Statoil’s slick clean energy storage plans

Norwegian oil driller Statoil's energy storage and wind turbines project will be an alternative for supplying electricity to offshore rigs.
Published: Mon 09 May 2016

At the beginning of the year, Norway’s state-owned oil group announced that it would be building the world’s largest floating offshore wind farm named the Hywind Scotland Pilot Park. [World’s Largest Floating Wind Farm Development Kicks Off]. The $214 million 30MW wind farm, to be developed off the coast of Peterhead, will generate green energy to power approximately 20,000 homes, and will lead the way to developing larger floating wind farms in other areas after an initial two-year testing period.

What makes this project so unique is that only about 8MW of floating offshore wind is operating worldwide to date.   

Now, Statoil intends to hook up a $1.2 million storage system to the floating wind farm so that its rigs can draw a reliable source of energy. The storage system, with a 1MWh lithium battery capacity, is viewed as one of the world’s most ambitious projects in the field of energy storage. Dubbed "Batwind," the battery system will be developed jointly with universities and Scottish suppliers.

Batwind’s relevance

Batwind is important because it’s one of a handful of large-scale examples where companies are using storage devices to balance the variable power flows coming from a renewable energy generator.

If it is successful and proven to be economically viable, the technologies used together could end up challenging diesel generators and coal plants, whose main selling point is reliability.

According to Stephen Bull, SVP in Statoil's Wind and CCS business line, while the system is “expensive”, the key part for Statoil is to be able to offer “predictability on power which has a much higher value than variability.”

If it goes well, there is a good chance that the technology will be snapped up by the fish-farming industry which also has significant offshore electricity needs. Norway is the world’s biggest salmon market, exporting a record 48 billion Norwegian krone ($6 billion) of trout and salmon in 2015 so the market is big.

Bull says that Norwegian fish farmers are already approaching Statoil about tapping its electricity because of the high cost of diesel.

Norway’s carbon tax-a big driver of Batwind

One of the biggest reasons for Statoil’s Batwind project is probably Norway’s extremely high carbon tax. To remain competitive, the company knows it needs to cut costs and Batwind is a good way in which to do this.

The Norwegian government charges as much as 436 krone ($53) per metric ton of carbon emitted for fossil fuels extracted on its continental shelf, 10 times the price of certificates in the European Union’s offset market.

Norway’s carbon tax is the fourth highest in the world behind Sweden, Finland and Switzerland, none of which produce significant quantities of fossil fuels. The next highest at about $25 a ton is the UK, according to the World Bank’s annual market report.

Norway was one of the first countries to adopt a carbon tax in 1991, and the fee now covers about 55% of the nation’s CO2 emissions, according to the World Bank. Emissions not covered by a carbon tax are included in the country’s ETS, which was linked to the European ETS in 2008.

Statoil to enter the energy storage market abroad

According to Tom Harries, an analyst at BNEF. Statoil is already well on the way to achieving competitive costs, having already shown a price per megawatt drop of 77% from its first demo turbine in 2009 to its latest array.

While it may take another decade or more to make floating wind turbines as cheap as ones anchored to the ocean floor, Statoil’s Batwind project may prove that marrying the two technologies (floating turbines and storage) can help generate clean electricity more economically.

The decreasing cost of lithium batteries, which are being pushed down by a boom in hybrid-electric vehicles, will also go a long way to creating price competitiveness. Battery storage could fall by as much as 52%, to $182/kWh by 2025, according BNEF.

The batteries are sure to increase the appeal of the project by ensuring a steady supply of electricity, making Batwind as reliable as more polluting incumbents for small-scale backup power.

Statoil has already bought domain names in key markets including the UK, Japan and US which highlights the possibility that it may seek to sell its Batwind energy-storage solutions abroad.  

Bull’s comment points to the company’s interest abroad: “It’s a must-have skill set for us. We’re going to have to get our head around storage technology -- particularly if we’re going to make floating wind a valued proposition in other countries beyond Europe.”