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Energy storage: Why we need it, and what it’s worth

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One of the biggest topics for the 20,000 people gathered in San Francisco for the Intersolar conference this week is that of energy storage.

Solar, and solar PV in particular, is being expanded at breathtaking speed, but the long term value of those installations, both to the consumer and the grid operator, seems to be intertwined with the ability to store that electricity. Storage, it seems clear, is the deal-breaker, or the deal-maker, for both new generation technologies, and the incumbents who operate the grid.

Which means there are two key questions about storage that everyone wants to know the answer to: those of costs and of value – which technology will deliver the cheapest option, and what the value of those technologies are for the owners and the operators.

There were a whole series of interesting speakers on the first day of the conference that we will try and get to in the next few days. But to start off, it’s probably worthwhile giving a quick overview of why it is that energy storage is needed, particularly as the global solar PV market surges inevitably to the 100GW annual market by the turn of the decade; and how some of the cost and value challenges are being viewed.

Ash Sharma, senior research director with research group HIS, said there were four key drivers for energy storage.

Self consumption: PV generation does not always align with residential demand, and in some cases the feed-in tariffs have fallen below the retail price. That makes it attractive for home-owners to use as much of the electricity they produce from rooftop solar as they can. Storage helps that self-consumption.

The second reason is in the commercial sector, where load profiles actually align with the solar PV generation profile quite nicely. But storage can be used to shift consumption around to avoid peak demand charges, which are common in commercial energy rates. And it can be used as back-up power.

At the utility scale, storage is invaluable to help control voltage and ramping issues, and in many cases it is a regulatory requirement. In Puerto Rico, for instance, a 2MW installation had to be accompanied by storage for that reason. It can also help balance and strengthen the grid in many instances, particularly in those areas – such as in Australia, Germany and in some suburbs in Los Angeles – where the penetration levels are getting to the point that the grid can’t, or won’t, take more.

And, of course, there is the off-grid opportunity. Renewables without storage are extremely variable and any off-grid application that seeks steady source of electricity has to have storage. Because of the costs, this is also the biggest commercial opportunity at the moment.

Right now, however, the problem is with cost. Sharma said adding storage to PV installations right now actually diminishes the return on investment – even if it does represent an IRR of around 7 per cent in Germany. But this is expected to change rapidly as the costs of storage come down, and as new incentives are provided that reflect the value of that investment. Some suggest that even now the IRRs can double with those incentives.

Sharma says one of the problems is that energy storage is an immature market with no mass production. What it needs is scale. Once it gets that, IHS predicts a fall of at least 40 per cent in coming years, as battery technologies are rolled out, and with the growing use of electric vehicles.

Mark Johnson,  the program director for ARPA-E, the Department of Energy program that focuses on new technologies, says that storage needs to come down to the point where it is adding only around 2.5c/kWh to the cost of electricity to make the technology effectively “invisible” to the consumer.

To do that however, the cost of storage must come down to around 100/kWh – which he said was less than one-quarter of the best estimates to date. ARPA-e is focused on finding a technology that can deliver a “10 times” step change in  costs.

Janice Li, a consultant with Strategem, and a member of the California Energy Storage Alliance (CESA), says energy storage will be a system-wide game changer, but the key lies not in the cost, but in the value to the grid, and the high renewable scenarios are the ones that create the most value.

“Storage is much more cost-effective than the way we do things today,” she said.  “It’s not just about cost, it’s about value, value, value.”

The key, she said, was to reframe the markets that were not geared around the assumption that only fossil fuels could provide a response to demand changes.

Energy storage was in fact faster and accurate in its response time, and in the US, market rules and tariffs are being drawn up to recognise and value that. “If you are fast, you get paid more.  That is the value proposition for energy storage.”

Lin argued that in some areas, storage is commercially viable and funded on a merchant basis already. What is needed is long-term contracts to support the up-front cost of financing equipment.

“It is clear that with the transformation of the global energy systems, wind and solar will be the two main pillars of these new systems,” said Professor Eicke Weber, the head of Germany’s Fraunhofer Solar Institute. “And to address that, we need to do something about storage. But it is the fastest growing sector and we will see big falls in costs.”

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  • Jason

    Storage can not arrive fast enough…I’m just worried about the metals and components required for these technologies, do we have enough globally in easy to access areas in the world to allow the scaling of the industry and how long would the resources last at exponential growth rates of consumption?

  • sunoba

    You need to consider life-cycle metrics for storage.
    How much energy will a battery store in the whole of its life compared to how much energy is required to manufacture it? That’s the “Energy Stored On Invested” metric, ESOI, as discussed in a terrific paper by Barnhart & Benson. They give ESOI values of 2 to 10 for batteries and flow batteries, whereas for pumped hydro and compressed air energy storage the values are more than 200. My research on solar thermal storage gives ESOI values of around 50; that’s for molten salt or pebble bed. Some details are at http://www.sunoba.blogspot.com, posts for 17 April 2013 and today (9 July).
    Take-away message – big improvements are required with batteries and flow batteries. If those breakthroughs aren’t achieved, you’d do better to look at other forms of storage.

