THERMAL ENERGY STORAGE Outlook

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THERMAL ENERGY STORAGE Outlook ( thermal-energy-storage-outlook )

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Uncertainty in future energy system mix There is a level of uncertainty in how the challenge of decarbonisation will be resolved. For example, it could be addressed by deploying significantly increased levels of (variable) renewable energy. Equally, it could be resolved through much higher levels of nuclear power generation, which is non-variable. It is unclear what combination of technologies will make up the future energy mix. The shape of future energy systems will guide the types of TES (or other forms of energy storage) that are utilised, given the differing storage needs (timescale, location, temperature range etc.) associated with differing energy technologies. It is not feasible to identify a single policy recommendation to solve this uncertainty, especially given that the composition of the future energy system will vary by country, by changes in governments, by increasing or decreasing costs and a variety of other factors. However, further analysis and modelling of energy systems would be beneficial, identifying the various scenarios that may or may not occur from varying perspectives, e.g. least cost, lowest CO2 emissions. Limited recognition in policy and regulation As covered in previous sections, global decarbonisation of the heating and cooling sectors has not kept pace with that of electricity systems. This is in part due to the comparatively limited attention paid by policy makers to heating and cooling decarbonisation roadmaps and strategies, relative to electricity. TES technologies for heat and cold vectors, like other potential decarbonisation solutions in these sectors, have not benefitted from policy support to the extent enjoyed by storage technologies in the power sector. In 2016 only 21 countries had renewable energy regulatory incentives and mandates that involved a solar heat obligation or a technology-neutral heat obligation. There were 29 other countries that had different heating or cooling policies. More effort is clearly needed to address heating and cooling, acknowledging the challenge of meeting the level of effort required when heating and cooling policy will need to vary by sector, country and infrastructure type in order to overcome specific barriers. On a positive note, the European Union’s revised Renewable Energy Directive specifically recognises the challenges surrounding renewable heating and cooling. Subsequently, it has set an ambitious target of a 1.3% annual increase in renewable heating and cooling, starting in 2021. Many countries have regulated energy markets for electricity and gas. Market regulators were typically established to ensure that competition between market participants delivers value for consumers, by preventing the formation of potentially exploitative monopolies. However, there is no equivalent regulated market for the generation, distribution or supply of heat (or cold). Notably, multiple actors from industry in the United Kingdom support the future regulation of heat networks under the supervision of a regulator (either current or newly formed) (The Association for Decentralised Energy, 2018). Furthermore, looking to the future, there is expected to be a much greater level of cross-sector interaction between energy vectors as a result of sector coupling (Energy Technologies Institute, 2017). If policy makers react to the interaction and competition between vectors by taking a whole-systems approach to policy and regulation, this would provide an opportunity to create a level playing field for TES amongst other technologies. Some TES technologies are also not widely recognised in environmental or planning and building standards regulatory regimes. TES is a relatively new infrastructure type, which may experience a public backlash in the absence of robust regulation. Therefore, regulation should be in place to ensure that these systems are designed in the best way to minimise the environmental impacts of TES installation and the technology itself. Conflicting policies In some cases, fossil fuel subsidies undermine efforts and progress towards low-carbon technology deployment (Matsuo and Schmidt, 2017). For example, diesel subsidies could severely limit the incentives for countries and their industries to invest in TES, reducing the scope for facilitating higher levels of renewable energy penetration. 108 INNOVATION OUTLOOK

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