FORESIGHT Climate & Energy Business - Autumn/Winter 2017

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ELECTRICITY STORAGE EXAMINED

KNOWLEDGE

BATTERY BABBLE DEBUNKED

GRID SCALE STORAGE

BUSINESS

CITIES

No compromise on grid reliability

What storage is for and what it cannot do

Batteries are for grid support not bulk supply

Copenhagen’s urban energy battery trial

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SPECIAL REPORT: PAGES 15-40

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WHEN COST EXCEEDS VALUE

The dangers of pursuing electricity storage

FORESIGHT 05 AUTUMN / WINTER 2017

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CCO Kristian Lee Dahm Dickow EDITOR-IN-CHIEF Peter Bjerregaard, newsdesk@foresightdk.com EDITORIAL ADVISER & CONTENT EDITOR Lyn Harrison PROJECT MANAGER Kasper Thejll-Karstensen ART DIRECTOR Trine Natskår PHOTO EDITOR Lars Just PHOTO Lars Just COVER ILLUSTRATION Hvass & Hannibal ILLUSTRATION Anders Morgenthaler Hvass & Hannibal WRITERS David Milborrow Henrik Bendix Justin Gerdes Sandra Meinecke RESEARCH Mads Krarup

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Danger lies in the misguided belief that transitioning to a green energy economy depends on storing more electricity for powering homes, businesses and the rest of modern society than in the age of fossil fuel. Pursuing storage at any cost risks a rush to create markets that make storage of electricity profitable, whether or not it is needed.

Yet that is what governments are doing. Public money is being poured into developing and implementing “storage solutions,” not in response to demand from power system operators, who are successfully integrating large volumes of variable solar and wind capacity without storage, but to demand from storage providers. Demand is also coming from households and businesses who fear rising electricity bills unless they take matters into their own hands.

Despite these demands, it is not the task of governments to pursue the uptake of technologies, through direct support or by market regulation, when doing so is to the detriment of the common good.

Storing electricity will always cost more than using it directly. The more electricity that is stored, the greater its overall cost, both to society as a whole and to the individual solar-storage home or business.

If the transition to renewable energy was dependent on massive uptake of electricity storage technologies, these would be an unavoidable cost. But it is not. Countries furthest ahead in successfully transitioning to renewable energy are managing the variability of wind and solar supply without adding the cost of unnecessary storage. This summer, wind met 75% of demand for several weeks in western Denmark, where all large central power stations were inactive for 19 days in June. Dutch researchers, in a recent review of more than 60 studies, conclude that in power systems with up to 95% renewables supply, the need for electricity storage is no more than 1.5% of annual demand.

Instead of focusing on leveraging storage into power markets, battery storage in particular, governments should be reducing the need for it by investing in robustly interconnected power networks over wider areas. The less storage, the cheaper the overall cost of supply.

Creating markets that widen the spread between the wholesale price of electricity and its sales price might make storage profitable, but it is the customer who pays more in the long run. They should not overpay for an essential service, or feel driven to invest in home supply.

The narrower the price spread, the lower the total cost.

Acting on a belief that storing electricity and “firming supply” from variable renewables is essential for reliable power delivery is no substitute for rigorous examination of the case for storage. When markets struggle to unearth a value proposition for investment in a product, it is high time governments asked themselves why that might be so. Only when the value of storage is greater than its cost does investing in it make economic sense.

Lyn Harrison

Printed matter 5041 0004

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SPECIAL REPORT EDITOR

FORESIGHT

Content

SPECIAL REPORT — ELECTRICITY STORAGE

KNOWLEDGE IN BRIEF Elon Musk’s Australian banter about batteries; battery challenge from wind; low cost pumped hydro storage; IEA wants stronger signals for new grid flexibility; facts and figures indicate limited role for battery storage in the big picture Pages 6-7

NO COMPROMISE ON RELIABILITY OF SUPPLY In green and flexible power systems, services like rapid cures for hiccups in grid frequency can be valuable Page 10

TRANSITION THE CASE FOR ELECTRICITY GRID STORAGE EXAMINED Is electricity storage essential?

Belief is a dangerous foundation for decision-making and beliefs about storage risk major investment errors

WHAT STORAGE IS FOR AND WHAT IT CANNOT DO Filling in for wind and solar over days of calm and cloudy weather is not a task storage can perform, even if it was a power system requirement

GRID SCALE STORAGE NOT ESSENTIAL BUT NICE TO HAVE The uptake of renewable energy does not increase the need for storage capacity, but stored power can help grid operators flexibly operate power systems, provided it can pay its way

COBALT CATCH FOR LI-ON Limitations on the supply of cobalt will restrict the production ramp-up of today’s lithium-ion batteries Page 44

KEY TAKEAWAYS AT A GLANCE Essential facts for evaluating the prospects for grid scale storage

THE RACE TO BUILD BETTER BATTERIES Lithium-ion batteries have developed a competitive edge for some uses, but flow batteries could be best for grid scale storage

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Page 46

STORAGE HAS TO MULTI-TASK TO EARN ITS KEEP By relieving grid bottlenecks of surplus supply and providing bursts of power when needed, storage can add sufficient value to find routes to profitability, but they are limited

BUSINESS BATTERIES FOR GRID SUPPORT NOT BULK SUPPLY Batteries score in their ability to rapidly inject bursts of electricity into the grid, but demand for the service is not greater in countries furthest ahead in transitioning to renewable energy

CITIES AN URBAN ENERGY BATTERY TRIAL A full scale energy management laboratory is part of a dockland regeneration project in Copenhagen

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UNDERSTANDING ONE ANOTHER A glossary of terminology used in electricity supply, power system management and grid services

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THE GRID IS A GIANT BATTERY Grid operators need incentives to use the grid as a large scale battery

NO SIGN OF A SILVER STORAGE BULLET No means of affordably storing large volumes of electricity in all geographies exists, but a robust grid, connected over a wide area, can deliver green energy reliability

GIANT SCALE BATTERY SHOWCASES The biggest battery bank experiments are in California and Australia

POLICY GREEN TECH MUST ENGAGE WITH BIG BUSINESS Former EU Commissioner for Climate Action and Denmark’s first minister for climate and energy, Connie Hedegaard, in conversation with FORESIGHT

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FORESIGHT

5

Knowledge

In Brief

Banter about batteries

6

Battery challenge from wind While Tesla has stolen most of the headlines in connection with Australia’s Hornsdale Wind Farm (previous story), the 100 MW stage two of the wind facility is setting out to prove that it, too, can provide grid stability services just as well as any battery.

