Public policy and the emergence of battery energy storage systems. A cross-national study and lessons for Ireland.

The deployment of grid-scale electricity storage, including battery energy storage systems (BESS), has accelerated with the transition toward a decarbonised and flexible electricity system and the electrification of the wider energy system. The emergence of storage and its rapid growth has demanded new public policy responses.This report shows that Ireland has been a ‘leader’ on the deployment of BESS in relative terms. This is likely a result of its need for flexibility in the context of high penetration of variable renewable electricity sources (VRES) and a paucity of alternative sources of flexibilities, especially in the short term. The deployment of BESS has been supported by key policies, including ambitious high-level goals for GHG emissions and renewable energy (RE) by 2030 and climate policies that acknowledge the important role of storage; policies that put in place the DS3 market for system services; and the establishment of capacity markets that accommodate storage. Ireland is now at a critical juncture in the development of its storage policies. It is therefore timely to take lessons from Ireland’s experience to date and from international experiences.Our comparative analysis of twelve leading and promising markets for storage finds great diversity in BESS policy mixes. While government intervention seems universally necessary in order to facilitate the development of storage and BESS, there is no single successful policy formula. The development of BESS is highly dynamic, and in many cases the full effects of current policy developments have yet to play out, so that the promising markets of the early 2020s may become leaders by the end of the decade. We identify several common markers of policy leadership.

• Today’s leaders on BESS were early starters in the early 2010s. This underlines the medium- and long-term effects of storage policies;

• Many leaders and promising markets have included a definition of storage in legislation and have recognised storage in other regulatory frameworks;

• They have established and regulated markets, including for system services, capacity, and arbitrage; leaders have also started to define a role in these markets for Long Duration Energy Storage (LDES);

• There is a wide variety of financial supports available across the twelve countries studied;

• While the study does not provide a comprehensive overview of R&D policies, it is evident from individual cases like the UK and South Korea that some leaders on BESS have also been leaders on R&D on storage/BESS.

These markers of leadership resonate with lessons drawn from our case study of Ireland, including interviews with stakeholders during 2022, which emphasise past successes, but also present opportunities and perceived shortcomings in Ireland’s policy mix. The case study identifies as key areas for policy development:

• the publication of an overarching storage policy (in development at time of writing);

• the definition/recognition of storage in legislation and regulations;

• the detailed identification of storage needs, targets and scenarios;

• clarification of remuneration prospects (in DS3, capacity markets including LDES, and spot markets);

• ensuring the planning system can process applications related to vital energy infrastructure in a timely manner;

• taking measures to improve public understanding of that infrastructure;

• and speeding up grid connections.

The imperative to facilitate and support the deployment of BESS in the short term is very strong, in the context of high-level targets for 2030 and 2050, and in view of the relatively long delivery timelines for alternative sources of flexibilities. At the same time, there is a time lag between formulating and adopting policies, implementing them, and seeing outcomes (e.g., installed capacity) from those policies. Just as leaders on storage/BESS now tend to have been early starters, storage policies adopted today can be anticipated to have effects well into the 2030s.