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AES, Siemens combine to tackle Tesla, dominate battery storage market

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The energy storage divisions of two of the world’s biggest energy companies – AES and Siemens – have joined forces to tackle the likes of Tesla and seek to dominate the soaring global battery storage market.

And Australia, where Tesla has just announced what will be the biggest lithium-ion battery storage market in the world, is high on the list, and AES expects to announce a series of major, and bigger, battery storage projects in the coming months.

AES battery storage.

The creation of the jointly owned Fluence was announced overnight in Washington, DC. It will focus exclusively on grid-level storage, rather than in the household market, with a minimum size of 100kW.

AES already claims to be the market leader, but says that by combining with the Siemens battery storage division, it will be firmly established as the biggest in the market, and well placed to deal with new competitors like Tesla.

AES sees the market for grid scale battery storage jumping from just 3GW in 2016 to 28GW in 2022, and John Zahurancik, the president of AES Energy Storage, says Australia has jumped into one of the top five global markets, thanks to elongated network, and the rising share of renewable energy.

“Australia has moved itself into one of top 5 markets in the world,” Zahurancik told RenewEconomy in an interview.  “You are sitting in the middle of one of the hot markets.

“There are lots of fundamentals that would encourage more storage in Australia – the lack of new dispatchable electricity, the growing renewable share, remote grids, its geographical limitations and the significant points of congestion. They all are points that make storage very valuable.”

AES is currently partnered with Lyon Group, which has ambitious plans to build more than 1GW of solar and more than 600MWh of battery storage in South Australia, Victoria and Queensland.

Even though three of the bigger projects have received a lot of publicity, the final go-ahead has not been given, and the company has indicated it will “tender” for the services that its battery storage will provide.

Zahurancik says AES is involved with a “number of other companies’ that are looking at battery storage installations in Australia, in the range of 20MW, 30MW, 50MW and bigger.

“We expect that some of these projects will come on towards end of this year and others will follow on after that. The question is do all the things that are talked about move forward. Will there be sustainable set of conditions going forward – or is this just a response to a crisis?”

It is true that the Tesla storage installation, commissioned by the South Australia government, comes under the general rubric of crisis management. The Australian Energy Market Operator says it will be essential to help keep the lights on this summer.

Most of its capacity will be focused on grid support, with only 30MW (but with three hours storage) assigned to shift the load of the wind farm.

Lyon Group, however, is looking at bigger investments in battery storage combined with large scale solar plants, with their 100MW facility in South Australia designed to have four hours storage, so a total of 400MWh. Similar-styled projects are planned in Victoria and Queensland.

AES has also been contracted to build a 100MW/400MWh battery storage installation in California under a 20 year agreement with Southern California Edison. It is designed to replace ageing and increasingly expensive gas generators in that state, and Zehurancik sees similar opportunities in Australia.

“Battery storage can do a relly good job – they can be utilised to a much degree than a gas speaker, and it is becoming the preferred choice for some locations,” he says.

“Storage would be used daily – they can do grid balancing, instant response for correcting faults, and it can be used daily for helping meet demand peaks.

Zahurancik says the high cost of network and generation in Australia makes it an interesting market, particularly as the cot battery storage falls.

He estimates the cost has fallen 90 per cent since AES first entered the market a decade ago, and will fall another 50 per cent over the next few years as efficiencies and energy density are improved.

“Battery storage is becoming a solution because of its flexibility, the ease of permitting, and its scaleability, and because it can be deployed very rapidly,” he said.

Siemens recently formed a partnership with Eos Energy Storage to integrate, install and service energy storage solutions, and has hitherto focused on the smaller commercial and industrial sectors.

Ralf Christian, CEO of Siemens’ Energy Management division, said that as the energy storage market scales, customers face the challenge of finding a trusted technology partner amidst “conflicting technical claims, inexperienced vendors and installers and new market entrants with limited power sector knowledge.”

   

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  • Brunel

    I bet the cells in AES batteries are made in Nevada. Thus they would not be tackling Tesla at all.

  • If their not Manufactured in Australia Australia Misses out of Jobs and the Government Taxes on those jobs plus G.S.T. on their spending .
    So Buy Australian Manufactured Goods where ever possible

    • john

      There is in fact a proposal to build a battery factory in Townsville.
      As to why build there good question however it seems the Local Government IE the council is going to make the land cheap so they decided on that town.