The Australian Energy Market Operator (AEMO) says that from October 2017 it will remotely control the 100 MW of wind turbines to allow them to provide frequency control as an ancillary service (FCAS) for the national electricity market. AEMO is partnering on the A$600,000 project with wind farm owner Neoen and the Australian Renewable Energy Agency. “If successful the trial will provide a critical proof of concept to the market and investors on the ability of wind farms to provide FCAS,” states AEMO. Wind farms already provide FCAS in Canada, the US and Europe.

FORESIGHT

ILLUSTRATION Anders Morgenthaler

Tesla boss Elon Musk was quick to join the Twitter storm that erupted after 40,000 customers were deprived of their electricity supply in South Australia during a heat wave in February this year.

The system operator said it ordered the cut in supply to avert the risk of rolling blackouts which may have resulted from insufficient generating capacity. In a bout of Twitter exchanges after the event, Musk offered a giant 100 MW battery solution at a "pack cost" (excluding infrastructure) of $250 for each kilowatt hour of storage capacity, delivered within 100 days or it would be free of charge. The cost is likely to be closer to $500/kWh once shipping, construction and infrastructure are accounted for, estimates Carnegie Clean Energy, indicating a total investment of $50 million for 100 MWh of supply, far outside the price range a utility would typically countenance. The South Australia battery, which reportedly can provide 129 MWh for 80 minutes at its full 100 MW capacity, is to share the Hornsdale Windfarm's grid infrastructure north of Jamestown. The wind farm of Siemens turbines will have a generating capacity of 315 MW when stage three, under construction, is complete. It is owned

by Neoen, a French renewable energy project developer. Australia has other and cheaper options than battery banks for storing electricity, including 67,000 GWh of pumped hydro storage potential at 22,000 sites identified in a research project by the Australian National University. Using just 459 GWh of that potential, Australia can transition to 100% renewable energy within 20 years, according to lead researcher Andrew Blakers.

Knowledge

Low cost pumped hydro storage By using electricity to pump water to an upper reservoir and releasing it downhill through turbines as required, electricity can be stored in large quantities in a medium that is found in abundance. Pumped hydro storage capacity is influenced by the size of the reservoirs, the power of the flow and the head of water, which is determined by the difference in height between the lower and upper reservoirs. The round trip efficiency is dependent on the productivity of the pump, motor, and turbine as well as evaporation rates, but 70-85% pumped storage efficiency is commonly quoted.

Only 3.4 GW in all the world Grid storage other than pumped hydro

Li-ion Flywheel CAES NaS Lead acid Redox-flow Nickel-cadmium

1394 MW 952 MW 646 MW 204 MW 102 MW 68 MW 34 MW

41% 28% 19% 6% 3% 2% 1%

Source: IEA Tracking clean energy progress 2017

The IEA view verbatim “In many cases, it is unclear whether the business models in place are conducive to encouraging adequate investment in flexible electricity assets, raising concerns about electricity security. Continuous investment in flexible assets to ensure system adequacy during periods of peak demand and to help integrate higher shares of wind and solar PV capacity into the system is essential. The bulk of the flexibility that has been introduced so far has come from existing assets, primarily dispatchable capacity (mainly gas-fired plants and hydropower) and transmission interconnections. In 2016, the amount of new flexible generation capacity plus grid-scale storage that was sanctioned worldwide fell to around 130 GW, its lowest level in over a decade, reflecting weaker price signals for investment stemming from ongoing regulatory uncertainty and flawed market designs. For the first time ever, this capacity was virtually matched by the 125 GW of variable renewables capacity (solar PV and wind) commissioned in 2016, whose construction times are generally a lot shorter. The 6% increase in electricity network investments in 2016, with a larger role for digital technologies, supports grid modernisation and the ongoing integration of variable renewables. However, new policies and regulatory reforms are needed to strengthen market signals for investment in all forms of flexibility.�

Source: IEA 2017 World Energy Investment

Real world investment Not much of a market for storage

GRID SCALE BATTERY BASED ENERGY STORAGE

ELECTRICITY NETWORKS AND STORAGE

$1

$277

RENEWABLE BASED POWER CAPACITY

GLOBAL ELECTRICITY INVESTMENT

$297

$718

BILLION

BILLION

BILLION

BILLION

Source: IEA World Energy Investment 2017

FORESIGHT

7

The big picture The Arctic has lost more than half its volume of sea ice over the past three decades and three-quarters of the sea area that was once frozen is now open water. The rate of ice decline indicates the Arctic Sea could be free of ice by 2040.

For the first time this year a Russian tanker made it through the Arctic ice fields without the aid of an icebreaker escort.

The Russian government expects cargo along the northern sea route between Siberia and the Pacific to grow tenfold by 2020. The Arctic region has in recent years experienced periods with temperatures 15-20°C above average.

