One such example of a reserve service is ‘Short Term Operational Reserve’, known by the acronym STOR. STOR acts as a type of ‘virtual power station’ where providers (generally businesses) known as ‘demand-side participants’ either start generating electricity or shut down parts of their plant to bring network supply and demand back into balance. Service providers contractually agree ‘availability windows’ with the National Grid, which are designated periods when the provider is obligated to provide the specified power, and often with only 20 minutes’ notice (although 240 minutes is the standard minimum response time). The Grid aims to procure a minimum of 1,800 megawatts of STOR annually, where the STOR year starts in April and is split into six seasons.

As the name indicates, STOR is designed to generate additional power for short durations only. The need for this additional power may arise from unplanned outages or demand forecast errors, with accurate demand forecasting becoming increasingly difficult due to more energy being generated by weather-dependent resources such as wind and solar. In July, MPs on the Transport Committee raised concerns that electric vehicle charging could put additional pressure on the National Grid which may need to be strengthened as a result. STOR could be one method of addressing this issue.

The aim to build a global energy sector with net-zero emissions by 2050 will require significant transformation of our current energy landscape. The UK power market is expected to become increasingly dominated by renewable and reserve power technologies, in parallel to divestment in fossil fuels such as coal, oil and gas. Whilst STOR itself is not a renewable energy, gas peakers, frequently used in the STOR process, have been called ‘the bridge between conventional fossil fuels and renewable [since] they allow solar and wind to be integrated into the energy system by providing back up when these can’t operate’.[1] Gas peakers are predicted to play an increasingly important role in line with the Government’s target to power all UK homes using offshore wind by 2030.

More recently a technology called Battery Energy Storage System (BESS) is experiencing greater use as part of the UK’s electricity network; however there are currently a number of risks associated with this technology due to the large and complex design of these batteries which can pose severe fire risks.

Another energy technology is Combined Heat and Power (CHP). Similarly to STOR, CHP is not itself a renewable technology but has the efficiency advantage that it captures the waste heat produced in the process of generating electricity, which can then be used to provide useful thermal energy. CHP often uses natural gas, but can also be fuelled by biomass.

It’s crucial that any company wishing to act as a STOR service provider has the relevant expert knowledge and expertise to ensure it remains safe for use.

One potential hazard is the gas used in the STOR process. This can present a real risk in conjunction with ignition sources such as electrical faults, mechanical failure and even weather events such as lightning strikes. To mitigate such risk, it’s vital to ensure that electrical testing, including thermographic testing is undertaken by a competent contractor and that equipment is regularly serviced and maintained in line with statutory requirements.

Since STOR equipment may be housed on unattended sites, it’s necessary to implement risk management processes to monitor the kit remotely. One recommended measure is to install heat and smoke detectors which can automatically shut off the engine in the event of fire or unacceptably high temperatures. Sites should also house suitable fire-fighting and suppression equipment, such as sprinkler systems. Supervisory control and data acquisition (SCADA) systems are an effective way of monitoring and controlling industrial processes to gather real-time data and be alerted to any anomalous readings which could indicate issues.

It’s also important to educate workers on the importance of correct storage of flammables and around housekeeping standards, such as strict controls on smoking.

Conversely, flooding and water damage can also pose a threat. Where a site is located in a higher flood risk area, a flood assessment should be completed. It may be necessary to take steps such as raising floor levels or building up site levels, in addition to completing regular building and roof inspections. 

A further risk of unmanned STOR sites is the potential for unauthorised access and criminal activity. To reduce the chances of this it’s recommended to install perimeter security (such as weldmesh or palisade fences), and consider electronic security such as CCTV and/or perimeter beams.

Whilst supportive of the technology, any potential insurer of STOR installations will be mindful of the many associated risks and wary of any service provider who exhibits a lack of expertise, due diligence and risk management processes. There will likely be a preference for new engines, but where second-hand engines are accepted, insurers will be keen to satisfy themselves that the operator has the required engineering capability and is committed to STOR for an enduring time period. Other criteria influencing insurance requirements include where and under which circumstances the equipment is used, the quality and type of gas used, and the number of start-ups and operating hours.

Where robust due diligence and ongoing maintenance is undertaken, STOR can offer an effective and efficient method of meeting our energy needs, both now and in the future.

Commentary and guidance in this article are provided for information purposes only and are not intended to amount to advice on which reliance should be placed. Readers should seek further advice when dealing with their individual and particular situations. Allianz Insurance plc shall have no liability for any action taken as a result of and in reliance on the information contained in this article.

[1] Tony Edwards, Head of Civil Construction, Green Frog Connect. https://greenfrogconnect.co.uk/sectors/gas-peaking-grid-connection/