Big switch: Distributed energy to overtake centralised power by 2018 | RenewEconomy

Big switch: Distributed energy to overtake centralised power by 2018

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Distributed energy additions like to overtake centralised plant in 2018, with 320GW large scale fossil fuel plants now not likely to be built.

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Energy storage has reached a tipping point, so much so that around 320GW of new large scale power plants that might have been planned in the 10 years to 2023 will now no longer be needed.

According to a new report from Deutsche Bank, the growth of distributed energy – locally provided renewables such as rooftop solar and battery storage – will soon outstrip new centralised generation capacity additions across the world.

In fact, it could happen as early as 2018, marking a fundamental shift in the nature of the world’s energy systems, recognising that the old centralised model will be quickly replaced by a system based around localised energy production and storage.

deutche lithium storage costsDeutsche Bank estimates that the market for stationary energy storage – used in electricity grids – will rise six fold in the next five years, from 1GW and $4 billion, or 40GW or $25 billion by 2022. Note the big fall in spending per GW as the price of storage plunges.

“This increased penetration of distributed generation should drive the need for intelligent distribution networks comprised of nanogrids, microgrids and virtual power plants (VPPs),” the Deutsche analysts write.

To put the 320GW into context, it is more than six times the installed capacity in Australia’s electricity grid, and about 14 times the size of its coal fleet. It represents the once-anticipated new build of coal fired power stations in India, that many say will no longer happen.

The shift in emphasis from centralised to distributed energy has long been predicted, although it is given scant attention in the latest Finkel Review. Some analysis, such as that by the CSIRO, predict that half of all generation will come from consumers by 2050.

Deutsche Bank says the global shift is likely to be accelerated by moves to reduce the scope of solar feed in tariffs, encouraging yet more consumers to add battery storage.

“Regulatory environment will likely be a critical driver of storage adoption rates and contrary to consensus views, detrimental solar policies could potentially act as a significant growth catalyst for storage sector.” (Meaning low feed in tariffs will encourage more people into storage).

It notes that in several European countries, the difference in the price of feed-in-tariffs and price paid for electricity from the price of power consumed from the grid is significantly wide. It didn’t mention Australia, but that is also significant difference.

This shift is being accompanied by big cost reductions in battery storage, particularly in the cost of lithium ion cells.

It  lithium-ion cell costs have already plunged from $US900/kWh in 2010 to $US225/kWh in 2015 – a similar trajectory to solar, and are tipped to fall to $US150/kWh by 2020. Tesla/Panasonic li-ion costs are already below $US200/kWh for cells and around $US225/kWh for the entire battery pack.

In says that in California, for example, combining a solar-panel system with a commercial-scale battery installation (500kWh) can deliver a 20 per cent return on investment with state subsidies, and still 12 per cent without subsidies, from peak shifting alone.

deutsche storage peak shiftBattery storage developers have recently outbid peaking gas generators in recent California auctions, marking another major shift in technologies.

Indeed, Deutsche suggests the demand for “peak shifting” will grow from just 500MWh in 2015 to 40GWh in 2025, a growth of 55 per cent per year, driving a $3.9 billion battery market in which lithium-ion should dominate due to its superior cell performance and costs.

Deutsche Bank estimates that global battery consumption will jump from 70GWh in 2015 to 535GWh by 2025, and the energy storage market from less than 3GWh to more than 80GWh over the same time.

In the US alone, residential solar PV plus energy storage nanogrids are expected to reach 1.8GW by 2025, with a third or more of these aggregated into virtual power plants, of the type that AGL is trialling in South Australia with 5MW of capacity.


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  1. Jonathan Prendergast 3 years ago

    I have only scanned the Finkel report, but it seems to not consider the fact that energy will become more local in the future?

  2. Malcolm M 3 years ago

    Where does that leave the Snowy 2 pumped hydro ? Perhaps the role of battery storage is in shifting energy from daylight hours into the evening peak of the same day, while Snowy 2 covers the period of several days of low wind and low solar (as has occurred in the past week).

    The investment in Snowy 2 gives us 3 pumped storage systems for the price of one. –
    Firstly there is the 600 m head difference between Talbingo and Tantangara, and about a one week storage.
    – Secondly, it allows more storage for the existing Tumut 3, with a ~100 m head difference between Talbingo and the Jounama Pondage.
    – Thirdly, for a small additional investment in a pump from Blowering up to the Jounama Pondage, it would allow the huge Blowering Dam to be the lower storage, and the huge Eucumbene Dam to be the upper storage for a pumped storage system with many months of storage.

    In the third option, the Tumut 4 pumps would pump up from Talbingo to Tantangara, from where it would flow into Eucumbene via the existing tunnel, then generate power as it flows down the existing Upper Tumut stations back into Talbingo. This could be useful in winter “wind droughts”, that the Tumut stations could be run hard with the water accumulating in Blowering, then pumped back up in the spring when spot power prices would be low because of daytime solar output (as has been occurring in California).