PHOTO Lars Just

NEW APPROACH TO ANCILLARY SERVICES

As provision of electricity moves away from command-and-control governance to become a multi-faceted business subject to the rules of demand and supply, specific sub-markets for vital grid support services are emerging. The new approach means services like rapid response to deviations in grid frequency become products in their own right

NO COMPROMISE ON RELIABILITY OF SUPPLY IN GREEN TRANSITION

A NEW APPROACH The increasing proportion of renewable energy in today’s power systems carries the risk that the electricity for frequency control may not always be available. As the head of the Australian Electricity Market 10

Operator, Audrey Zibelman, recently put it, a higher level of renewables on the system means the provision of frequency control and other ancillary services needs a new approach, “Not because it is a bad thing, but because it was bundled previously with the big generators.”

The emerging approach, whether in Australia, Europe or across America, is to treat the electricity needed for frequency regulation as a product in its own right and subject it to the forces of demand and supply in a specific services sub-market. The UK system operator recently held a specific auction for ultra fast frequency response, which was won by bidders offering instantaneous power from batteries. In the wide Pennsylvania-Jersey-Maryland area of the United States, PJM Interconnection, a regional transmission organisation, now operates a frequency control market for fast ramping resources to bid into tenders to provide grid services.

PLENTY OF OPTIONS Batteries are beginning to demonstrate a market edge for provision of instantaneous bursts of power now their prices have dropped, particularly the price FORESIGHT

Modelling by Danish researchers of various volumes of wind generation in the power system demonstrates that maintenance of grid frequency and power quality is not a problem

TEXT Justin Gerdes

E

lectricity grid operators have a tough job. Not only do they oversee the most vital delivery system in the world, the product they distribute has to exactly match demand for it at all times, down to split second intervals. Should supply fall short of demand, or exceed demand, grid frequency would wobble off target (60 Hertz in America and 50 Hz in most other regions) and risk collapse of the whole system.

The second-by-second matching of supply and demand to maintain frequency is achieved through frequency regulation, a largely automated process in which the dispatch of electricity from generators is constantly increased and decreased in tiny amounts.

This dispatchable generation comes as part-and-parcel of the bulk supply of electricity from thermal capacity, hydro and other plant. Integral to the delivered package, it is an “ancillary service” and provides essential support to the primary activity.

SPECIAL REPORT — ELECTRICITY STORAGE

Outside the box

Potential energy storage in Denmark compared with the UK and Ireland

If all cars were EV in Denmark ~ 75 GWh (2.5 million x 30 kWh)

Thermal storage in district heating grid, 2.6 TWh

SOURCE Aalborg University

DANISH GAS STORAGE ~ 11 TWh

Total electricity storage in Ireland and Britain ~ 30 GWh

“Modern wind turbines can draw on the kinetic energy in their rotating blades to deliver fast-acting power injection into the grid”

of lithium-ion technology. But they are not the only contenders for frequency regulation. Batteries face competition from electricity generators and also from electricity consumers. Consumption can be turned off at the flick of a switch to restore frequency and users who are unaffected by a dip in power supply are often prepared to accept relatively low payment for the demand response service they provide.

Generators will continue to provide frequency response, wind turbines among them, if for no other reason than it conveniently comes from the inertia inherent in the kinetic energy of many rotating generators. In Canada, the Hydro Quebec power utility has equipped hundreds of wind turbines with grid-responsive technology, as Tom Butler at the Clean Energy Council, Australia’s main green lobby group, points out. “Modern wind turbines can draw on FORESIGHT

the kinetic energy in their rotating blades to deliver fast-acting power injection into the grid if triggered by an event. They can also be flexibly controlled to deliver the correct response to suit the local grid conditions and requirements,” he states. In the US, the Public Service of Colorado also draws on wind energy for frequency regulation.

Admittedly the practice requires careful coordination of all the many clusters of wind turbines, especially on a power system running almost entirely on wind energy, as researchers at the Technical University of Denmark (DTU) and Denmark’s Aalborg University point out in a study from 2016, Provision of Enhanced Ancillary Services from Wind Power Plants. Their modelling of various volumes of wind generation in a power system demonstrates that maintenance of grid frequency and power quality is not a problem.

FROM SOLAR TOO Solar photovoltaic power can also be tapped to balance the grid. First Solar and the California Independent System Operator (CAISO) partnered for a series of tests in summer 2016 demonstrating that a 300 MW 11

SPECIAL REPORT — ELECTRICITY STORAGE

AND BATTERIES The attraction to a grid operator of obtaining full access at all times to an instantaneous store of electricity for fine-tune adjustments is undeniable. Battery energy storage systems (BESS), long held to be too expensive for other than some niche applications in grid power supply, are showing strong signs of living up to their long held promise.

Experiments with embedding battery storage in renewable energy projects, as well as at commercial and industrial facilities, are also multiplying. Denmark’s Ørsted (formerly DONG Energy), a world leader in operation of offshore wind power facilities, is installing a 2 MW battery at the Burbo Bank offshore wind farm in the UK. By using the wind farm’s grid connection it can offer frequency response and contribute, in a small way, to maintaining it locally.

For commercial and industrial players looking for market opportunities to sell electricity stored in batteries, frequency regulation is one of the options to “stack” several streams of revenue to help pay for the capital and running costs of battery ownership.

GOOD IN THEORY Looking ahead, mainstream adoption of battery electric vehicles (EVs) will in theory enable consumers everywhere to participate in frequency regulation markets. Every EV battery can potentially be a grid-balancing asset. “By varying its charge level, controlled charging can provide any ancillary service, including frequency regulation,” states a California Public Utilities Commission report as far back as 2013.

