+44 (0) 1865 952 700 |
Press enquiries
  • This field is for validation purposes and should be left unchanged.


Home/Market for flexible power generation in Britain set to grow rapidly to 25GW by 2030

Market for flexible power generation in Britain set to grow rapidly to 25GW by 2030

Market for flexible power generation in Britain set to grow rapidly to 25GW by 2030

  • The power market in Britain is undergoing a fundamental transition towards flexible and distributed generation – including batteries, ‘peakers’ and demand side response
  • Aurora Energy Research forecasts that this part of the market could grow to over 25 GW installed capacity in 2030
  • A number of key uncertainties could significantly affect the deployment of flexible capacity – namely the rollout of renewables, the growth of electric vehicles, and the overall tightness of the power market.

On Tuesday 31st October, Aurora Energy Research hosted its annual Battery Storage and Flexibility Conference – one of the largest energy conferences in Europe, with around 500 people attending. Keynote speakers included Alex Chisholm, Permanent Secretary at the Department for Business, Energy and Industrial Strategy, and Tony Cocker, former CEO of E.On UK.

The conference focused on the rapid growth of flexible and distributed power capacity within the GB power market and more broadly across Europe, highlighting both the risks and opportunities for this emerging part of the energy industry.

A fundamental transition towards flexible and distributed sources of energy is underway in the GB power market. The rise of renewables is substantially changing the generation mix, posing a threat to large baseload generators that may become unprofitable at lower load factors. At the same time, intermittent renewables are unable to provide firm power, and still require backup generation. In this context, markets increasingly look set to reward small-scale, flexible technologies like batteries and ‘peakers’ that are capable of ramping up and down quickly to help balance the system.

Aurora Energy Research forecasts that flexible capacity could grow at a rate of 10% per year, almost tripling to more than 25GW of installed capacity by 2030—at which point the market will generate revenues of close to £3 billion per year. Although flexible technologies compete directly with one another, this is not a winner-takes-all market – as batteries, peakers and demand-side response (DSR) all provide different services to the market and all look set to benefit in the coming years.

While flexible generation is set to take centre stage, a number of key risks and opportunities prevail.

The first uncertainty relates to just how much renewable capacity we will see in the GB market. In many ways, renewables and flexible generation are symbiotic technologies—the more intermittent renewables, the greater the need for flexible assets, and the more flexible assets, the higher market share renewables can capture without causing major problems for grid stability. With renewable energy costs declining at unprecedented rates, solar and onshore wind in particular are not far from being deployed subsidy-free. The arrival of subsidy-free renewables in the 2020s could mean lots of value for flexible assets to chase.

The second uncertainty relates to scarcity-driven price volatility. Flexible assets achieve a disproportionate amount of their revenues and profits during high price periods. Price volatility varies from year to year—but in 2016/17, a typical peaking plant would have earned nearly three quarters of its annual profits during the 10% highest priced periods. Profit margins for peaking plants were four times higher in 2016/17 than the previous year due to a combination of tight capacity margins, cold weather and plant outages.

The question is, will the average year in the future look more like 2015/16 or 2016/17?

Aurora expects de-rated capacity margins to remain low over the next ten years, decreasing from around 4 GW today to just under 2.5 GW in 2030. Despite the growth in flexible generation that will come online to take advantage of the resulting price volatility, Aurora modelling suggests significant scarcity ‘uplift’ will remain in the market out to 2030.

The third uncertainty concerns the opportunities and risks to flexible generators posed by the growth in electric vehicles. EVs are a key part of the Government’s Industrial Strategy and Clean Growth Strategy, and a commitment has already been made to end sales of conventional vehicles by 2040. The rollout of EVs, and crucially, ‘smart’ charging, has a major bearing on the requirement for flexible capacity on the grid. If EV charging remains relatively unsophisticated, as it is at the moment, then peak demand could increase significantly as the number of Electric Vehicles increases. In Aurora’s high EV scenario, assuming a relatively ‘dumb’ charging profile would necessitate 12GW of grid-scale battery capacity in 2035 to meet peak power demand (compared to 7GW in our central case).

Conversely, if EV charging is smart and optimised, then the impact on peak demand will be far smaller. This could weaken the business case for flexible capacity, with 2GW of grid scale battery storage capacity required by 2035. However, achieving such smart EV charging cannot be taken for granted – delivering this would require changes to policy, the rollout of smart charging technology, and incentives for consumers to switch their charging to off-peak times.

Ben Irons, Executive Director at Aurora Energy Research commented:

“The past few years has seen a substantial increase in flexible and distributed capacity in the GB power system. This is set to continue in the coming years due to power market remaining relatively tight, combined with the growth in intermittent renewables. We expect to see rapid growth in battery storage, peaking plant and demand response capability – reaching a total of 25GW installed capacity by 2030. Indeed, the rapid growth in battery storage capacity could quickly saturate the Frequency Response market, with prices falling significantly by 2020. Battery developers will need to look beyond this to alternative business models such as trading in the wholesale and balancing markets or co-locating batteries with renewables.”

Interested in viewing the recording? Please get in touch

Our subscription services

Our subscription service provides you with long-term market forecasts, strategic insight reports, interactive client forums and access to our market data and analytics platform.

Interested? Please sign up to receive our complimentary monthly summary reports via email. Simply tick which reports you would like to receive. Please indicate your consent in the box provided and view our privacy policy.

If you would like further information on a particular subscription service or report please enter further information in the box provided.



  • Please find our privacy policy here

Independent intelligence for the global energy transformation

Contact us