Developers of “pumped storage” hydro power plants in Scotland have called on the UK government to rethink energy market rules for such projects in order to release potentially billions of pounds in investment and greater use of renewable power. Planners are currently considering ILI Group’s £500m pumped storage scheme at Loch Ness, but Mark Wilson, the company’s chief executive, said it would it would be “very difficult” to seal financing for it without a market “level playing field” for such projects. Pumped storage plants use cheap or excess power from the grid to pump water from one reservoir into a raised basin, from where it can be released to flow back down to the lower reservoir to generate electricity. Analysts say such plants are expensive to build but are highly efficient and can improve grid reliability and balance out fluctuations in output from wind farms and solar power schemes. Greater electricity storage capacity is widely seen as vital to promote maximum use of renewable energy, but supporters of pumped storage say it is being held back by government failure to enable long-term power contracts that would, for example, lock in prices. Mr Wilson said ILI had a pipeline of pumped storage projects with total generating capacity of 2GW and was convinced they were the “logical” solution to ease strain on the UK grid caused by the closure of coal plants and increased use of wind and solar. But the current UK market system did not give pumped storage investors the kind of long-term security used to encourage funding of interconnectors, which link the British grid to overseas networks, or of nuclear power plants, Mr Wilson said. ScottishPower and SSE have in the past called for changes to the pricing regime for pumped storage plants, suggesting one option would be a “cap and floor” system that would guarantee utilities a minimum price for output but also set a maximum to limit potential cost to consumers.
FT 2nd April 2019 read more »