In practice, the value of the service to a power system may not be sufficient to provide revenue enough to the EV owner to make participation in the frequency response market worthwhile. Neither does the volume of storage offered by even millions of EVs connected to a power system look impressive. If every 12

Dips and blips

Grid frequency is retained within strict parameters

52.5 52 51.5 FREQUENCY (Hz)

utility-scale PV plant outfitted with standard inverters and software controls could respond to CAISO’s automatic generation control signals and frequency response commands. By curtailing the facility’s output slightly, it was in a position to demonstrate its ability to meet and even exceed frequency regulation response normally provided by gas plant. The inverters proved they could respond faster than spinning generators. “The plant demonstrated fast and accurate frequency performance,” the project partners report, also in cloudy conditions and to correct both positive or negative frequency deviations. “Data from these tests will be used by the CAISO in the future ancillary service market design,” state the partners in their project report.

51 50.5 50 49.5 49 48.5 48 47.5 47 46.5 17:00

17:10

17:30

17:20

System Shutdown

Statutory Limit

Operational Limit

Frequency

car on the road in Denmark were an EV, the storage offered would make up a tiny proportion of the total available, according to research by scientists at Aalborg University (graph previous page).

As with all electricity users, EVs can provide a flexible means for reducing or increasing demand, as demonstrated in an 18-month pilot project in the San Francisco Bay Area. One hundred BMW i3 owners were paid up to $1540 by electricity provider Pacific Gas & Electric to allow the utility to control home vehicle charging during times of high demand on the grid. Load reductions of up to 100 kilowatts were achieved via targeted delayed charging of vehicles.

The PJM frequency regulation market allows bids in increments as low as 100 kW, meaning as few as nine EVs can provide grid services when their reduction in demand is aggregated, states the International Council on Clean Transportation (ICCT).

Commercialisation of vehicle-to-grid (V2G) technology would permit EVs to both draw from and dispatch to the grid economically, according to Zhenpo Wang and Shuo Wang, engineers with China’s National Engineering Laboratory for Electric Vehicles.

“Compared with other peak-shaving and valley-filling methods, V2G can be a more economical and effective solution, with the added advantage of rapid response to grid-demand variations,” they state. • FORESIGHT

By the end of 2016, two million electric vehicles were on the road globally, according to the International Energy Agency.

Accelerating future energy solutions

An efficient transition towards a fossil free future depends on our ability to store and integrate renewable energy. Europe’s gas infrastructure can store significant amounts of energy and balance fluctuating power production.

However, gas systems are today predominantly filled with fossil gas.

We have established some of the largest biogas facilities in Northern Europe, replacing fossil gas with green gas.

Join us on the journey. eon.dk

14

FORESIGHT

TEXT Lyn Harrison & David Milborrow ILLUSTRATION Hvass & Hannibal

SPECIAL REPORT — ELECTRICITY STORAGE

It is widely believed the shift to renewable energy will open vast markets for electricity storage to mop up surplus wind and solar output in times of plenty for use when it is in short supply.

In response, governments are scrambling to support uptake of storage solutions.

But is storage essential for the energy transition, or even desirable, and what type?

Or is it a big added cost without cause?

THE CASE FOR ELECTRICITY GRID STORAGE EXAMINED Elemental Transitioning to renewable energy requires a modest increase in the volume of overall generating capacity needed to maintain high levels of supply security, but it does not automatically trigger a requirement for more storage capacity

Storage is widely seen as the essential missing piece in the energy transition puzzle. Only by storing electricity for use when the wind is not blowing and the sun not shining can variable sources of energy form the backbone of a clean power system. Or so the argument goes. Examine the case for storage more closely, however, and it is far from clear cut.

Storage is not essential for guaranteeing reliability of supply on a power system based on renewable energy. Alternatives for managing the ebbs and flows of supply and demand have long been in use and this flexibility remains available when renewable energy replaces fossil fuel and nuclear supply. Moreoever, new digital tools increase the ability to flexibly manage power systems.

Significantly, not one of the challenges presented by high proportions of renewables has proved insurmountable, or demanded large storage capacities, FORESIGHT

even on power systems regularly running on all renewable energy for many hours at a time, such as in regions of Europe, North America and elsewhere.

It was more than ten years ago that Denmark’s power system operator produced an analysis demonstrating that the entire western half of Denmark could reliably provide 70% of electricity needs from wind alone without storage and without relying on interconnections to its neighbours or the other half of the country. Trading power across borders, however, is a common sense use of interconnected grid networks, reducing electricity cost for all parties involved. The analysis was an academic exercise not a statement of intent. At the time, the foreseen 70% of wind electricity would require the remaining 30% to come from gas-fired generation.

Since that analysis, Denmark has transitioned to renewable electricity for 54% of its requirements 15

SPECIAL REPORT

Denmark’s evolving power system

Seventy per cent wind without large scale grid storage

MVH 8000

80%

7000

70%

6000

60%

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50%

4000

40%

3000

30%

2000

20%

1000

10%

2035

2030

2026

2022

2018

COST IS KEY While storage is not essential, stored electricity can be a welcome extra resource on any power system, provided the value of the service is greater than the added cost of generating more electricity as it is needed. For most power system applications, storage fails to meet that criteria. Even on a system entirely reliant on renewable energy, alternatives to storage are cheaper for meeting most needs.

Before electricity can be stored it must be generated and that comes at a cost. Although solar and wind have no fuel costs, they have capital costs to repay

2014

Offshore wind capacity

(about 40% of that from wind) and has set a firm course to be totally free of fossil fuel for all its energy needs by 2050, gradually transferring its energy demand for heat and transport to electricity. By 2035 a main scenario has wind supplying 75% of electricity demand (graph) and a mixture of other renewables supplying the remainder. Large scale electricity storage within the power system is not part of the country’s plans for meeting its 100% clean energy goal.

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2010

2006

2002

1998

1994

1990

1986

1982

1978

Onshore wind capacity

Wind power production as a percentage of classic consumption

and operation and maintenance expenses to cover.