    • JohnOz 3 years ago

      Something else you might want to think about is floating solar voltaic panels which can generate power and prevent evaporation – provided that ecological issues are addressed such as bird feeding and light for plants etc. in the dams.

      • Gordon Hervey 3 years ago

        For long term security from a non-anthropogenic disintegration of the West Antarctic Ice Sheet I personally favour floating wind turbines, which can be unaffected by tsunami. A Sept 2016 US National Security Risk Assessment for the next 20 years included “the sudden breakup of immense ice sheet(s)”. pp11:

        • Mike Shackleton 3 years ago

          Non-floating wind turbines are unaffected by Tsunami too. The “wave” doesn’t actually form until the water surge reaches close to shore. Floating turbines still need to be tethered.

          • Gordon Hervey 3 years ago

            Quite right, I hadn’t got around to looking at a bathymetry map to see how the seafloor rose relative to the possible location of the project. Slack tethers could be useful not only to allow rise with an early tsunami wavefront, research is being done that current blades could fail in a cat 5 hurricane and some extra ‘give’ might help gust survival in rare events, and longevity.

      • Malcolm M 3 years ago

        There would be less sunshine in these mountain dams, and there is the cost of maintaining panels, floats and electrical connections in water with waves and varying water levels. Compare that with the cost of procuring cheap land in a sunny desert close to grid infrastructure and setting up land-based panels. So the desert locations get taken first, up to the capacity of the grid infrastructure, followed by the less sunny locations. In Victoria there is only capacity for ~750 MW of solar in the sunny north (Mildura, Kerang), before there are capacity constraints. In the Finkel report there is discussion about who pays for the grid upgrade – whether the solar farm developer (with the cost on the energy component of the power bill) or the network owner (with the cost on the fixed component of the power bill).

      • Ian 3 years ago

        Floating pv I think would be a perfect fit for the numerous giant shallow cotton dams around Moree, Wee Waa, and other dry cotton growing areas.
        Evaporation savings in the darling river catchment is of great value.
        Many of those dams would have suitable power lines and industrial demand nearby too.

      • Ian 3 years ago

        A turkey nest header dam would be perfectly suitable for solar. The impoundage is totally artificial with generally a flat bottom and regular wall. The water stored is water already pumped from the tail dam and any evaporation is an energy loss. The surface area of the dam is relatively small. The solar would not necessary need to float, just cover the available surface area. Consider this: the potential energy per m2 for a dam 10m deep and a height of 300m above the tail dam is 10x 9.8x 300 x 1000=8kwh. A m2 of solar panels would produce about 200watts x 5 hrs 1KWH – about 10% plus of the water stored in the dam. Not bad at all! Water evaporation can be 3m a year which would be a loss of 2.7kwh/m2 for the whole year – which is not too much actually.

        • JohnOz 3 years ago

          Thanks, Ian,

          It looks as though adding solar PV to any pump-back hydro – certainly worth serious investigation. Cheers, John.

  3. Ray Miller 3 years ago

    Figure 1 shows significantly Flow batteries are at an early stage in the innovation cycle and major future competitor to Li-ion in future. Interesting to watch the progress.

    • coreidae 3 years ago

      I have confidence in them long term

      • Joe 3 years ago

        Red Flow here in Australia have had a problem recently so there seems some work still to be done in the area of flow batteries. Hopefully they can sort it out to be competitive in the market.

        • Mike Dill 3 years ago

          I personally want a flow battery for medium to long term (a few months) for my residence. The price coming down is just what I need.

    • Malcolm M 3 years ago

      Zinc and bromine (used in the flow batteries) are both low cost commodities, whereas lithium is going through a price boom. So if the flow battery manufacturers can get their manufacturing process reliable and scaled up, there is more potential for cost reductions than for lithium batteries.

  4. coreidae 3 years ago

    You’re missing half a sentence in paragraph three.

  5. Ren Stimpy 3 years ago

    The ABC news today said that job advertisements in WA lithium mines are on the rise.

  6. Jonathan Prendergast 3 years ago

    In Australia, has this already happened? Rooftop solar outstripping new centralised power generation capacity build each year?

  7. juxx0r 3 years ago

    Giles, i get a cost of 24c/kWh to go off grid right now. But to do so i have to oversize my solar and oversize my battery.

    If i got my neighbour involved, the price goes down. If we get the whole street involved, we can provide our own power for about 1/2 to 2/3rds of the cost of the grid.

    Not including the 10% price rises that we are about to experience.

    Wont be long till companies start to agglomerate households who are fed up with being ripped off and told lies by the country’s leaders.

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