      • Ren Stimpy

        Proximity to the lithium mines?

        • Joe

          Close to Adani ?…for cheap CLEEEEN Coal energy to provide the energie to build the batts.

  • John Saint-Smith

    I’m saddened to see the LNP fossils’ plans for an eternity of coal-fired pollution in such disarray. Could their very intransigence on energy policy, and their vituperative attacks on renewables and storage have produced this unintended consequence?
    Oh Mercy! I just caught my self in time, I almost smiled.

    • Chris Fraser

      They don’t have an energy policy of their own, it’s somebody else’s, dark and insidious.

  • Robin_Harrison

    A healthy dose of competition is just what we need. Does anyone know where AES and Siemens are hiding their gigafactory?
    Zehurancik missed a significant reason for the huge market in Oz, the ridiculously high energy prices for consumers here.

  • MaxG

    Remember: whatever cost savings a company may achieve — will not, as we have seen over and over — benefit the customer.
    Why I have built my 10/20 kWh PV/Battery systems — since then I had price stability, and do not have to worry about future cost of electricity.

    • solarguy

      Ditto me.

    • Phil

      Same here . i have an “overpannelled and optimised for inclement weather ” 100% off grid setup with a 1 day autonomy model

      This is a DIY model and relies on 10 x 2 hour genset bursts per annum for $2.20 per day (no gst) funded in perpetuity for 10kwh per day average use and 99.9999% uptime as it has TRIPLE redundancy

      The costs are coming down as replacement costs for ALL hardware is coming down. Not going up.

  • riley222

    Pumped hydro. Get on with the missing link in the energy chain.

    • Colin

      Well said.

    • George Appleton

      I heard that it will cost more to pump it up the mountain than what it generates going down. Could you please enlighten me?

      • riley222

        George, try reading something other than the deliberately ignorant Murdoch press , enlightenment guaranteed.

        • George Appleton

          I’m not trying to be funny, but you haven’t answered my question, have you? I’m not an ignoramus, I honestly want to know.

          • riley222

            George, there is an energy loss involved in pumped hydro of around 20%. Now cost loss is another ballgame altogether. If you have an excess of solar and wind energy being produced then using that cheap energy for pumped hydro, ie storing it, would allow approximately 80% of that energy to enter the market at a later time. If there’s one thing we can be sure of in the energy market it would be the value of baseload power, and that is what pumped hydro transforms renewables into.
            So , although there is an energy loss involved I expect it would turn out to be a very profitable way of providing readily despatchable baseload power.

          • George Appleton

            Thank you! I understand now.

          • Alastair Leith

            It’s actually dispatchable, load-following power in PHES that you are talking about. Baseload is just that: a base load demand and doesn’t happen on the grid above daily minimum demand typically at 3AM, base-load demand only happens at a mining site or somewhere like that where demand doesn’t change much for months at a time beyond small oscillations.

            Having a base load accommodates generation plants that have flat output and cannot ramp quickly without damaging plant, i.e. coal and CCGT. And that’s why they the generators meeting base-load get the name “baseload” for short.

            It’s a big problem that so many people are using the term baseload to mean something completely different, load following or dispatchable power.

          • riley222

            More carefullmentasiousness needed . Noted.

          • Alastair Leith

            Well it’s just that all these people these days, Liberal Party MPs in particular, are incorrectly using the term “baseload” (synonymous with coal) to mean ‘the lights will always be on when I switch them on’. It actually doesn’t mean that at all, baseload means ‘you never can switch the lights off’. It’s amazing how many people argue black and blue over this who have no idea what they’re talking about, part of the reason there’s no energy debate in this country, just ideological warfare being launched by coal miners and their paid-in-full MPs and shock jocks.

      • Ian

        That’s very funny, considering that the primary generating sources, be they fossil or new age, cost in the vicinity of 5 to 10c/KWH and the utilities best price with fixed network fees comes in at over 40c//KWH there is no economic scope for storage of any kind even if they were perpetual motion machines with a net positive energy balance . Gridbatteries and PHES are lame ducks before they even get going. You just can’t beat distributed, behind-the-meter, solar and storage.

        In the future, the only ones to afford grid electricity will be the subsidised and foreign owned companies!

        • riley222

          Ian, whether its new coal, pumped hydro, solar thermal, batteries or whatever any new large baseload capable power is going to cost. You may be right, subsidies may be necessary for those who don’t have behind the meter capabilities.
          I don’t think thats a reason to do nothing, we elect governments to solve problems, this is just another rather large and complicated one.