The price of the storage hardware, its operating cost and the cost of discharging the stored energy comes in addition to the cost of generating the power in the first place.

Most storage systems take as long to charge as to discharge, meaning they can only generate for less than half the time. Moreover, energy losses occur in both the charge and discharge cycles. Just like any generation technology, storage has a utilisation limit, expressed as a “load factor” or “capacity factor.”

For storage, the load factor is unlikely to rise above 40%, which is less than for an offshore wind station, or a wind plant in a windy location on land, and compares with the 85-90% load factor achievable for a gas plant in full operation today. Using stored power will always cost more than using it directly.

These fundamentals of storage economics are non-negotiable. They are not changed by the falling price of batteries or abundant supplies of low-marginal-cost solar and wind.

That truth is blurred, however, when the full cost FORESIGHT

SOURCE Energinet.dk

0%

0

ELECTRICITY STORAGE

of storage gets hidden from view. When homeowners pay for their own solar panels and batteries, or the owners of electric vehicles offer storage capability to the grid, the cost of the hardware and running it does not show up in the bill for operating the power system. Indeed, that bill can even fall. If “behind-the-meter” storage reduces demand on the network just when peak use and peak prices occur, the system operator can save money by not having to buy electricity when it is most expensive. That does not mean to say the cost has disappeared. Although hidden from view, the greater cost of storage still exists and is still an item on the national economy. The bill trickles through and the extra cost has to be paid by society, one way or another.

THE ARBITRAGE DECOY The same principle applies to large scale storage, even though the benefits of economies of scale mean it is cheaper than home storage. The attraction of buying power when it is cheap and selling it later at peak rates is irrefutable and can represent a compelling market opportunity. The process can take place through energy exchanges, where it is open ended and without an obligation to match sales volumes with purchases, or it can be through interconnectors that link one power system to another.

The wider the spread in prices between rock-bottom, when demand on the system is low and/or renewable energy is in abundance, and peak rates, when demand threatens to outstrip supply, often

Stored electricity can be a useful extra resource on any power system, provided its value is greater than its added cost

from the lowest-priced renewables, the more money there is to be made from selling stored electricity.

It is this so-called arbitrage market, essentially an energy exchange process, that commercial storage players have their eyes on. It thrives on the price differential. Arbitrage has been used for many years to maintain constant demand on thermal plant (including nuclear), which operate most efficiently at constant full-load output. Thermal output under threat of curtailment as demand drops is bought at a low price and stored, typically during the night, and resold during the day, when prices are higher. If a sysFORESIGHT

THE GRID IS A GIANT BATTERY The grid itself can operate as storage, argues David Littell, a former public utility commissioner in the US state of Maine and now with the global Regulatory Assistance Project.

“The grid as storage can be efficient and cost effective. Larger scale grid operations open up geographic potential to move energy, balance energy and reduce the need for capacity and reserves dramatically at scales that smaller storage cannot. On a smaller scale, literal storage, such as the grid-enabled hot water heaters in use for decades, can shift demand peaks to reduce unnecessary supply side costs for high priced peaking plant. New technologies enhance the ability of different forms of storage to be deployed for different uses — but the efficiency is at the grid level," he says.

The challenge lies in introducing regulation to monetise the value of storage.

“Capturing the different value streams of storage will be a market, planning and analysis issue for years. Storage can be managed to maximise consumer end-user value, to provide distribution grid support or bulk transmission grid support. Or storage can look like a small generator or customers.

“These potential uses must be made to work in sync to optimise the value storage brings to consumers, the distribution and bulk power grids and how it can support or supplement traditional generation and grid assets. Planners don’t understand how to do this because the technologies are only now being developed and deployed.”

Grid operators need performance incentives to use the grid as a large scale battery to balance variable generation from wind and solar, adds Littell. ”Achieving high operational excellence has to be of greater benefit to an operator than building more and bigger power plants.”

He warns that the focus on the capacity of each individual storage technology obscures the efficiencies and cost effectiveness that grid-scale operations can achieve using the grid itself as storage.

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SPECIAL REPORT

tem operator owns or has access to sufficient storage, arbitrage can be a micro-economic option.

With storage operating at a 40% load factor, typically costing around $1400 per kilowatt of capacity installed and assuming a 30 year life of the hardware and 6% borrowing rate on the cost of capital involved, storage merchants need to sell their discharged electricity for around €40/MWh more than the price they paid for it, just to break even. Given that fact, it is not surprising that storage suppliers are persuasive in their arguments for market structures that support wide price spreads over a long enough period to make a commercial case for their arbitrage business.

A CLASH OF INTERESTS From the customer’s viewpoint, however, the narrower the price spread the less arbitrage that is required and the lower the average price they pay for electricity. Narrowing that spread without incurring the cost of storage can be achieved by employing

cheaper alternatives from the pool of so-called “flexibility” options.

One option is trading power with a neighbouring system, which can be across a national border. Trading adds flexibility for the price of a strengthened interconnection, bringing down costs for everybody long-term. Dynamic shifting of demand away from peak times, is another option. It has long been practised by system operators and well before the arrival of renewable energy.

Grid operators can also contract “demand response” from commercial businesses. These aggregators of system flexibility services pay customers to reduce demand for short periods and aggregate the “negative load” to sell to the system operator. Temporarily adjusting air conditioning or refrigeration quickly reduces spikes in demand with no ill-effects for the user. Commercial aggregators of demand response create different sized products as required.

