Energy storage: The next game changer

September 27th, 2017, Published in Articles: EE Publishers, Articles: Energize, Featured: Energize

The rise of variable renewable generation is driving demand for storage. A recent article in The EconomistElectrifying everything”, was devoted to batteries with projections of massive investments and rapidly falling costs. Even more telling, however, was a sold-out energy storage conference recently organised in San Diego.

As described in an article in San Diego Union-Tribune, the event, which was fifth in a series, was attended by over 2000 delegates and ran out of space for exhibitors which were eager to showcase their latest products. A couple of years ago, the same event at the same venue would have struggled to attract 400 attendees with plenty of exhibition space left unused.

Why the rising interest in storage? Two reasons come to mind:

  • First, with so much variable renewable generation coming on line virtually everywhere the need to store the excess output is already large and rapidly growing.
  • Second, as the technology to store ever larger amounts of energy improves and costs fall with massive investments and large economies of scale, there will be even more demand for storage, both utility scale as well as distributed.

The organisers of next year’s storage event in San Diego, and elsewhere else, will need bigger convention halls to accommodate the increased audience, and the one after that.

The evolution of storage cost is likely to follow the path of solar PVs with the exception that – by all indications – this time around the technology improvements and falling costs will be even more dramatic and are expected to happen much faster. There is so much at stake, and so much money and talent is going into it.

Solar PVs, after all, were known for many decades but were sparingly used in the 1960s and 70s due to high costs. Only when prices began to fall dramatically in the 1980s that demand took off. Distributed solar PVs, the type now commonly found on many roofs around the world were exorbitantly expensive in 1980s and 1990s, limiting their mass appeal.

Little demand meant little investment, which meant little demand. That equation changed dramatically starting in 2000s as China began massive investments in upstream infrastructure, which resulted in equally massive price drops and increasing demand (visual bottom of page 3).

Batteries and storage technologies, of course, have also been known for a very long time – at least since the days of Nicola Tesla – but sparingly used to date in high value-added applications such as mobile phones, PCs, tablets and cameras. But if the lesson of solar PVs is any indication, the price of storage technologies – not one but a myriad of technologies – is now on the brink of plunging, which will give rise to more applications and bigger demand.

How can one be so sure?

As The Economist explains, because many giant companies – the likes of Panasonic, LG, BYD, Samsung and countless others – are making massive investments to expand energy storage capacity (visual on page 3 top) – mostly in batteries, but also in a myriad of other technologies, including those described in the San Diego Union-Tribune article (visual on right).

Energy storage technologies

Storage, after all, is not just chemical as in batteries. Energy can be stored in other forms such as pumped storage, flying wheels and compressed air as well as in simple forms such as hot or chilled water/ice or in super-capacitors which can store energy more or less instantaneously and release quickly it but not for sustained periods of time. Each type and application, of course, meets a particular need.

How likely is that storage prices will fall? With so much investment in capacity, they surely must. Experts who follow energy storage reckon the cost of lithium-ion batteries, for example, will drop from $10 000/kWh in the early 1990s to $100/kWh by 2019, according to a new study published in Nature Energy.

And in case you are not convinced that lower prices will boost demand, take a look at what happened to solar PV installations in the US since 2010 and how this translated to increased capacity in the past few years (visual on page 5 bottom). The longer-term trajectory of solar PV prices, shown on page 3 bottom are now widely expected to be repeated in storage but with much accelerated speed.

The indicators that storage is moving mainstream as prices fall are everywhere. For example, IKEA has announced that it will begin selling distributed storage along with solar PVs for anyone who is willing to follow the instructions with simple tools provided.

In early August 2017, IKEA announced that it is expanding its solar homes partnership with London-based Solarcentury by offering energy storage to its customers in the UK.

According to Hege Saebjornsen, IKEA’s sustainability manager for UK & Ireland, the company will work with Solarcentury to help IKEA’s customers get more value from their solar panels. With energy bills increasing rapidly, there’s never been a better time for customers to take back control of their electricity bills and maximise their savings by switching to solar and solar storage, he said.

IKEA, in collaboration with Solarcentury are likely to offer solar battery storage and home solar package starting at £6925 (about R122 500), and retrofit battery prices will start at about £5000 (about R87 500).

Will anyone buy the batteries? Susannah Wood, head of residential solar at Solarcentury, believes they will. Battery storage is set to completely revolutionise the home energy market, with solar home owners now able to maximise the amount of solar-generated electricity that they can store and use in their own homes, she says.

IKEA will make the solar plus storage package available online and in UK stores later this year. The standard package includes a 3,3 kWh LG Chem battery.

Distributed storage space promises to get crowded as multiples of others enter the business. Tesla, Sonnen, Stem are already in with many more about to launch. Large manufacturers of batteries including YBD, LG, Panasonic and Samsung (graph on top) are active in the background, usually working with intermediaries who handle marketing, distribution, installation and customer interface.

More will likely follow, including Alphabet’s X, which has unveiled a new product called Malta, which reportedly stores energy in vats of salt and antifreeze. Like others, X is chasing a piece of the pie in the rapidly expanding storage market that could generate as much as $40-billion in investments by 2024, according Bloomberg New Energy Finance (BNEF).

According to The Economist article, that may be an under-estimate. BNEF says the size of the energy storage market will grow exponentially from roughly 790 MW this year to as much as 45 GW in seven years. No company, large or small, can afford to be left without a piece of this growing pie.

Among the reasons for the rapid expansion is the dire need in electricity grids virtually everywhere to cope with the rise of variable renewable generation, the equivalent of the California duck curve, now appearing in similar patterns in many parts of the world (visual on page 17).

The pressure to store the excess renewable generation – mostly wind and solar when output exceeds demand – is dire and getting worse. In the first six months of 2017, California had to shed more than 300 000 MWh of excess power produced by solar panels and wind farms because there were no easy ways to store it.

Germany, Texas, Australia and other places are facing similar issues. Which is one reason Tesla is building its first and biggest utility-scale battery storage project in South Australia.

California’s independent system operator (CAISO) is increasingly paying neighbouring states of Arizona, Nevada, Oregon, Washington and the Canadian province of British Columbia to take the excess generation.

BNEF estimates that roughly 4% of wind energy generated in Germany was given away at negative prices in 2015, perhaps more in 2016 and 2017. In China and a number of other countries with inadequate transmission capacity, the situation is even more pressing – since there is no way to get rid of the excess renewable generation but to curtail. BNEF estimates that China curtails as much as 17% of its renewable generation for lack of adequate transmission capacity to major load centers.

Figures like these make it abundantly clear why storage is going to be the next big game changer in electricity markets around the world. How much, how soon and at what cost can be debated.

Acknowledgement

This article was first published in EEnergy Informer and is republished here with permission.

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