  • JohnRD

    The economics will depend on what the stored energy is replacing. Storage may be quite competitive if it replacing expensive power from a source thatonly operates for a few hours per day

  • Matt

    I think you need to expand the definition of storage. A large portion of electric demand is for heating and cooling. The methods to do this have been proven and cost would drop even farther if really massed produced. If you had time of day pricing, then just as it is better to charge my EV car at night, it is better to super chill a material then use that to chill are during the day. This levels out the demand, by being distributed it also removes the need for a lot of infrastructure.

    • Bob_Wallace

      I wonder how the math would work for doing the opposite in the winter?

      Use late night cheaper electricity or surplus ‘home brewed’ solar to warm storage. The use the AC heat pump to heat the house when electricity costs are higher.

      Ground effect heat pumps would probably be more efficient overall, but installation costs might be higher.

    • Francis Clark

      Spot on Matt. Thermal storage can do a lot, including in relation to more efficient utilisation of network infrastructure. This is especially so when associated with chilled water cooling systems, especially in the topics where winter morning loads are not an issue. There are good examples of these systems, such as the one at Charles Darwin University that has been going for years and saves the uni $$.

      It is also the case, as in the article, that some battery style storage can have a place in the system, especially when used as part of the ancillary services market. Also, since so much load is associated with compressors / chillers of one sort or another, control systems associated with these have a huge potential to provide fast acting load control.

      • Matt

        Frank, I wasn’t saying there wasn’t a place for battery storage. Only that we should not over look the solution that are already proven but not install very widely. The first one I saw was an article just after the NRG crises in the 70s. A big museum used a super chiller to freeze balls, so they could run the fans instead of their AC during the day. In places like Texas that already have a lot of wind; night time power is very cheap. I think batteries at key points in the grid have a large role to play. Both from absorbing extra power (think Wind farm holding it’s power when it is too cheap) to be released at high load, and in fast load/freq balancing. But the benefit of distribution are way underplayed. It can greatly reduce the need for transmission upgrades. Deploy, deploy, deploy! Yes we need all of the above, that is all above the fossil line.

  • Nick Sharp

    Some of the previous comments talk about using cheaper overnight electricity. OK for now, but since storage will always increase the price of PV-generated (obviously daytime) power, tariffs will surely shift, with off peak pricing moving to some part of the daytime, as coal fired power ceases. This is likely eventually to have a significant effect on society eg by adding to the cost of running night shifts.

    • Bob_Wallace

      Don’t know where you live, but in the US we have a lot of nighttime wind to be harvested.

      • Nick Sharp

        Sydney, Australia. Sure, there’s usually wind somewhere in the country 24×365, though I have no idea whether it is on average stronger at night. My point was that as coal fired generators are phased out, there will be no cheap overnight power that used to come from their need to keep burning. I’m fairly sure that will push any off peak tariffing towards daytime.

  • KenFabos

    I think the storage problem will be one that proves to be less problematic than most people expect. On the battery front we are getting reports of graphene’s potential to improve Li- ion battery capacity – not a few percent but 300% here, 1000% there, proving concepts even if commercialisation remains a hit or miss process that often has less to do with the actual potential of the innovation than the quantity of funding and quality of management. http://www.extremetech.com/extreme/122763-graphene-supercapacitors-are-20-times-as-powerful-can-be-made-with-a-dvd-burner

    We are seeing graphene improving supercapacitors in similar increments. Dramatically better supercapacitor dielectric materials that don’t use graphene have recently come out of research at ANU. http://news.anu.edu.au/2013/07/01/new-material-holds-big-energy-hope/

    For utility scale we are beginning to see molten salt becoming integrated into new and larger scale solar thermal. I expect it will get cheaper and easier as it’s use expands. And then there is Isentropic’s pumped heat storage system that is already claiming it can do lower costs than pumped hydro. http://www.nationalgrid.com/NR/rdonlyres/13B80693-2958-4C5B-ABCB-FCB50E585EFB/38388/Isentropic.pdf

    Jason might be interested to know the latter uses non-toxic and reusable materials – steel, gravel, inert Argon (distilled from air and going back into the air if it leaks).

    I think the “too hard, too expensive” refrain is just one more bit of PR spin of an energy sector seeking excuses to go on doing things the old way, unchanged. ie “Too hard, too expensive, too bad”. If they had any vision they would see that storage is going to be at the core of future energy businesses.

  • Bob_Wallace

    Storage may have arrived.

    Eos Systems has just announced that their zinc-air batteries are going to be installed on multiple grids spread around the world. That means that some pre-testing has happened by those grids, numbers have been crunched, and the go-ahead has been received.

    Here’s what they claim. $160/kWh. >10,000 100% Depth of Discharge cycles. Round trip efficiency 75%.

    That’s a game changer.

    http://www.power-eng.com/articles/2013/07/a-great-leap-forward-in-energy-storage.html