Rapid advances in digital technology and develop-

More cons than pros for grid scale electricity storage

Types, capabilities and global deployment of storage systems for bulk power supply

TECHNOLOGY

TYPICAL CAPACITIES (MW)

STORAGE CAPACITY (MWh)

Pumped storage

< 3000

<24,000

Compressed air

<1000

<1000

Battery (various types)

< 50

Flow battery

Flywheels

Thermal storage

Power to gas (usually hydrogen or methane)

18

PROS AND CONS*

GLOBAL CAPACITY (GW)

Versatile *Land needs

184

*Complexity, sealed space needed

2.6

<100

*Weight and size

3.1

<10

20-30

Versatile *Complexity of corrosive chemicals

<1

~1

1-10 MWth

Efficiency falls off if storage medium cools

Versatile *Low efficiency if converted back to electricity

3.6

Mostly <10 MW

< 100 MWh but higher if existing gas grids used

Versatile *Low efficiency, especially re-converted to electricity

Limited (experimental)

FORESIGHT

Weight

0.04

0.04 (in US)

ELECTRICITY STORAGE

ment of the “energy internet” is making it ever easier and cheaper to manage demand, presenting storage with a tough flexibility competitor. •

UNCERTAIN MARKET

WHAT STORAGE IS FOR AND WHAT IT CANNOT DO

Filling in for wind and solar over days of calm and cloudy weather is not among the requirements that storage could potentially help meet Understanding how electricity storage can competitively add value to power system management is key to assessing if and where there is a market for it as the transition to renewable energy progresses. Storage can potentially increase the range of options for meeting any or all of four principal requirements for reliable supply: provision of bulk power to make up for

deficits in the variable output of solar and wind; system services (frequency response, reserves, voltage support) to provide increased flexibility in power system operation; management of variability to reduce price peaks and thus the cost of matching supply and demand; and easement of congestion on the network to reduce curtailment of green power production and defer spending on grid expansion (table).

Each principal use for storage can be further subdivided and within the four main types up to 15 separate applications can be identified. In all cases, options other than storage can meet the required need and that will not change much when transitioning to 100% renewable energy.

Essentially, there are six kinds of storage to potentially call upon: pumped hydro (versatile but geographically limited), compressed air (complex), various battery types (mostly very short-term only), flywheels (technically limited), heat/thermal storage (poor conversion efficiency) and power-to-gas (also

Four principal uses for the range of technology options

System support, maintenance of grid stability, deferring grid reinforcement and making up supply shorfalls

TECHNOLOGY

RESERVE AND RESPONSE

MANAGE VARIABILITY

EASE GRID BOTTLENECKS

BULK SUPPLY

Pumped storage

Yes

Yes

Yes

Yes

Compressed air

Yes

Yes

Yes

Yes

Battery (various types)

Response only

Limited

Yes

No

Flow battery

Yes

Yes

Yes

Yes

Flywheels

Response only

No

No

No

Thermal storage

Reserve only

Yes

Yes

Yes, but costly

Power to gas (usually hydrogen or methane)

Reserve only

Yes

Yes

Yes, but costly

FORESIGHT

19

SPECIAL REPORT â&#x20AC;&#x201D; ELECTRICITY STORAGE

Storage in context

Mostly pumped hydro and a limited market for batteries

ELECTRO-CHEMICAL 3.28 GW / 1.7 %

LIQUID AIR ENERGY STORAGE 0.01 GW / 0 PUMPED HYDRO

HYDROGEN STORAGE 0.02 GW / 0

183.8 GW

THERMAL STORAGE 3.60 GW / 1.9 %

Proportion of total

95.1%

Includes 1,322 operational facilities, and 262 announced, contracted or under construction, but excludes decommissioned facilities

ELECTRO-MECHANICAL 2.62 GW / 1.4 %

poor conversion efficiency). To date, only pumped hydro is used at grid scale to regularly store and discharge large volumes of electricity.

BULK POWER SUPPLY No technology exists that can be widely deployed across all power systems to affordably store volumes of electricity sufficient to meet demand over consecutive days devoid of wind or sun. Should wind and solar on a power system reliant on their supply be insufficient to meet demand over days, a mixture of various alternatives would need to fill the gap. Among these, stepping up generation from other renewables, such as biomass or geothermal, buying green power from a neighbouring system, and triggering agreements to reduce demand are among the main options. Calling on some non-renewable thermal generation, most likely gas, might be necessary.

Some forms of storage may also be brought into play should cheaper alternatives run short. Types of storage with the right technical attributes for bulk power supply are pumped hydro, compressed air energy storage (CAES), flow batteries, power-to-gas, and heat stored as hot water, hot rocks, or in another medium, for conversion back to electricity using a steam turbine. Given sufficient land area, a large number of lithium-ion batteries could potentially also meet grid demand for an hour or two. Their falling price make them close to being suitable for this purpose.

20

Meantime, pumped hydro, well established for years, is the only storage technology capable of storing large amounts of electricity at a cost that makes it viable for several applications. Even so, it has had difficulty finding an economic footing in markets with growing volumes of renewable energy. In Germany, demand for reserve capacity has fallen as the proportion of renewable energy rises, reducing the market for pumped hydro and lowering the cost of managing variability. A number of local pumped hydro facilities in Germany, built in the expectation of a grow-

In Germany demand for reserve capacity has fallen as the proportion of renewable energy rises

ing need for their services, have quietly closed. The German example is not unique. Texas is also noting a fall in spending on system services as its renewable energy supply increases.

To a lesser extent CAES can supply bulk power, but has technical and economic challenges to contend with (page 28) and is not in widespread use.

Converting heat back into electricity is not an efficient energy cycle, which probably accounts for why FORESIGHT

SOURCE DOE Energy Storage Database

Total capacity

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SPECIAL REPORT

GLOSSARY OF TERMINOLOGY

UNDERSTANDING ONE ANOTHER

GENERAL TERMS RELATED TO ELECTRICITY SUPPLY AND POWER SYSTEM OPERATION

AGGREGATORS Organisations or commercial businesses that pay disparate users and producers of electricity for slow or rapid reductions and increases in demand or supply to and from the grid and aggregate the result into packaged quantities that are of sufficient size to be attractive to power System Operators.

