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MPhil in Engineering for Sustainable Development

global challenges, engineering solutions

Electrical Energy Storage Business Models: Anaysis and Comparison of the Market and Regulatory Framework in California, the UK, Germany and Spain.

The necessity of reducing the greenhouse gas emissions and the pursuit of a low carbon energy mix is leading rise of variable renewable energy sources, such as wind and solar. The unpredictability of these sources will cause unexpected energy flow fluctuations in the network inducing a greater stress for the grid and, therefore, increasing the need for flexibility.

Electrical energy storage (EES) is a technically feasible technology as proved in multiple grid applications. EES can increase the reliability and resiliency of the network and deliver the energy more efficiently. However, there is no proven business model that makes this technology attractive to investors. The high capital costs and numerous market and regulatory barriers are hindering the required deployment of the technology. Thus, this research aims at analysing critically and comparing the market and regulatory framework in California, the UK, Germany and Spain and suggesting changes to overcome them

The methodology consists in, firstly identifying the barriers through literature review based on reports from the industry and government institutions, and interviews with industrial stakeholders. Then, after analysing the situation of the different markets, recommendations are proposed.

The research shows that, currently, the technology can be made attractive by utilizing the asset to provide multiple services. Regarding the market and regulatory framework, the main barriers found in the four jurisdictions are: the inadequate definition and classification of EES; the lack of markets for some ancillary services like voltage control or black start; inadequate market design that benefits traditional technologies; and the lack of need for EES in countries like Spain.

However, in California, the regulations are more advanced and favourable for the technology – with a goal for an installed capacity of 1.3GW of EES systems by 2020– and regulators collaborating with developers and utilities to analyse barriers and solutions for the technology.

The recommendations to tackle the barrier are: clarifying the definition of EES through cooperation of all stakeholders involved; creating new markets for ancillary services mainly based on tendering processes; designing existing and new markets in a technology-neutral way; and studying more in-depth the necessity for EES in countries where it is not clear like Spain or Germany.

Further research necessitates the study of how to value and monetize the additional benefits that EES give not only to the power system but also to society and the environment. Besides, the optimization of the operation of the asset to maximise the value in every jurisdiction should be analysed.


Course Overview


The need to engage in better problem definition through careful dialogue with all stakeholder groups and a proper recognition of context.


An ability to work with specialists from other disciplines and professional groups acknowledging that technical innovation and business skills also must be understood, nurtured and combined as precursors to the successful implementation of sustainable solutions.


An understanding of mechanisms for managing change in organisations so future engineers are equipped to play a leadership role.


An awareness of a range of assessment frameworks, sustainability metrics and methodologies such as Life Cycle Analysis, Systems Dynamics, Multi-Criteria Decision making and Impact Assessment.