There is no question that additional storage assets are going to be needed as renewable capacity increases, making it harder to match supply and demand, which peak at different times. But the services energy storage can provide go far beyond simply shifting energy through time, and it can only present a viable investment case if other value streams can be captured. Some of these markets already exist such as frequency response reserve, voltage regulation and other ancillary services, but other value propositions such as avoiding curtailment or derating, avoiding infrastructure spending, providing synthetic inertia, location and speed of response are still not adequately reflected in the potential revenue stream.
Nearly 100 experts from utilities, system operators and expert consultants surveyed by Engerati agreed overwhelmingly that storage is either very or extremely important in their countries. Those who considered it less important were in countries with plentiful hydropower resources or good interconnections with other countries.
“Energy storage has been identified as an enabler for the integration of variable renewable energy sources onto the grid. It is also important for load shifting and peak shaving, and improving reliability in constrained networks.”
“Increasing intermittent renewables and retirement of conventional plant opens up opportunities for storage to help balance the system.”
“Current power availability is quite erratic and storage will enable more effective deployment of renewables as well as provide for greater power stability.”
A successful and cost-effective energy transition will depend on a robust suite of storage services, including very fast reacting batteries, mid-range applications with duration of up to eight hours such as pumped storage, and longer-term interseasonal assets such as thermal storage, or hydrogen and compressed air which are still in the development phase. Without this range of storage assets, the claim that renewables are near or even below cost-parity with fossil fuel generation is questionable as there would need to be a huge over build to achieve high percentages of renewable capacity in order to mitigate the effects of intermittency. Gas-fired power plants would need to remain in service but run infrequently, with the cost to keep them available borne by the consumer. Meanwhile demand will increase as electric vehicles reach their tipping point and become commercially competitive in the next five years and heating and cooling is electrified.
Behind the meter storage will increasingly allow customers to become more self-sufficient and facilitate the development of local energy marketplaces where communities of prosumers can trade excess power amongst themselves. Combined with demand-response programmes, domestic storage will revolutionise the retail sector and give customers more control over their energy consumption.
Cost was highlighted as the greatest barrier to the widespread deployment of storage, despite a recent sharp drop in battery costs. The volume weighted average battery pack cost fell 85% from 2010-18, reaching an average of $176/kWh, according to Bloomberg New Energy Finance.
Pumped hydro is the largest source of electricity storage with around 160GW in operation globally. While upfront costs are high, recent studies have proved it to be cost-effective with other solutions over the course of its long life-cycle. Lithium-ion cells are currently the most prevalent of battery technologies, but they degrade quickly unless charging is managed and use somewhat scarce materials which are difficult to recycle.
Our survey found that over half of respondents were using or developing lithium-ion batteries, and less than 10% said they were involved with other battery technologies. But it is very important not to pick winners at this stage and to keep a technology-neutral approach to research, says Patrick Clerens, secretary general of the European Association for Storage of Energy (EASE).
Flow batteries, including vanadium or organic materials such as salt water, use a process known as aqueous ion exchange and can be used alongside lithium-ion batteries depending on the need of the customer. The next generation of solid state batteries with lithium metals and lithium sulphur is not quite commercial yet, Clerens says.
Policy barriers are seen as the next most challenging issue for energy storage, as frameworks to define storage and who can own and operate it are only just being implemented. The most common problem that is raised is the double charging of energy on the grid as it is imported and exported from storage. Incentives may be needed to compensate storage operators as these markets mature, for example in the US there is a call for an investment tax credit to be applied for storage assets. Allowing revenue stacking is crucial, so that storage can be compensated for providing multiple services at the same time. The need for greater standardisation of control systems interoperability and other protocols was mentioned by several respondents.
Safety is also a concern particularly for lithium-ion batteries, following a well-publicised explosion at a 2MW Fluence battery at an Arizona Public Service site in Surprise, Arizona that injured some firefighters. The cause of the fire is still to be determined but APS says it remains committed to its ambitious storage plans: “What we do know is that energy storage, including batteries, is vital to a clean-energy future. This technology is solving important challenges and creating new opportunities for clean energy like solar.”
Tying into this, a lesser but still legitimate concern is gaining public and utility acceptance for this new technology, even though almost everyone has one at home already in their smartphones or laptops. Some suppliers are starting to include storage in their resource plans, but others are taking a more cautious approach. System operators are generally not allowed to own storage assets due to unbundling laws, but the new Clean Energy Package does allow storage to be owned to a limited extent for short term balancing and ancillary services.
Innovative energy storage solutions such as power to methane and mobile applications including vehicle to grid charging are being tested in various pilots around the world, but most consider commercial viability to be some way off. On average survey respondents were bearish on the potential of power to gas to become feasible within the next five years unless supported by strong incentives.
“It depends on the evolution of the regulatory framework and on the presence of incentives. If no incentives will be in place it's difficult to say if power-to-methane will become profitable in the next 5 years.”
“Rather little without substantial regulatory support and subsidies.”
“Far too costly and inefficient.”
“Keeping in view the identification & development of new gas reserves and large scale utilization of gas for power generation, it seems to be the most suitable technology to become commercially viable in the coming years.”
Hydrogen – a pipe dream?
There was slightly more optimism for the potential for power to hydrogen technology to develop, although perhaps not in the short term. While it is possible to envisage a breakthrough that would allow hydrogen to safely and efficiently be produced and stored, at the moment costs are prohibitive and many see it as a pipe dream. Perhaps an even bigger hurdle would be getting the political will and public support to undertake the considerable infrastructure investment that would be required to switch to a hydrogen economy.
“I believe that H2 is the understated energy storage medium.”
“Yes if there's a use for hydrogen other than power generation, e.g. gas grid, fuel cells. No for generation: too expensive, complex and inefficient - there are better ways available today.
No. Because the method has high loss of energy.”
“Yes, it is possible especially with the need to develop new energy storage technology that do not depend on environmentally pollution materials like lead, or costlier materials like lithium.”
Respondents were positive on the opportunities that storage presents for commercial revenue streams, network balancing and customer involvement. But the greatest opportunity was seen as the potential to support sustainability objectives, by reducing the demand for power at peak times or avoiding infrastructure investments, while facilitating the integration of more renewables.
The needs of grid operators and energy suppliers are complex, and the range of potential storage solutions is diverse. The next five to ten years will see intensive studies and investment into battery technologies and at the moment it is still anyone’s race. The answer will undoubtedly be that a mix of technologies is required, and the challenge will be to find the best application for each one in the most cost-effective way.
As revealed by the survey, demand for storage depends on the particular market fundamentals in each country. Those with plentiful hydropower resources or good interconnections with other countries will have less need to invest in storage. But in many countries, particularly those that are geographically isolated, storage services will become increasingly important as more variable generation sources are connected to the grid. As to what the most successful energy storage technologies will be in the future – the jury is still out.