BERLIN — With the generation capacity of renewables, led by solar PV and wind power, on the rise across the globe — 46 percent of newly installed generation capacity in 2013 was renewables — investors large and small are scrambling to find cost-effective means to store power and balance energy systems.
There are many different energy storage technologies in various stages of development. These range from power-to-gas, batteries and flywheels to compressed air and hydrogen, many of which are still being honed in laboratories. Certainly, pumped hydro storage will remain the dominant means of storing utility-scale volumes of electricity, at least in the foreseeable future. Yet it is in battery storage that breakthroughs and declining costs have led to a dynamic market that many experts see as wide-open and full of potential despite obstacles — foremost the high costs.
It has not been the market and cost-benefit rationale that have driven growth in energy storage thus far — or will in 2015. State financing, subsidies, tax credits and regulatory measures are key to the equation both for small and large-scale storage. North America is leading the way with commercial and demonstration grid-scale energy storage projects, but Asia and Europe are right behind.
The Younicos Technology Center allows the company to simulate and test up 100 percent renewables-based energy systems anywhere using real power flows. Credit: Younicos.
“The fact is that every country into renewables is going to need storage capacity — sooner or later — as the volume of weather-dependent renewables increase in our energy mixes,” said Marco Wilke of the Munich-based 8p2 Consulting, referring to recent studies that question the acute need for storage capacity in Germany. He said that while investment is picking up in energy storage, high cost, regulatory uncertainty, and the novelty of the sector will probably keep the upswing gradual.
As far as battery technology is concerned, lithium ion is currently the preferred technology and the most active market, although it is not alone in the field. A recent study conducted by the Technical University of Munich concluded that many more new electrochemical energy storage technologies will be ready for market entry in the near future and will be more cost-effective than existing products. It found that safety fears about the lithium-ion batteries had dissipated. Worldwide, the study noted, there were many more times the numbers of patents issued for lithium products than for lead, redox flow or other battery technologies. The study claimed that Asian firms could be taking over Europe and American companies at the cutting edge of battery technology.
“The storage industry is profiting from the larges quantities of lithium that is being produced for electric vehicle batteries,” said Philip Hiersemenzel of Younicos. “This is why prices are declining.”
According to Navigant Research, there were 362.8 MW of energy storage projects announced worldwide in 2013-2014, an almost equal distribution between North America, Asia Pacific, and Western Europe. Navigant Research expects global installed energy storage for the grid and ancillary services power capacity to grow from 538 MW in 2014 to 21 GW in 2024. It predicts that worldwide revenue from energy storage will increase from $675 million in 2014 to $15.6 billion in 2024.
“The storage industry is poised for an exponential increase in sales,” said Eric Borden, a Berlin-based energy consultant. “Storage is today where PV was six or seven years ago,” noting that battery costs have declined 80 percent over the past decade.
“Countries and areas which are rapidly increasing renewable deployment in relation to grid transmission infrastructure and thermal power plants will look to larger-scale storage to help balance fluctuation of renewables,” said Borden, citing Hawaii in the U.S., Puerto Rico, Japan, Italy, China and other places. In order for China to meet its renewable goals, he said, it will have to compensate for its “lack of grid infrastructure to integrate its expanding wind power, which will also likely pave the way for larger storage projects — which could be pumped-hydro, too, not just batteries,” he said.
If 2015 is anything like 2014, it will be another year of firsts and breakthroughs for battery storage technology. Last year, for example, Europe’s biggest battery storage facility went into operation in Schwerin, in northeastern Germany. The facility, with a rated power of 5 MW and capacity of 5 GWh, is intended to help compensate fluctuations in the energy grid and ensure a stable supply by making short-term adjustments to balance supply
Many experts see projects like the Schwerin facility as the harbinger of things to come. Utility-sized batteries (larger than 1 MW) like the one in Schwerin, are popular where the potential to develop pumped-hydro storage is low, like in Germany. A battery twice as large as the Schwerin model is currently being installed in the village of Feldheim outside of Berlin. The Italian TSO Tema is in the process of adding 70 MW of storage capacity to its network.
The Southern California Edison Tehachapi Energy Storage Project features 604,832 lithium-ion battery cells, housed in 10,872 modules of 56 cells each, stacked in 604 racks arranged in rows. The system was provided by LG Chem. Credit: Southern California Edison.
In the U.S., battery storage is being given a massive boost by a California law that requires that the state’s investor-owned utilities purchase 1.3 GW of storage capacity by 2020. The mandate has greatly accelerated the development of storage technologies in the U.S. Experts say that California’s unprecedented storage mandate will turn the state into the world’s leading energy storage test bed. The utility Southern California Edison is moving forward with the world’s biggest storage plant — 260 MW at a cost of $50 million — which is being constructed with assistance from the Department
“The grid-scale energy storage market around the world is developing in starts and fits with a strong regional accents,” said Anissa Dehamna, senior research analyst with the independent consulting firm Navigant Research, who believes the market is poised for significant expansion in the coming years.
In terms of small-scale battery storage, high costs have kept the market small. Germany and Japan, the two leaders in small-scale storage, both have modest subsidy programs for residences and businesses. Experts estimated that by the end of 2014 there would be about 20,000 residential systems in use in each of the countries. In Germany, the lithium-ion batteries are usually sold as part of home energy management systems bundled with a software platform and solar panels. These systems range in price from about $13,000 for a 4.5-kilowatt-hour storage system to about $21,000 for a 10-kilowatt-hour system.
The German program has been hindered by complicated bureaucracy. Sixteen months since its inception, only about 50 percent of the new German owners of such systems were taking advantage of the subsidies. The Leipzig-based PV company Deutsche Energieversorgung said that only 15-20 percent of its battery customers use the supports. Roughly a third of RWE Home Power Storage’s clients have availed themselves of the subventions.
Yet, a study by research outfit EuPD, commissioned by Germany Trade & Invest is optimistic that the bugs are being worked out. It predicts a nationwide market of 100,000 units in Germany by 2018, citing falling PV prices as the “most significant reason” for this growth.
Navigant’s Dehamna said the storage market in Europe has reached an “early commercial stage” and will grow all the faster when regulatory frameworks are in place that investors can count on. “It’s not a cohesive worldwide market yet,” she said, citing differences in regulation, subsidies, technology and application in the U.S., Asia and Europe. “The market is coming into its own now.”
A study by the market research group IHS estimated that the distributed storage market worldwide will grow from about 90 MW today to 900 MW by 2019. It estimated that lithium-ion batteries will fall another 15 percent in price in 2015 (in addition to the 20 percent they dropped in 2014) paving the way for 90 percent market growth for the residential battery sector in 2015. IHS claimed that the chief driver of the sector is the increasing attractiveness of PV self-consumption to homeowners.