By Charles Aldous
It is a windy afternoon on the east coast of Scotland. Seagreen, Scotland’s largest offshore wind farm, should be working. But it is not producing any of its 1.1-gigawatt capacity. What’s gone wrong?
Perversely, the National Electricity System Operator pays renewable companies to not produce energy because it doesn’t have enough energy storage. When wind turbines or solar panels could be generating cheap and plentiful energy, a lack of transmission capacity means electricity authorities pay Seagreen to stop producing while simultaneously paying gas plants to increase output. Last year alone, Seagreen received £65m to limit its output. These skip-rates – when companies are paid not to produce green energy – fly in the face of Britain’s much-vaunted Net Zero Revolution.
At the heart of this problem lies Britain’s failure to construct and integrate enough Battery Energy Storage Systems (BESS). Outdated IT systems from the 1990s still govern the National Grid, with scandalous consequences: they often prioritise non-renewables over renewables in moments of excess supply. These systems will not be upgraded until next year at the earliest.
According to the Net Zero Power Plan, Britain needs 23-27 gigawatts (GW) of BESS by 2030. Yet today, it has only 6.4 GW, with a further 7.6 GW under construction. This shortfall means renewables are not properly utilised. Instead, they are either wasted or switched off entirely. If Sir Keir Starmer wants to achieve Net Zero, he must reform market mechanisms to reward battery deployment and modernise grid management systems. Otherwise, what is the point?
Although some on the British left may not view America as a leader in climate technology, the US has successfully shown how to incorporate battery storage and renewables into its power system. Its approach – combining incentives for investors with long-term industrial planning – offers valuable lessons for the UK.
The 2022 Inflation Reduction Act introduced a 30% tax credit on project costs, making battery projects significantly cheaper to deliver. Incentives like this have driven down construction costs and enabled economies of scale. States like California and Texas have also introduced binding storage mandates, requiring utilities to procure large amounts of battery capacity and making planning permission easier to secure. This environment has given developers and investors the confidence to scale up projects by attracting private equity and institutional capital and driving costs down even further. In California and Texas, four-hour storage systems generally cost around $150 per kWh to build. In Britain, the figure is closer to $380 per kWh. Thanks to these policies, BESS has become a bigger business in the US than in the UK.
Long-term political planning has also underpinned America’s success. In 2010, California’s then-governor Arnold Schwarzenegger signed legislation requiring Investor-Owned Utilities to meet battery storage targets. Since 2019, California’s storage capacity has surged by 1,944% to over 15 GW. Texas has seen similar growth, underpinned by bipartisan support for grid reform. Britain can only dream of such a unified approach to energy policy.
By contrast, the UK’s political climate is marked by division. Richard Tice, Reform UK’s deputy leader, has described Net Zero as a “rip-off.” With Reform polling strongly, can investors be confident any future government would provide the long-term planning and financial stimuli needed for BESS? Even within the Conservative and Labour parties, there are growing tensions about how much to invest in renewable energy infrastructure.
Energy Secretary Ed Miliband has spent the past six months considering and ultimately rejecting a shift from national electricity pricing to zonal pricing (where different regions would pay different rates based on local supply and demand). Throughout this debate, there was barely a mention of BESS beyond the limited cap-and-floor mechanism for Long-Duration Energy Storage (LDES). That scheme provides investors with a guaranteed income for up to 7.7 GW by 2050 – well short of the 27 GW needed by 2030.
To avoid further wasted opportunities, the UK should act decisively. By making all battery projects over 1 MW Nationally Significant Infrastructure, Britain can reduce planning delays. Mirroring America, it should also introduce a BESS Storage Investment Tax Credit – a 20% tax credit for projects larger than 1 MW – to improve capital flows into storage systems. While costing the Treasury £200 million in lost revenue per GW, this policy alone could save investors £1 billion in expenditure.
Britain should further adopt a Utility Storage Obligation Act, requiring all electricity suppliers to contract BESS equivalent to 15% of their peak demand by 2028. As California’s experience shows, such policies would rapidly scale up storage, increase supply, and lower consumer costs. If implemented, these measures could save Britain as much as £24 billion between 2030 and 2050.
At present, the UK’s energy policy resembles a mirage. From a distance, it dazzles with vast wind and solar farms and ambitious pledges. But up close, the absence of grid infrastructure and storage systems exposes an empty illusion.
Nowhere is this problem clearer than at Seagreen. On windy afternoons, it should be producing clean power for millions and storing it for peak demand. Instead, it is paid £65m to sit idle, its turbines still and silent because we don’t have anywhere to store the energy it produces. Without urgent reform – from tax credits for storage to utility storage obligations – Britain will continue to squander its renewable revolution.
Charles Aldous is a policy writer with Young Voices UK. He is reading for an MPhil in Economic and Social History at Cambridge University. A first-class graduate of Durham University, Charles has completed internships in renewable finance and served as the president of the Durham Union Society.
