With fast falling costs energy storage is gaining increasing interest from utilities on the one hand and budding prosumers on the other.
But are the markets at a sufficient state of readiness, and what real value can the storage bring?
Currently modern energy storage comprises little more than 1% of all energy storage in Europe, with the vast majority the traditional pumped hydro. But this storage, particularly lithium-ion battery storage, is growing fast and growth is also expected in the deployment of other energy storage technologies.
In particular, two technology developments should be demanding attention from policy makers, according to a new report from the European Academies’ Science Advisory Council (EASAC).
One of these, as the penetration of variable renewable generation increases, is the potential for storage to be connected to transmission and distribution grids to provide short-term flexibility in competition with other flexibility options (e.g. flexible generation, interconnections, demand response and curtailment).
The second is the installation of small storage systems on distribution grids as consumers invest in solar PV and battery systems for increased self-consumption.
EASAC is a representative body of the national science academies across Europe that was formed to provide independent advice to the region’s policy makers. The report is aimed to provide an independent view of the value of dedicated storage on electricity grids from a scientific perspective.
Market readiness of storage technologies
According to the study only pumped hydro storage and possibly lithium-ion batteries appear to be ready for large-scale deployment over the next few years in grid-connected applications in the EU.
Currently, more than 48GW of pumped hydro is in operation in the EU28 plus Norway and Switzerland. There is scope for increasing the output from many of the existing plants and several new sites could be used, so it is estimated that up to about 75GW of pumped hydro storage could be working in the EU by 2030, and more could be built after that.
Battery technologies have been successfully demonstrated in both transmission and distribution grid-connected applications. Research is continuing in particular to reduce the costs and to improve the performance of batteries, and major investments are being made worldwide in new mass production plants for producing lithium-ion batteries in particular.
However, while research is under way on a wide range of storage technology options, including power to gas, no new storage technologies are expected to be commercially deployed on a large-scale in grid-connected applications before 2030. Similarly, the charging and discharging of electric vehicles as a service to support the grid are being researched, but it is unlikely that such options will have a commercial role before 2030.
Value of storage
The report finds that the value of dedicated storage on an electricity grid is system dependent. The roles and opportunities for electricity storage and its competitors grow as the electricity systems grow, in particular as the penetrations of variable renewable generation increase.
The same storage technology can offer several different services to the grid, and have different values in different situations. The business case for investing in storage becomes more attractive when one specific storage system can viably compete in more than one role/market at the same location.
Storage adds value to electricity grids by contributing to the growing demand for flexibility (including congestion management), which is resulting from the increasing levels of variable renewable generation.
Other options for flexibility, which will compete with each other, are flexible generation, curtailment, grid reinforcement/interconnections and demand response. Where feasible, these are typically cheaper than dedicated storage. However, given the barriers to them, such as the limited scope for curtailment, the long time to build new grid reinforcements/interconnections and the end-use constraints that may limit the potential for demand response, it is reasonable to expect a growing penetration of dedicated electricity storage in future markets for flexibility on the grid.
Storage also adds value to electricity grids by contributing to balancing, reserves, network capacity and generation adequacy. The use of storage to provide peaking capacity as well as reserves permits the most cost-effective generators to operate with higher utilisation levels, thereby increasing their efficiency and potentially leading to lower electricity prices for consumers.
Limits of storage
According to the report, storage will not substantially reduce EU needs for back-up generating capacity in the short to medium term. Storage has traditionally been used to smooth out peaks in demand, and it can similarly be used to smooth out peaks in supply. However, where over-capacity exists, it is difficult to justify significant additional investments in storage.
As new capacity is required, storage can play a valuable role in contributing to generation adequacy and reducing system operating costs. However, none of the dedicated storage systems, which are commercially available for grid applications in 2016, is typically able to deliver its nominal power for more than about 10 hours, so they could not fill the gap during periods of several days of little or no supply from wind and solar generation. As a result, it seems likely that the most cost-effective solutions for providing generation adequacy in the coming decades will involve combinations of hydro and thermal generators along with dedicated storage.
Similarly, new technologies are not yet ready to deliver competitive seasonal storage of electricity for the grid. While several power to gas options are being studied with the initial aim of producing synthetic gas for transport and industry, the costs of such systems are too high and their round-trip efficiencies too low to be deployed commercially for seasonal grid electricity storage applications within the foreseeable future. However, they could perhaps be deployed within the 2050 timeframe.
For the effective use of storage, EASAC offers four recommendations, of which three are focussed on electricity market design.
These are that the market design should deliver price signals that will encourage investments in the most cost-efficient flexibility options on both transmission and distribution grids, that it should address the emerging challenge of more PV plus battery systems being installed by householders on distribution grids and that it should be technology neutral, i.e. not creating barriers to the deployment of potentially valuable systems and technologies (including storage).
In addition, research and development should be continued, with a focus on the continued reduction of costs and studies and analysis of transmission and distribution systems and markets.
“Dedicated electricity storage has historically had a relatively minor role in the management of Europe’s electricity networks,” writes EASAC President Professor Thierry Courvoisier in the foreword. “However, the abilities of storage systems to contribute to the balancing of electricity supplies and demands, as well as to reserves, capacity and generation adequacy, have the potential to make storage more valuable in the future.”