment. But being an early participant is a way to identify key stakes and find the right model with the downturn of bearing the highest risks.

2. As you mentioned we are at the heart of a moving environment. Could you please be more specific on regulatory changes? What about the evolution of the value generated from grid balancing services?

Having been involved in storage projects for a few years now, things are moving in the right direction in France when it comes to regulatory changes. Balancing and reserve markets will soon be completely open to competition and to all types of flexibilities including storage systems. Detailed rules, especially technical compliances, are still works in progress though. This can be frustrating as the technology appears clearly mature now. Tax and charges issues are also being debated as some models are penalized by discrepancies in charging and discharging levies.

Regarding grid balancing services, value creation through frequency regulation (FCR) participation drives the current market development. However, applications like frequency regulation, are niche markets which price is sensitive to increases in offered volumes. A large development of storage projects could lead to a collapse of market prices. This surely contributes to create some uncertainty. The good news is that some innovative models, enabling many applications for one single battery, do emerge as they minimize risks. Energy Pool supports projects developers to design and implement such models, using its expertise in Demand Response (DR) as a game changer.

3. How would you describe Energy Pool added value for projects developers?

Of course, we do not have a magic wand which would make all uncertainty and risks disappear. But we do have a very strong expertise in technical know-how. Our models were built with battery manufacturers and we have already operated grid-scale systems in various configurations now. Through our historical activities, we also have market competencies, having daily operations on the full scope of energy, reserve and balancing schemes in several countries. Energy Pool regulatory team faced similar issues at the beginning of our Demand Response activities and gained experience in finding the most efficient ways to suggest and defend amends. In addition, our international footprint provides us with experience from countries more advanced than France.

Another added value brought by Energy Pool is reached through our portfolio. We believe batteries are excellent complements to our existing DR flexibility. Colocation also brings additional applications which smooth the risks through various revenue streams. This added value relies on fundamental aspects which mostly consist in taking advantage of existing flexibility. We are therefore confident such models will last in changing regulatory and market environments and be replicable in a various range of countries.

Our tools are tried and tested as we have been operating systems in various configurations and markets (UK, France) for the last two years. Regarding future applications, we are developing a new range of solutions to tackle the challenges of electromobility and are looking for the right partners and the right timing for more sophisticated projects based on advanced behind-the-meter models.

Interested in getting further information on Energy Pool services and solution? Join us on European Utility Week booth G57 or contact us today.