          • Ian

            You’re right of course, Australians can’t do nothing, but we don’t , we are doing plenty, these gridscale batteries are welcomed, just saying the network operators, given their recent history, charge a lot for getting wholesale power to the meter, even if batteries or PHES had zero cost, you’d have to wonder if retail electricity prices would come down.

        • George Appleton

          I’m not actually asking for your advice mate.

          • Ian

            Just like you, I’m putting in my 2c worth. Your comment was in response to Riley’s and mine continuing the thread. Keep it up anyway , people have pretty cool insights in these comments.

        • Alastair Leith

          The spot market often sees negative prices that are not reflective or the LCOE price you are quoting. Very different things.

      • Alastair Leith

        What they buy it at say negative 5c/KWh overnight and sell it for $14,000/MWh 6PM that night, and you call that a loss?

  • Admittedly, my
    “Modelling of wind and pumped-storage power”
    https://scottishscientist.wordpress.com/2015/04/03/scientific-computer-modelling-of-wind-pumped-storage-hydro
    has focused on wind (not solar)/energy storage combos, but drawing a direct parallel, however approximately, I might suggest that about 5 MW-hours of energy storage for every MW of solar (as with wind) power capacity might be appropriate to smooth the intermittent output from a solar farm to meet customer demand.

    plans to build more than 1GW of solar and more than 600MWh of battery storage …

    INADEQUATE – For 1GW of solar, my recommendation is to install about 5GWh (5,000MWH) of energy storage.

    Lyon Group, however, is looking at bigger investments in battery storage combined with large scale solar plants, with their 100MW facility in South Australia designed to have four hours storage, so a total of 400MWh.

    INADEQUATE.

    The mismatch with the proposed system being between the impressive 330MW of solar power generation capacity and the relatively tiny 400MWh (or 500 MWh) energy store, which would not even store 2 hours of full power capacity.
    I might suggest instead 5 hours or 5h x 330MW = 1650 MWh of storage would be more appropriate.

    The battery’s specified 100 MW regeneration (and presumably charging) power of the battery would be plenty for stand alone (peak demand of 47 MW) operation but even so considerably enhanced system performance (to a peak demand of 82 MW) may be achievable by including a stand-by back-up power supply of 25 MW from, say, a biomass-burning power station, to supplement combo power.

    Anyway I stand to have my “wind derived” figures corrected by scientist colleagues who have crunched the numbers with modelling data and assumptions specifically for solar / battery combinations, but meanwhile I would strongly recommend against proceeding on the erroneous basis that a 400 (or 500) MWh battery would be “adequate” because I am firmly of the view that it will not be, in the least.

    For larger energy store capacities, it is likely that the technology of choice, even for dry South Australia, will be pumped-storage hydro.

    BEWARE the sloppy way that storage is being quantified as “hours of storage” per different system features.

    Yesterday, the “hours” discussed were MWh of storage per MW of GENERATION CAPACITY (solar or wind)

    Today, the “hours” are now understood to be MWh of storage per MW of REGENERATION (battery power).

    Just be careful. My recommendation is for 5 hours of storage per unit power of generation capacity not merely “per unit power of battery power regeneration”.

    These proposed farm batteries are too small an energy store for the purpose of smoothing wind or solar farm output to meet customer demand. Only pumped-storage hydro offers the big energy storage capacities that are needed.

    But don’t take my word for it – ask Australian academics.

    “Opportunities for Pumped Hydro Energy Storage in Australia” – Melbourne Energy Institute (2014)
    http://energy.unimelb.edu.au/__data/assets/pdf_file/0007/1526587/Opps-for-pumped-hydro-in-Australia.pdf

    “Hydro storage can secure 100% renewable electricity”
    http://www.anu.edu.au/news/all-news/hydro-storage-can-secure-100-renewable-electricity

    Scottish Scientist
    Independent Scientific Adviser for Scotland
    https://scottishscientist.wordpress.com/

    * Double Tidal Lagoon Baseload Scheme
    * Off-Shore Electricity from Wind, Solar and Hydrogen Power
    * World’s biggest-ever pumped-storage hydro-scheme, for Scotland?
    * Modelling of wind and pumped-storage power
    * Scotland Electricity Generation – my plan for 2020
    * South America – GREAT for Renewable Energy