Energy storage systems signal arrival of ‘baseload’ renewables

It has been widely thought that the arrival of cost-competitive rooftop solar PV systems would be the biggest game changer in the electricity market. But it may be that the emergence of affordable energy storage systems will have an even more profound impact.

There are predictions that the energy storage market is going to boom. One survey suggested that $30 billion will be spent on energy storage in the next decade in Australia alone. In the US, where $1 trillion is expected to be spent on electricity network infrastructure in the next 10 years, at least one fifth of that – or $200 billion – will be spent on energy storage.

The big question is who is going to benefit most from that investment – the customer, or the utility that delivers or sells the electricity. Or maybe even both. Most people are still trying to figure that out.

There is little doubt that there is huge interest, and likely huge demand, for the product. Given that the arrival of solar PV has enabled homeowners and small businesses to produce their own energy, it is only natural that they would want to store it.

An analysis by Energeia this year said that as a result of cost reductions in the technology, it predicted there would be 421,000 residential energy storage systems in Australian homes by 2021 – nearly half the number that currently have solar on their rooftops. The new pricing mechanisms that are being introduced into Australia – high rates for peak consumption and low rates for overnight – make it particularly attractive to have both solar, which can draw down cheap energy from the sun during the day, and energy storage – which can store excess energy and draw from the grid at low overnight rates. It effectively doubles the attraction.

Richard Turner, the CEO of Adelaide-based Zen Energy Systems, last month unveiled a new product called Freedom Powerbank, an energy storage system that will allow households to store enough electricity to cater for their average daily usage. An email sent out to 4,000 of Zen’s solar PV customers generated an enormous response – one person a minute signing up for more details, according to Turner.  The response from utilities and international customers has been equally effusive, he says.

Turner describes his product as a “world first,” because it uses proprietary software to capture the energy produced by solar, wind, or from the grid, and allows it to be used when the customer chooses. “We have created the most functional energy storage system at one end and at the other end broke through major cost barriers. What we developed is the first battery operating system for renewable energy systems.”

Production of the Freedom Powerbank for households begins in Adelaide in January next year. Turner says the units will cost $29,500 – offering a payback of 7-8 years, but he says the cost will fall as manufacturing techniques improve and some of it is outsourced to cheaper facilities overseas. Larger units will be available for small businesses – who will be able to use the systems to ensure they retain their power sources through any outages – and are being tested by utilities.

Turner says the storage system is a game changer because it is clear that solar PV will be the power supply of the future, and this enables households to store that energy and utilise what is effectively “baseload” renewables.

“We have got a massive problem around peak demand,” Turner says. The proposed introduction of time-of-use pricing, along with smart meters, means that consumers will be paying as little as 7c/kWh at  time, but up to 52c/kWh in peak periods. That is already occurring in Victoria.

“We saw this coming and that is what we designed this for. It will enable consumers to load shift inside their own home – they can source cheap energy from solar during the day, or draw down from the grid at night, and save it for use later.”

Turner says focusing on the software component – with Zen’s joint venture partner, the US-based Greensmith Energy Systems – was a cheaper and more effective method than trying to deliver a better battery – a pursuit that has been the ruin of several aspiring battery manufacturers as they found their technology undercut by the latest developments elsewhere.

“We went the other way, we’ve talked to the people operating the grid and looked at the functionality and created a battery operating systems with three layers of software,” he tells RenewEconomy. This covers a utility control system that can address load shifting and frequency problems, and brings the individual units together to operate as one block if needed. The second layer has rich data analytics to optimise grid function, while the third layer is an “active balancing battery management system”, that ensures optimal performance from the battery cells.

Turner says utilities are also very interested in his product – even if they have yet to “get their head” around the issue, and how it fits in with their business models. Most accept, however, that the introduction of such systems is inevitable. “It will really challenge the retail business model,” Turner says. “But it’s going to be challenged anyway.”

He suspects some utilities will use storage systems to manage their grids, and some are already testing units in the 100kWh to 1.5MWh scale. And they will also offer such systems to their customers, but possibly not at the 20kWh scale – they will want a margin from providing as much electricity as they can, so they may offer systems with storage limits of 5kWh or 10kWh to their customers.

“People will put these systems into their home – and will be put on a contract where there is a heavy penalty to draw on power at peak times. And the utilities will have the right to pull power back into the grid when needed. Ultimately though, it is the consumer who will control the energy over the house.”

Turner says it does offer the opportunity to go off grid as well. This is particularly attractive to those dreaming of homes on rural blocks who want to look after their own energy systems. “We are going to see a trend toward modern off-grid living,” he says. His company has received 200 inquiries already for off-grid housing developments. And mining camps are also interested.

And how will the system be integrated with electric cars, and the ability of those batteries to also provide storage? Turner sent us this emailed response:

Q. Do you empty the fuel from your car into your generator at home?

A. No. Then most likely you won’t flatten your car to power your home.

He says the Zen Freedom PowerBank will be provisioned in the future for DC to DC fast charging to draw and store off-peak grid power or solar power to charge EVs quickly whenever it’s required.

Here’s a graphic display of what Turner sees as the problem for electricity grids, and the solution that energy storage systems offer.