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Energy storage
European Union Electricity Market Glossary

 

 

The Clean Energy Package (CEP) defines an 'energy storage' in the electricity system as 'deferring the final use of electricity to a moment later than when it was generated, or the conversion of electrical energy into a form of energy which can be stored, the storing of such energy, and the subsequent reconversion of such energy into electrical energy or use as another energy carrier' (Article 2(59) of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU).

 

 

Article 36 
of the Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD)

 

Ownership of storage facilities


1. Distribution system operators shall not be allowed to own, develop, manage or operate energy storage facilities.


2. By way of derogation from paragraph 1, Member States may allow distribution system operators to own, develop, manage or operate storage facilities only if the following conditions are fulfilled:


(a) other parties, following an open and transparent tendering procedure, have not expressed their interest to own, develop, manage or operate storage facilities;

 

(b)  such facilities are necessary for the distribution system operators to fulfil their obligations under this Directive for the efficient, reliable and secure operation of the distribution system; and


(c)  the regulatory authority has assessed the necessity of such derogation taking into account the conditions under points (a) and (b) and has granted its approval.


3. Articles 35 and 56 shall apply to distribution system operators engaged in ownership, development, operation or management of energy storage facilities.


4. Regulatory authorities shall perform at regular intervals or at least every five years a public consultation in order to re-assess the potential interest of market parties to invest, develop, operate or manage energy storage facilities. In case the public consultation indicates that third parties are able to own, develop, operate or manage such facilities, Member States shall ensure that distribution system operators' activities in this regard are phased-out.


Consequently, 'energy storage facility’ means, in the electricity system, 'a facility where energy storage occurs' (Article 2(60) of the Recast Electricity Directive).


It is noteworthy, the definition of 'energy storage' was subject to evolution in the process of the CEP comitology - the initial European Commission's Proposal of 30 November 2016 (for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast), COM(2016) 864 final 2016/0380 (COD)) in Article 2(47) contained the following wording: 'deferring an amount of the electricity that was generated to the moment of use, either as final energy or converted into another energy carrier'.


Further, the Report of the European Parliament’s Committee on Industry, Research and Energy (ITRE) of 27 February 2018 on the proposal for a directive of the European Parliament and of the Council on common rules for the internal market in electricity (recast) (COM(2016)0864 – C8-0495/2016 – 2016/0380(COD)) proposed the following modification to the definition of energy storage in the electricity system:

‘deferring the use of electricity to a later moment than when it was generated or the conversion of electrical energy into a form of energy which can be stored, the storing of that energy, and the subsequent reconversion of that energy back into electrical energy or another energy carrier'.

 

It is visible, the ITRE's definition has been also slightly altered in the final text of Directive (EU) 2019/944 (the Recast Electricity Directive).

 

The noteworthy alteration has also been introduced by the aforementioned ITRE Report of 27 February 2018 to Article 15 of the said directive - that the EU Member States must ensure that active customers owning a storage facility:

(a) have the right to a grid connection within a reasonable time following the request;
(b) are not subject to additional taxes, surcharges, and fees for the electricity stored in the storage facility;
(c) are distinguished from generators and not subject to related licensing requirements and fees;
(d) are allowed to provide several services simultaneously, if technically feasible.  

 
However, this ITRE's drafting was subject to more subsequent - and important - amendments and, finally, materialised as Article 15(5) of the Recast Directive - see the textbox below.

 

The policies and measures to ensure the non-discriminatory participation of energy storage, including via aggregation, should be described in the national climate and energy plans, the EU Member States are required to prepare under Article 3 of the Regulation of the European Parliament and of the Council on the Governance of the Energy Union.

 

 

Ownership, development, management and operation of energy storage facilities by Transmission System Operators

 

 

A new important provision (Article 54 of the Recast Electricity Directive) prohibits Transmission System Operators (TSOs), as a general principle, from owning, developing, managing or operating energy storage.

 

The underlying idea is that network operators should not own, develop, manage or operate energy storage facilities, as in the new electricity market design storage services should be market-based and competitive (Implementation of TSO and DSO Unbundling Provisions, Update and Clean Energy Package Outlook, CEER Status Review, Legal Affairs Committee, Ref: C18-LAC-02-08, 14 June 2019, p. 45, 46).

