Why battery storage may put peaking gas plants out of business

In global energy markets, debate rages around the likely make-up of energy supplies in the near, mid and long-term future. The percentage of renewables and the need for “back-up” is chief amongst them.

The introduction of battery storage – both as an economic addition to home and business use, and to avoid expensive upgrades of poles and wires in electricity networks – is adding a new element to the equation.

But here’s a new take on the storage issue from Navigant Research. It suggests that battery storage could make gas-fired peaking plants virtually redundant, by combining storage with combined cycle plants, which are usually used for baseload or intermediate applications.

Sam Jaffe, an analyst with Navigant, told a conference organised by the Institute of Energy Economics and Financial Analysis in New York last month that peaking plants currently account for nearly all of peak demand requirements in the US. And this has been largely the case in energy markets such as Australia too.

The reason for this is that peaking plants are quick to respond to changes in demand. But they are expensive and more polluting – and even more expensive in Australia where gas prices are high.

But Jaffe suggests pairing a large combined-cycle gas plant with a large battery pack – say 1GW and 400MWh of storage.

What you get, says Jaffe, is a “duty cycle that today’s batteries can meet, a more efficient use of fossil fuels and a lower fuel cost.

“Additionally you make the grid more flexible, allowing more renewables to penetrate without fears of destabilisation.”

Of course, that’s just one of a number of applications for battery storage that is being mooted for electricity grids.

Storage – be it battery or in the form of salts for solar thermal – is being paired with renewables such as wind and solar to provide the same service. The ability to pair it with an existing gas plant, however, creates some interesting options. It also means the amount of fossil fuel plant needed in the current system, or in a renewables-based system, will be significantly reduced.

Battery storage is already being deployed at network level in Australia, with the likes of Ergon Energy and others finding it a cheaper option that to upgrade poles and wires, with the added benefit of improving grid stability and allowing more locally-based renewables to be incorporated.

Some suggest that battery storage is likely to fall in price so quickly that homes and businesses will find it economic to add to rooftop solar, for instance, within years – even to leave the grid entirely if they choose – and if the grid tariffs basically gave them no other option.

And battery storage is now being more widely used in off-grid applications, with new software allowing it to combine with solar, wind and other renewable options to allow incumbent diesel generators to be switched off completely, and to help balance solar suppliers to industrial consumers such as miners.

Jaffe’s presentation included a couple of interesting graphs.

The first is the forecast revenues over the coming decade. This graph shows the stationary storage market booming from, basically, a standing start to more than $4 billion a year.The second graph shows the EV market, which Navigant predicts will follow a similar trajectory. Together, the two sectors will be worth as much, if not more, than the well established consumer electronics markets.

And this graph here shows how lithium ion has grabbed such a dominant share in each of the main consumer markets to date. Jaffe says that could continue in the EV and stationary storage market.

And this last one is another graph that looks a lot like the solar market. Steep price falls triggered by increase in manufacturing and demand. Navigant notes that Tesla, which is building the first “giga-factory” with Panasonic, currently sources its battery cells from its partner for around $180/kWh.