Battery storage, which claimed a sizable portion of the U.K. electricity capacity market this December, could be in for another serving soon.

Energy storage projects took just over 6 percent of a total 52.43 gigawatts of capacity awarded in the U.K.’s 2016 T-4 auction, which is designed to keep the lights on across the country over the winter of 2020-2021 (the "-4" stands for four years from now).

Of the 3.2 gigawatts of storage, around 500 megawatts of capacity went to new-build battery projects.

The result saw developers being awarded a clearing price of £22.50 ($27.65 U.S.) per kilowatt per year and bodes well for storage in future auctions, including two due to be held in early 2017 to backfill the capacity needed up until 2020.

According to the U.K.’s Electricity Market Reform Capacity Market Operational Plan, another auction is scheduled in January for 53.8 gigawatts of capacity that would need to be available for delivery in the winter of 2017 to 2018.

Given the timescales involved, it is most likely existing generation assets will fill this early capacity or "T-1" auction.

But with Tesla proving it can build megawatt-scale battery projects, such as Aliso Canyon in the U.S., within months rather than years, maybe there is an opportunity for storage developers to get in on the action, too.

The 20-megawatt, 80-megawatt-hour Aliso Canyon project was due to come online at the end of 2016, less than four months after being green-lighted by Southern California Edison to replace a loss of peaking capacity caused by America’s biggest-ever natural gas leak. The ability for energy storage companies to meet shorter deadlines could open up new opportunities across the pond.

Tom Harper, a manager at the U.K. business consultancy Baringa Partners, said: “The most recent T-4 was for delivery in 2020/21, so in effect there is a contracting gap that the T-1s in 2017, 2018 and 2019 could potentially fill…provided there are sufficient volumes available.

"Many of the storage developers that we have been working with are looking at it just like that," he said.

The upcoming T-1 auction in 2017 represents a bigger potential opportunity because, Harper said, the country is “procuring a ‘full market’ volume.”

However, he warned: “New sites will need to be pretty certain that they can meet various construction milestones in the first half of next year, or they could face termination fees.”

It is not clear whether energy storage will be able to participate in a further auction in March, for 300 megawatts of turn-down demand-side response (DSR) capacity needed for the 2017-2018 winter season. Some generation was included in a DSR auction this year.

Developers cannot bid on more than one auction, but what seems clear in any case is that the U.K. capacity market mechanism could offer important opportunities for energy storage over the long term.

The winning new-build energy storage bidders in the T-4 auction included four projects that had previously won short-term contracts in National Grid’s Enhanced Frequency Response (EFR) tender in August 2016.

The four are Low Carbon, which is developing a total of 50 megawatts of storage across two projects, EDF Energy Renewables, which is building a 49-megawatt plant, and E.ON U.K., which is working on a 10-megawatt battery system.

All have now been given 15-year contracts under T-4.

In addition, the T-4 auction handed contracts to some bidders that had lost out in the EFR tender, such as Centrica, which is building a 48-megawatt battery storage facility on the site of former coal-fired power station in Roosecote, Cumbria.

The biggest new-build storage contract went to U.K. Power Reserve, which picked up 120 megawatts of capacity.

The T-4 auction was widely reported as representing a turning point for energy storage in the U.K., although it also raised concern for failing to attract gas-fired generation. 

“No new gas power station of a significant scale won a subsidy contract in the bidding process,” noted The Guardian.

Nevertheless, a spokesperson for National Grid, which managed the T-4 bid process on behalf of the U.K. Department for Business, Energy & Industrial Strategy, told GTM: “We would view the auction as a success.”