Policy background Part 7: Market Reform and Consumer Protection Electricity Storage
Electricity storage is a key technology in the transition to a smarter and more flexible energy system and will play an important role in helping to reduce emissions to net zero by 2050 16 . Technologies such as electricity storage, demand side response and interconnectors can provide flexibility to the system, by shifting when electricity is generated and shifting demand from peak times. Flexibility in the energy system is essential to the integration of high volumes of low carbon power, heat, and transport. Analysis carried out by the Government estimated that flexibility could reduce system costs between £30 to 70 billion from 2020 to 2050 17 .
	In July 2017 the Government and Ofgem published the first Smart Systems and Flexibility Plan 18 this was followed by a Progress Update to the Plan 19 in 2018, and a second Smart Systems and Flexibility 20 in July 2021. These documents set out actions for the Government, Ofgem and industry to support the transition to a smarter and more flexible system, including removing barriers to electricity storage. One of the commitments from the 2017 Smart System and Flexibility Plan, re-iterated in the 2021 Plan was to define electricity storage in primary legislation.
	The regulatory framework for electricity was not built with technologies such as electricity storage in mind. This has led to a lack of legal clarity over its treatment, creating a barrier to its deployment. To some degree, clarity has been achieved in relation to securing planning consent for electricity storage, but further clarity is needed for electricity storage to be developed, providing certainty to developers and investors.
	The intention of formalising storage as a distinct subset of generation within the Electricity Act 1989 is to remove the current ambiguities and provide clarity and certainty over its treatment within the existing frameworks and possible future frameworks. The proposed definition is supported by responses to the Government and Ofgem’s Call for Evidence on a smart, flexible energy system 21 . This approach avoids unnecessary duplication of regulations while still allowing specific regulations to be determined for storage assets, in the shortest possible timeframe.