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Renewables unshackled by push into battery storage

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For years, those advocating a clean energy revolution have faced two undeniable barriers: the relatively high cost of renewables and, for most renewable technologies, their intermittency. As long as these barriers remained in place, the penetration of renewable energy generation would remain constrained.

As we explore in the latest issue of our Renewable Energy Country Attractiveness Index, the renewable energy sector is, finally, breaking free.

We find falling costs in the offshore wind sector beginning to deliver subsidy-free clean power, at scale, across northern Europe. With the right conditions — including a little help with transmission costs — developers are confident that the next generation of offshore turbines will be able to pay their way without government support.

This has been a remarkable story, where the industry has rapidly refined its technology and slashed costs. It shows what is possible with supportive policy and a long-term vision.

A parallel process is taking place in energy storage, albeit with somewhat different drivers. Here, the possibilities presented by electric vehicles have driven enormous investment in battery technology, leading to dramatic price declines. This is enabling battery storage to insert itself into a growing number of niches within power generation, distribution and supply.

It is difficult to overstate just how profound the impacts of wide-scale, low-cost energy storage will be on the utility sector. Ever since the first power plants were built in the 1880s, electrical engineers have grappled with the challenges of balancing, in real-time, the supply and demand of a commodity that was almost impossible to store.

These challenges have become only greater with the rising proportion of intermittent renewable energy on electrical grids around the world. Battery storage promises to address these challenges, as well as ultimately enabling the entire decarbonization of the world’s electricity supply.

The impacts on the power and utility sector will be disruptive. While the sector has generally been able to adapt to new types of generation capacity such as renewables, the rapid spread of battery technology will be much harder to integrate into legacy business models. It promises to shift power toward consumers, undermine grid operators’ investment plans and allow new entrants to challenge utilities.

It also presents an enormous investment opportunity. Utilities start with some advantages — existing customer bases, network knowledge and relationships with regulators — but they will have to move quickly. The combination of distributed renewable energy and affordable storage presents perhaps the biggest challenge to the utility sector since the switch was flicked “on” at the first Edison power plant.

Ben Warren is EY Global Power & Utilities Corporate Finance Leader

  

  • john

    Interment RE supply is a problem if one looks at it as one place one time.
    Spreading RE over the large landscape of Australia will result in a smoothing of that supply.
    I fully expect very shortly that large battery storage will be in place just imagine 10 G watts of storage and how that could be utilized!
    To give an illustration of the impact of solar and storage I could provide the 8 households on my road with power by using a large solar array and battery storage and even at the costs today i am sure i could do this for less than their present cost of power.
    So I can only see with good policy a downward trend in the cost of power.
    Now this is the problem, once a realization is made that the present system is geared to ensure the incumbents are very profitable,then a totally different cost for supply will be put in place.

  • Focus on the intermittent character of solar and wind power generation fits in a “glass half-full” mindset. This is understandable as there isn’t much experience with a 100% renewable energy system.

    In the near future renewable energy generators will discover the “glass over-flowing” reality. Energy storage is only one of several opportunities that arise.

    Electricity grids need reserve capacity to meet peak demand for relatively brief periods in each year. When the reserve capacity came from power stations that had to buy fuel it made sense to have them sit idle when not needed.

    Wind farms and solar PV systems produce electricity with no running cost so the old ideas are no longer relevant.

    It becomes worthwhile to think about what to do when far more electricity is being generated than is needed on the majority of occasions that do not call for peak generating capacity.

    If there are say 4 different ways of using electricity, a renewable energy generator could use an automated switching system to send electricity to the highest value application, depending on short term market variations.
    Option 1 might be to sell electricity to the grid while the price is above say $100 a MWh.
    Option 2 might be to sell the energy for storage while the price for electricity to be stored is above $50 a MWh.
    Options 3, 4… might be to manufacture hydrogen and / or power a small-scale electrolytic copper refining plant whenever the price is below $50 a MWh.

    • Peter Campbell

      Option 5 might be to run the wind turbine in reverse as a power sink (IE as a big fan!) when the cost goes negative (IE when people will pay you to consume power).

      • Ian

        Good idea, just don’t aim the wind turbine at a sewage farm!

        • Joe

          Just turn the sewage farm in a bio gas plant and your problem is solved.

      • Mike Shackleton

        In California they have been converting old fossil fuel generators to this purpose – they in effect become massive electric motors with a heavy flywheel attached. These “energy sinks” can smooth out power on the network, and provide some of the “inertia” required on the network. That is my layperson understanding anyway.

  • Robin_Harrison

    Storage is now affordable and getting cheaper, making already attractive RE investment even more attractive. A potential feeding frenzy kicked off by one tweet. Now that’s some tweet.

  • Tom

    Demand management needs to be integrated into batteries of domestic battery owners as soon as possible, preferably yesterday.

    If it was done in a way that provides 1) bonus revenue, and 2) self-determination for the battery owners, I’m sure that 90% of them would jump straight on board. I would.

  • derekbolton

    The doubt I have about batteries unleashing PV is the charge rate.
    Average output of a panel is only about 4h of peak output. To couple it with battery so as to turn it into constant output requires the peak charge rate of the battery to be five times that constant power level. E.g. for 1kW constant out you need 6kW peak from the PV and 5kW peak charge rate for the battery.
    The situation with wind is rather better, with the mean output about 30-40% of the peak output.