Central versus distributed storage has been an ongoing debate. Each has its pros and cons. There are instances where the advantage of one over the other is obvious — such as central bulk storage at geological sites where caverns or water reservoirs with different elevations are almost readily available. The real question is: which one would the market or investors prefer when no geological advantages are readily available? Traditionally, two key advantages have kept hopes high for central storage: lower cost per kWh and availability in large GWh scale. Both of these key advantages were challenged, if not shattered, in the last year.
Tesla Motor’s $5 billion GigaFactory is being built to deliver li-ion batteries, 15 GWh/year of which is dedicated for stationary applications. There is no doubt that this and similar investments will accelerate the already declining battery cost to be competitive with bulk central storage — but there is another significance in this announcement. Apparently, 96 percent of the pumped hydro plants in the world have a generating capacity less than 15 GWh. Finding accurate information on pumped hydro facilities around the world is a difficult task.
The DOE’s Global Energy Storage Database only lists 342 — and much of the information is still missing since it is a voluntary reporting system. Based on available data, only a handful (about 4 percent) of all pumped hydro plants in the world have a generating capacity over 15 GWh. Figure 1 compares GigaFactory’s planned annual production for stationary applications with the generation capacity of the world’s largest pumped hydro plants.
Figure 1: World’s Largest Pumped Hydro Plants (excluding hundreds of units smaller than 500 MW or 5 GWh). Source: DNV GL
The real significance is not in the size but the fact that it takes almost a decade to build a pumped hydro (or other large central storage) plant, which has a storage capacity less than what GigaFactory can deliver within a single year with no need for permits or special geological formations. GigaFactory alone can produce the equivalent of a few average pumped hydro power plants each single year, and that is without considering its much larger production for the electric vehicles.
Tesla’s GigaFactory, along with other companies that are already in place to aggregate distributed storage into effectively larger storage plants, are prime examples of “distributed bulk” storage. Distributed bulk, which effectively functions as a pumped hydro or CAES, seems poised to work for massive storage and to time-shift of energy on the grid. This should clear distributed storage from being disregarded as too small to fit national-scale storage needs. When aggregated properly to benefit the energy grid performance, especially if the storage units are on the utility side of the meters or controlled by the grid operators, distributed storage will effectively serve as much needed bulk storage.
2014 had many significant news announcements on storage, but I believe facilitating the move to “distributed bulk” storage was a very noteworthy trend-setting event to mention. This trend has, and will continue to, opened up the storage market of utilities and behind the meter applications.