ARBITRAGE The buying of low cost energy on a power system with the purpose of selling it elsewhere or at another time in expectation of making a profit. Owners of storage facilities require a sufficiently large spread between the price at which they buy electricity and the price at which they sell it to make arbitrage worthwhile.

BALANCING Ensuring a match between power demand and power supply, without which electricity systems cannot maintain stability.

out the need for electricity supply from a grid connection.

BASELOAD The minimum load (demand from consumers) on an electricity network.

GRID BOTTLENECKS See congestion.

BULK POWER SUPPLY The provision of electricity for consumption by society. By far the largest market for sales of all electricity generated.

INERTIA The energy stored in an electricity system by virtue of the kinetic energy of the rotating generators.

CONGESTION Also known as grid bottlenecks and network congestion. Electricity networks become congested when more electricity threatens to flow into them than the capacity of the wires or transformers to absorb and transport it to customers.

INTERCONNECTOR Transmission lines linking sectors of the grid that are controlled by different System Operators. Power systems can be divided into sectors within a country, be contained to an area surrounded by water, or span international borders.

CURTAILMENT The throttling back of power, usually at the request of the System Operator, because a sector of the electricity transmission system is congested and would otherwise be overloaded (see congestion).

PEAK SHAVING Various mechanisms for reducing the peaks in demand that require bringing more generation online. Peaking plant only sell power occasionally (to cover peaks in demand) and must cover their capital and running costs with high charges, which make their electricity the most expensive to procure. Reducing peaks in demand reduces the average price of electricity to the consumer and the spread between high and low prices that can make arbitrage profitable (see arbitrage).

BALANCING MARKET A short-term market that enables power generators to make bids to increase or decrease the output of their plant.

DEMAND SIDE MANAGEMENT (DEMAND RESPONSE) A system service, energy users are paid to reduce (sometimes increase) power demands to facilitate balancing of the system. Users can receive payment from aggregators of demand side response or directly from the System Operator.

BLACK START Power stations or storage facilities that are able to start up independently with-

FLEXIBILITY Measures that enable electricity systems to respond to the continuous variations

22

in consumer demand and power supply, including the supply from some renewable energy sources.

FORESIGHT

SYSTEM OPERATOR The body whose responsibility it is to ensure that system demand and supply are kept in balance.

ELECTRICITY STORAGE

POWER SYSTEM SERVICES FOR MAINTENANCE OF GRID STABILITY

ANCILLARY SERVICES A range of adjustments to electricity supply into and out of the grid to keep the power system stable and sustain a reliable supply of high quality electricity.

Adjustments are automatic and manual.

They are controlled by power System Operators who call on generators to provide grid support services in a market driven or command and control process.

There is no globally standard nomenclature for the various ancillary services AUTOMATIC FREQUENCY RESTORATION RESERVE (AFRR) See “frequency response.”

BALANCING SERVICES Measures to balance supply and demand by reductions or increases in power output from generating plant. There are several types of balancing service delivered on various timescales, from seconds to hours. They fall into two basic categories, automatic or manual. Most of the rapid response services are provided automatically.

FREQUENCY CONTAINMENT RESERVE (FCR) Measures that include primary regulation, primary reserve and frequency response, See frequency response.

ENHANCED FREQUENCY RESPONSE Ultra rapid delivery of active power output in one second or less in response to a grid frequency deviation. A relatively new service. Some system operators now hold specific auctions for “enhanced frequency response,” with battery storage providers competing for contracts. Batteries are particularly well suited to injecting near instantaneous bursts of power into the grid as needed. Development of cheaper batteries is making enhanced frequency response from batteries affordable. They can potentially deliver the power more rapidly than generating units.

FREQUENCY RESPONSE Provided by power generators whose output increases or decreases automatically in response to changes in frequency Output is increased when frequency falls below or exceeds the target (50 Hz in Europe, parts of Africa and Asia and 60 Hz in North America). Also referred to as simply “response.” Most primary frequency response services have timescales around ten seconds and secondary frequency response timescales of around 30 seconds. Enhanced frequency response is within one second.

Synchronous generators can provide “lagging” or “leading” power and are used to bring current and voltage in phase. Some wind turbines can perform this corrective function.

MANUAL RESERVES Also referred to as manual frequency restoration reserve (mFRR). Reserves that are called on by the System Operator to restore system frequency or balance supply and demand.

RESPONSE See frequency response.

REGULATING POWER The power used to assist in the restoration of system frequency, up or down.

RESERVES A generic term for increases or decreases of power supplied to the grid (for a fee) as requested by the System Operator.

MANUAL FREQUENCY RESTORATION RESERVE (MFRR) See manual reserves.

SECONDARY REGULATION (SECONDARY RESPONSE) Also known as automatic frequency restoration response (aFRR). Measures that may be needed to restore system frequency after primary regulation has provided the initial action.

PRIMARY REGULATION Also referred to as frequency containment reserve (FCR).

SECONDARY RESERVE MARKET A commercial market for secondary regulation (above).

PRIMARY RESERVE MARKET In Europe refers to a reserve market forged from a coupling of the primary reserve markets of Germany, Belgium, the Netherlands, Switzerland and Austria to make up a combined market of over 800 MW, expected to grow to 900 MW in 2020, according to PA Consulting Group.

Weekly tenders for the reserve needed provide no long-term cash security, a disincentive to participation by battery energy storage systems.

SHORT TERM OPERATING RESERVE See spinning reserve (below).

REACTIVE POWER Reactive power exists in alternating current power systems when current and voltage are not in phase. It exists as a consequence of current passing through most machines and other devices. In most electrical systems, the current lags behind the voltage, due to the presence of motors and other inductive loads, but capacitive loads have the opposite effect and the current leads the voltage.