 

Consequently, cross-subsidisation between energy storage and the regulated functions of distribution or transmission should be avoided.

 

This prohibition is involved with the two potential derogations for the EU Member States: they may allow TSOs to own, develop, manage or operate energy storage facilities:

- where they are fully integrated network components and the regulatory authority has granted its approval or,

- where a series of (cumulative) conditions is fulfilled including a tendering procedure as well as ex-ante review and approval by the National Regulatory Authority (NRA).

 

Decisions to grant a derogation also have to be notified to ACER and the European Commission.

 

As regards the first derogation, Recital 63 of the Recast Electricity Directive clarifies that where energy storage facilities are fully integrated network components that are not used for balancing or congestion management, they should not, subject to approval by the regulatory authority, be required to comply with the same strict limitations for system operators to own, develop, manage or operate those facilities.

 

Capacitors or flywheels which provide important services for network security and reliability, and contribute to synchronisation of different parts of the system, are given as examples of fully integrated network components.

 

The conditions for the second derogation are as follows:

 

a) other parties, following a tendering procedure (subject to review and approval by the regulatory authority) have not been awarded with a right to own, develop, control, manage or operate such facilities or could not deliver these services at a reasonable cost and in a timely manner;

 

b) such facilities are necessary for the TSOs to fulfil their obligations under this Directive for the efficient, reliable and secure operation of the transmission system and they are not used to buy or sell electricity in the electricity markets; and

 

c) the regulatory authority has assessed the necessity of such derogation, has carried out an ex-ante review of the applicability of a tendering procedure, including the conditions of the tendering procedure, and granted its approval.

 

This implies new tasks for NRAs, among others, NRA approval in case of a derogation.

 

Derogations are to be also be subject to regular reassessment by the NRA in view of a phasing-out of TSO energy storage activities (in which case the NRA also has to ensure phase-out).

 

In sum: derogations are subject to clearly detailed conditions and can only be granted after an enquiry and approval by regulators.

 

 

 

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast), Article 15(5), 54, Recital 62, 42

 

Article 15(5)

Member States shall ensure that active customers that own an energy storage facility:

(a) have the right to a grid connection within a reasonable time after the request, provided that all necessary conditions, such as balancing responsibility and adequate metering, are fulfilled;

(b) are not subject to any double charges, including network charges, for stored electricity remaining within their premises or when providing flexibility services to system operators;

(c) are not subject to disproportionate licensing requirements or fees;

(d) are allowed to provide several services simultaneously, if technically feasible.

 

Article 54

Ownership of energy storage facilities by transmission system operators

 

1. Transmission system operators shall not own, develop, manage or operate energy storage facilities.


2. By way of derogation from paragraph 1, Member States may allow transmission system operators to own, develop, manage or operate energy storage facilities, where they are fully integrated network components and the regulatory authority has granted its approval, or where all of the following conditions are fulfilled:


(a) other parties, following an open, transparent and non-discriminatory tendering procedure that is subject to review and approval by the regulatory authority, have not been awarded a right to own, develop, manage or operate such facilities, or could not deliver those services at a reasonable cost and in a timely manner;


(b) such facilities or non-frequency ancillary services are necessary for the transmission system operators to fulfil their obligations under this Directive for the efficient, reliable and secure operation of the transmission system and they are not used to buy or sell electricity in the electricity markets; and


(c) the regulatory authority has assessed the necessity of such a derogation, has carried out an ex ante review of the applicability of a tendering procedure, including the conditions of the tendering procedure, and has granted its approval.
The regulatory authority may draw up guidelines or procurement clauses to help transmission system operators ensure a fair tendering procedure.


3. The decision to grant a derogation shall be notified to the Commission and ACER together with relevant information about the request and the reasons for granting the derogation.


