„As PV power generation is growing and the number of installations is going up, shut downs will occur more frequently. The solution to the problem is very simple. We need to install more energy storage devices,” says Krzysztof Kochanowski from the Polish Chamber of Energy Storage (PIME) in an interview with BiznesAlert.pl.
BiznesAlert.pl: Last weekend power supply in Poland was at risk. Photovoltaics produced more energy than the system required. PSE (grid operator – ed.) had to reduce the amount of electricity even from domestic installations. Will this situation happen again? How quickly can we deal with this problem? What does it depend on?
Krzysztof Kochanowski: As PV power generation is growing and the number of installations is going up, shut downs will occur more frequently. The solution to the problem is very simple. We need to install more energy storage devices so that when the operator orders a shut down, the investor will have to turn on the energy storage device instead of turning the installation off. Once the operator decides they need more power in the system, the energy can be released from the power banks to the grid. In Poland, the market for RES and energy storage is developing unevenly. Sooner or later there will be enough power storage devices. We have to wait, but this should motivate investors, mainly private ones, who will notice that when shut downs reoccur frequently, they sustain losses. This will make them realize how quickly an investment in energy storage will pay off.
How do you assess the actions of the government and state-owned energy companies regarding the expansion of energy storage facilities?
The pace could be faster. First of all, more momentum is still needed in the development of prosumer storage. Perhaps an increase in subsidies would accelerate the expansion of such installations, but there will also be other reasons to increase investment. I hope that the new regulations resulting from the RED II directive will be implemented, because the market wants this. This directive includes the introduction of dynamic tariffs. When hourly rates kick in next year, everybody will notice at what times of the day you can profit from energy and at what times you record losses. At those times of the day when it is not profitable to add energy into the grid, it will be more profitable to store it, so this will increase the desire to invest in storage. Regulations will also be crucial to boost investment in large-scale energy storage. We hope this will be introduced in 2024. The Ministry of Climate and Environment has informed that such regulations have already been pre-drafted and are due to go to public consultations this year. We also hope that revenues from flexibility services will increase the profitability of investments in energy storage.
Today, the financial sector is very cautious about granting loans for energy storage, since the only source of income are services as part of the capacity market. This is not enough and we are waiting for more. All of this is doable, because it’s already happening in the West. The regulations resulting from the RED II directive are already in place in most EU countries, and we will be implementing RED III soon. As an industry, we expect the same to happen in Poland. There is also good news – PIME helped to create a system of subsidies for multi-family homes and housing communities. It will be a grant for energy storage, which will have more capacity than the prosumer ones.
When’s that going to happen?
This solution is expected to launch this year, and the first pool will amount to 123 million euros by 2026. The Climate Ministry informs that this will be a recurring program and will be a complement to the already existing grants for renewable energy installations, thanks to which housing cooperatives finance PVs on the roofs of multi family apartment buildings. We have also prepared a concept for co-financing energy storage facilities for investors in electromobility infrastructure. Slowly, the number of energy storage facilities is increasing, and it is growing especially quickly among industrial consumers. However, I think that the pace of work on the regulations could be faster. We would like the legislative barriers to be removed more efficiently, especially streamlining the procedures for connecting storage to the distribution network.
The number of refusals to obtain conditions for connecting energy storage facilities to the grid is alarming and we do not see any justification for these diffusions from both a commercial and technical point of view. The negative approach of distribution operators to connecting energy storage facilities is largely due to the lack of knowledge about energy storage technologies as well as non-transparent procedures resulting from the lack of full unbundling among energy companies. One of the consequences of this is the fact that various operators interpret energy storage facilities and their connection conditions differently. We, as an industry organization, are also working on a manual for operating and exploiting power storage, so that this document can be used by distribution companies to update their instructions on connecting storage facilities. Such a document will also allow the banking sector and insurers to reduce the risk of investment in energy storage. There is a lot of work and we need to start working.
I would like to add that energy storage will also be necessary in other business models, such as cable pooling, which will significantly reduce network investments and increase the efficiency of using existing energy switches on which RES is already working. In the professional energy sector, the main obstacle is the mental and regulatory barrier, and the pace of implementation of new regulations should be faster, but I hope that 2024 and 2025 will be a breakthrough year for energy storage technologies. Let me remind you that next year the new rules for the balancing market will come into force, which provide for new contracts for energy storage. The new rules of the balancing market still need to be refined so that the potential of hybrid renewable energy installations with storage can also be tapped into.
However, we are moving in the right direction in terms of rebuilding the electricity system. These changes should be more dynamic in order to accelerate the development of distributed energy. The increase in energy self-sufficiency of final customers translates into the security of the entire system. The role of energy storage in building a new architecture of the decentralised energy system in Poland is crucial here.
Interview by Jacek Perzyński