Energy storage – key to the renewables revolution
Energy storage is key to an affordable decarbonisation of both the electricity and transport systems.
- In the electricity system, the increasing share of variable renewables, in particular solar and wind power, requires new and better storage methods.
- In transport, batteries and other storage systems are needed to enable the growth of electric and hydrogen vehicles.
The term “energy storage” covers a wide range of different applications and technologies. For “stationary” storage (as opposed to “mobile” storage, for example in electric cars), a distinction can be made between “utility-scale” storage, “behind-the-meter” storage and off-grid storage.
- Utilities use storage systems (and other “flexibility” services) to “balance” demand and supply in the electricity system. “Balancing” takes place at various time intervals, from very short-term to “seasonal” balancing. The operations that are needed to balance the system – beyond generation and transmission – are called ancillary grid services. They include primary (fast) frequency regulation, secondary frequency regulation, voltage support, spinning reserve and capacity reserve, which are all forms of electricity storage. Different technologies can be used to provide these services, for example pumped hydro, flywheels or batteries. For long-term seasonal balancing needs, gas and hydrogen storage systems may also be used.
- “Behind-the-meter” storage systems, e.g. home solar systems with batteries, allow consumers to better manage their electricity use and to increase self-consumption from rooftop PV or other decentralised power systems. In future, the batteries of electric cars may be connected to the power grid and used as storage for the electricity system.
- Electricity storage is also key to off-grid, standalone systems based on renewable energy, for example a solar array with a battery, or a micro-grid, a set of power generators and energy storage systems connected to a local distribution network. In particular in developing countries off-grid systems can be a solution for people who currently have no access to the main power grid.
Energy analysts agree that the energy storage market is set to grow strongly over the coming decades. But who will be the winners in this race is not clear yet. Most likely there will not be one winner, but different solutions will be found for various parts of the market.
As the International Renewable Energy Agency (IRENA) notes in a study on Electricity storage and renewables:
“The growth in the electricity storage market to 2030 is not likely to be a one-horse race. Although lithium-ion (Li-ion) batteries are likely to dominate the EV market, this is not necessarily going to be the case in stationary applications. The very different requirements of the range of services that electricity storage can provide — and the varying performance characteristics of each group of electricity storage technologies — means that a diverse group of storage technologies will prosper.”
A critical issue for the successful development of electricity storage, writes IRENA, will be the ability “to derive multiple value streams by providing a range of services with one storage system. This will enable the stacking of revenue streams and improve project revenues.”
In many countries, the report notes, “this will require changes to market structure and regulations, or the creation of new markets for ancillary grid services. It will also, ideally, require behind-the meter applications to have access to utility-scale markets through aggregators to maximise the potential for storage to contribute fully.”
The electricity storage market today is dominated by pumped hydro, which supplies roughly 95% of the total. However, according to IRENA by 2030 the more rapid growth of other sources of storage, such as batteries, will see the share of pumped hydro fall to around 50% in the case of a doubling of the share of renewables in the power mix.
The growth of batteries is driven by their strong cost reduction potential. The total installed cost of a lithium-ion battery could fall by some 60% in 2030 on top of a 73% cost reduction in the period 2010-2016, notes IRENA.
Think tank Bloomberg New Energy Finance (BNEF) closely tracks the development of the global storage market in its Long-Term Energy Storage Outlooks. In the 2019 edition BNEF writes that “energy storage installations around the world will multiply exponentially, from a modest 9GW/17GWh deployed as of 2018 to 1,095GW/2,850GWh by 2040.” This 122-fold boom of stationary energy storage over the next two decades will require $662 billion of investment, according to BNEF estimates. “It will be made possible by further sharp declines in the cost of lithium-ion batteries, on top of an 85% reduction in the 2010-18 period.”
BNEF predicts: a further halving of lithium-ion battery costs per kilowatt-hour by 2030, as demand takes off in two different markets – stationary storage and electric vehicles. ”
BNEF further notes that “the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses.” The analysis suggests “that cheaper batteries can be used in more and more applications. These include energy shifting (moving in time the dispatch of electricity to the grid, often from times of excess solar and wind generation), peaking in the bulk power system (to deal with demand spikes), as well as for customers looking to save on their energy bills by buying electricity at cheap hours and using it later.”
The battery market has been dominated by liquid lithium-ion batteries for the last few decades, but research on other batteries and storage technologies is continuing.
Examples of alternatives are solid-state and redox flow batteries, ultracapacitors and batteries based on different chemistries including zinc, sulfur, sodium, nickel and lead.
In addition, various thermal and heat storage systems are being developed. Heat can even be stored in bricks and concrete. None of these alternative technologies has reached commercial maturity, but experts expect that tipping points may soon be reached that may completely alter the dynamics of the storage market. One thing is certain: the market will continue to be dynamic for a long time to come.