The nature of the energy market is rapidly changing, thanks to features such as the integration of renewable energy resources and the electrification of transport.
It is now more important than ever for utilities to invest in energy storage. Julian Jansen, Senior Analyst, Energy Storage at IHS Markit, showed why energy storage matters and how to make the best out of it in a presentation in the inaugural Engerati Meet this June.
“As the energy system transitions towards more renewable generation and the electrification of transport and heat, that type of storage will be much more needed due to intermittent generation and more volatile demand profiles from customers," said Jansen.
“For example, while we have stored data for hundreds of years, we have only stored electricity for around 20 minutes when we look at the entire energy system. This really shows you that, at the moment, there's not a huge amount of storage within the grid.
Different applications of energy storage
According to Jansen, traditional applications of energy storage were single applications for customers, whether in the residential space or the commercial and industrial (C&I) space. These included solar self-consumption in the residential space and peak shaving for C&I customers. On the utility side of the meter, storage applications have focused on frequency regulation and renewables integration - since renewables are an intermittent source of energy, coupling their generation with energy storage is practically essential.
However, the energy storage market is now starting to evolve from single applications to a wider range of stackable values. “That means that energy storage can provide not just one value, but it can access multiple revenue streams with the same assets providing value for customers and the energy system alike. If we look at some of the most promising applications, we have, for instance, aggregated ancillary services provided with behind-the-meter storage, the integration of intermittent renewables and the provision of peaking capacity."
As such, with these different value streams, the market for grid-connected stationary energy storage systems is experiencing significant growth. In fact, in the Americas, the Asia-Pacific and in Europe, the Middle East and Africa IHS Markit is expecting the market to grow from just under 2GW deployed in 2017 to annual installations of more than 9GW by 2025.
Managing EV uptake with storage solutions
Another issue to be contended with is the massive uptake of electric vehicles (EVs) across the globe and the penetration of EVs into the energy industry. “Legislation and subsidies, as well as the decline of battery costs, have the biggest impact on the growth of EV uptake. Other factors such as charging infrastructure do play an important role, but the biggest swing in EV uptake is caused by those two factors,” says Jansen.
With the adoption of EVs reaching such significant numbers and expected to grow exponentially within upcoming decades, EVs are beginning to cause constraints on the electrical grid. “EVs are really challenging the electric grid. While overall total electricity demand is only expected to increase by 1.5% to 2% caused by EVs, the bigger impact of EVs will be on the networks and the peak demand they draw when charging. We will see much more constrained local networks, and those are some of the challenges that need to be mitigated."
As such, it is important for utilities to consider what measures to employ to mitigate the system challenges posed by EV growth. One option is for utilities to invest in traditional infrastructure, such as substations and cables, but more innovative solutions include smart charging, vehicle-to-grid (V2G) applications and the deployment of stationary energy storage on the local network.
Smart charging, which can essentially control time and rate at which the car is charged according to signals from the grid operator, enables the car to stop charging at peak times. According to Jansen, smart charging might be even more suitable than V2G applications, since the bi-directional charging that V2G enables may not be always necessary to manage peak demand. “You could solve the same issues an EV could cause us with smart charging, i.e. just intelligently controlling the EV charge profile.
“You could also argue that the bi-directional charging is not particularly suitable for residential owners, so it only suits large fleets of EVs to provide a big aggregated resource in a single place."
However, energy storage is still virtually a necessity to overcome the challenges that EV charging, especially fast and super-fast charging, poses to the grid. “On local networks, the high power those types of charging stations will draw could be challenging, especially in already constrained areas,” explains Jansen.
“We are expecting over 25,000 fast and super-fast charging points, so anything over 50kW DC, by 2022. That growth will pose some of the core challenges; nonetheless, the only area where energy storage can grow significantly is where it helps reduce the connection costs of a charging station or where it can solve a specific network constraint.”
Energy storage in the energy transition
In the wider context of the energy transition, the energy systems are shifting from centralised to decentralised with the addition of new assets, resources, demands and users. However, says Jansen, “with the players we have today, the decentralised power system still very much works like the old centralised system because we have all these resources, but we don't intelligently connect them.”
“What will happen in the future is that, through the process of digitalisation, we will create this distributed intelligent electricity network that will integrate microgrids, energy storage and EVs into an intelligently communicating system and best optimise all these different resources.”
In order to achieve that state, energy storage will be necessary to provide various values for the customer and the energy system. “To intelligently manage that and deploy it in the best possible way, we need these distributed electricity networks,” comments Jansen.
“At the same time, the integration of EVs into this wider ecosystem is absolutely crucial because only if we intelligently manage the way they charge and discharge, and connect them with other resources that can help balance them, can we have a successful integration of e-mobility.”
As such, for a seamless electrification of transport and its integration into the grid, it is essential for the automotive and energy industries to work in partnership, as both are moving into the same EV space simultaneously. Whilst automotive players are getting increasingly involved with stationary energy storage, with V2G concepts and trials, large energy companies are moving into the automotive industry, whether that's through acquisitions and investments of EV startups, for example, or through owning charging infrastructure.
“All of these will have to work together to realise this new energy paradigm that brings together the automotive and energy industries. However, we really think that the best-positioned people, traditionally, are the large energy players because they have most of the expertise required to implement these new business models."