4. The regulatory authorities shall perform, at regular intervals or at least every five years, a public consultation on the existing energy storage facilities in order to assess the potential availability and interest of other parties in investing in such facilities. Where the public consultation, as assessed by the regulatory authority, indicates that other parties are able to own, develop, operate or manage such facilities in a cost-effective manner, the regulatory authority shall ensure that transmission system operators' activities in this regard are phased-out within 18 months. As part of the conditions of that procedure, regulatory authorities may allow the transmission system operators to receive reasonable compensation, in particular to recover the residual value of their investment in the energy storage facilities.


5. Paragraph 4 shall not apply to fully integrated network components or for the usual depreciation period of new battery storage facilities with a final investment decision until 2024, provided that such battery storage facilities are:
(a) connected to the grid at the latest two years thereafter;
(b) integrated into the transmission system;
(c) used only for the reactive instantaneous restoration of network security in the case of network contingencies where such restoration measure starts immediately and ends when regular re-dispatch can solve the issue; and
(d) not used to buy or sell electricity in the electricity markets, including balancing.

 

Recital 42

 

Consumers should be able to consume, to store and to sell self-generated electricity to the market and to participate in all electricity markets by providing flexibility to the system, for instance through energy storage, such as storage using electric vehicles, through demand response or through energy efficiency schemes. New technology developments will facilitate those activities in the future. However, legal and commercial barriers exist, including, for example, disproportionate fees for internally consumed electricity, obligations to feed self-generated electricity to the energy system, and administrative burdens, such as the need for consumers who self- generate electricity and sell it to the system to comply with the requirements for suppliers, etc. Such obstacles, which prevent consumers from self-generating electricity and from consuming, storing or selling self-generated electricity to the market, should be removed while it should be ensured that such consumers contribute adequately to system costs. Member States should be able to have different provisions in their national law with respect to taxes and levies for individual and jointly-acting active customers, as well as for household and other final customers.

 

Recital 62

 

System operators should not own, develop, manage or operate energy storage facilities. In the new electricity market design, energy storage services should be market-based and competitive. Consequently, cross-subsidisation between energy storage and the regulated functions of distribution or transmission should be avoided. Such restrictions on the ownership of energy storage facilities is to prevent distortion of competition, to eliminate the risk of discrimination, to ensure fair access to energy storage services to all market participants and to foster the effective and efficient use of energy storage facilities, beyond the operation of the distribution or transmission system. That requirement should be interpreted and applied in accordance with the rights and principles established under the Charter of Fundamental Rights of the European Union (the ‘Charter’), in particular the freedom to conduct a business and the right to property guaranteed by Articles 16 and 17 of the Charter.

 

Recital 63

 

Where energy storage facilities are fully integrated network components that are not used for balancing or for congestion management, they should not, subject to approval by the regulatory authority, be required to comply with the same strict limitations for system operators to own, develop, manage or operate those facilities. Such fully integrated network components can include energy storage facilities such as capacitors or flywheels which provide important services for network security and reliability, and contribute to the synchronisation of different parts of the system.


 

 

 

 

 

IMG 0744

    Documentation    

 

 

 

 

Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market in electricity (recast), Article 2(59), 2(60), 15(5), 54, Recitals 42, 62, 63

 
Implementation of TSO and DSO Unbundling Provisions, Update and Clean Energy Package Outlook, CEER Status Review, Legal Affairs Committee, Ref: C18-LAC-02-08, 14 June 2019

 

Report on the proposal for a directive of the European Parliament and of the Council on common rules for the internal market in electricity (recast) (COM(2016)0864 – C8-0495/2016 – 2016/0380(COD)), European Parliament, 27 February 2018, Committee on Industry, Research and Energy 

 

Proposal for a Directive of the European Parliament and of the Council on the internal market for electricity (recast) on common rules for the internal market in electricity (recast), 30.11.2016, COM(2016) 864 final 2016/0380 (COD), Article 2(48), Article 36

 

Energy Storage: Which Market Designs and Regulatory Incentives Are Needed? Study for the ITRE Committee, 2015

 

Energy Storage and Storage Services ENTSO-E Position, October 2016

 

 

 

 

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    Links    

 

 

 

REMIT reporting - hydro storage virtual power plant contract

 

REMIT reporting - gas storage

 

 

 

 

 

 

Last Updated on Saturday, 11 January 2020 20:18
 

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