FORESIGHT

SPINNING RESERVE The provision of extra or reduced power under instruction from the System Operator, with a notice period of around 30 minutes, also referred to as short term operating reserve.

STANDING RESERVE The provision of extra or reduced power under instruction from the System Operator, with a notice period of typically two to four hours.

VOLTAGE SUPPORT Measures needed to keep system voltage and reactive power levels within statutory or technical limits. The support may be provided by ensuring that there is adequate generation within a particular area or by the use of static devices such as synchronous compensators.

23

SPECIAL REPORT — ELECTRICITY STORAGE

it has not been widely adopted. Meantime, the versatility offered by flow batteries means they could make a contribution to bulk power supply, should their technical challenges be overcome.

MANAGEMENT OF VARIABILITY Historically, storage has been perceived as having a role in “firming” the supply of wind and solar power on an electricity network that has significant proportions of both. The purpose is to reduce the variability of output from wind or PV installations. Such firming can take place either at the individual wind farm or at the level of the power system. Pumped hydro, CAES, thermal storage and power-to-gas all have the technical ability to provide firming, batteries less so, if at all.

Making wind and solar behave like thermal generation to supply firm power serves no obvious purpose

The question, however, is whether so-called firm power is essential for reliable electricity supply, or even desirable. Making wind and solar behave in the same way as traditional generation serves no obvious purpose and may not be economically achievable.

Seen from the perspective of the grid, no storage system is capable of entirely firming the supply of a variable renewable energy resource. A real world example from Denmark demonstrates the point. On February 9, 2016 at 19:00, wind output from 3800 MW of capacity dropped below 1000 MW. It remained below 1000 MW for four days. When the calm period began, consumer demand would have been falling, obviating the need to boost production from the system’s gas and coal plant. To cover the next day’s morning and evening peaks, more power would likely have been needed, a pattern repeated over the next three days.

If storage had been used to boost production, assuming sufficient storage capacity, it would only have been for a few hours each day. As a capital-intensive technology, storage needs to be used intensively to pay for itself. The incremental cost of supplying electricity for just a few hours soon becomes unaffordable, as well as uncompetitive compared with using the existing fossil fuel capacity. For the green energy transition to be both fast and affordable, managing variability by occasional use, for short periods, of some of the considerable volume of thermal generation already in place can be a compromise worth making.

24

TOO MUCH OF A GOOD THING When renewable generators are producing more electricity than there is immediate demand for, storing the power rather than curtailing production is an obvious option. But only a limited amount of the energy from a long period of strong winds can be accommodated in a store. Curtailment of output is likely to be cheaper than paying for more storage, even when compensation is paid to the curtailed generator for lost revenue. Power system operators have for years curtailed all kinds of generation to help manage supply and demand variability. They are comfortable with compensating generators and it is part of the reliability of service that consumers pay for. Increasing the cost of that service by storing power for which there may be no or little need is not the foundation for a future market.

Storage at the individual wind farm level may in some circumstances be worthwhile, but the added value could be small, as demonstrated by the prices achieved in power auctions in the UK conducted by the Non Fossil Fuel Purchasing Agency. The difference in prices between firm power (such as landfill gas) and variable power (such as wind power) rarely exceeds £5/MWh, a long way short of the €40/MWh break-even point for stored power.

In some locations capacity firming to support the electricity network may be so useful that it has enough value to make storage commercial. The United States Department of Energy Storage Database lists over 200 projects where this takes place, often in remote areas. The value to the network lies in the system having access to the storage capacity and the stored power. Going off grid does neither grid customers nor individual consumers any favours, as pointed out in a 2014 report from Britain’s Imperial College, Can Storage Help Reduce the Cost of a Future UK Electricity System? “Distributed storage at the household level with no interaction with the network is neither the most economically attractive solution for end users, nor most beneficial to the network,” it states. •

STORAGE HAS TO MULTI-TASK

EASE CONGESTION AND SUPPORT THE GRID

Storage located in the grid can defer network expansion and power from batteries can be advantageous in provision of system services A market structure that allows storage facilities to meet multiple requirements raises the value of stored electricity to system operators, a value recognised in FORESIGHT

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SPECIAL REPORT

multiple streams of revenue. When a storage facility has the opportunity to multi-task, the “revenue stacking” that follows mitigates against the inherent economic disadvantage that storage labours under.

Employing a storage system to not only contribute to bulk power supply and help manage variability, but also to ease congestion to avoid network expansion, and to supply needed grid support services could increase its value sufficiently to make it a competitive player in the energy market.

Grouping such a variety of needs for a single storage facility, however, is unlikely to prove possible on many power systems for much of the time and not all types of storage can meet all needs (table pages 18-19).

Pumped hydro, CAES and flow batteries are versatile enough to cover all applications, but are challenged geographically and technically. Most types of storage can help ease congestion, but thermal storage and powerto-gas cannot easily contribute to more than a narrow range of system services, albeit at a relatively high cost.

Other battery types are limited to the supply of some system services only, though can help ease grid congestion and in some cases help manage variability.

LIFE IN THE SLOW LANE An electricity network becomes locally congested in areas where expansion of grid capacity has not kept up with expansion of generating capacity. As production outstrips local demand, bottlenecks on the grid form unless production is curtailed, or stored. Wind generation is particularly prone to getting caught in bottlenecks on the wires. Without storage, the system operator’s only choice is to cap generation on the production side of the bottleneck and find another source of supply on the demand side.

Compensation to curtailed generators for loss of revenue is usual. It is provided either on the basis of cost-reflective calculations or, more commonly, on the basis of bids by the owners of the generating capacity.

Locating appropriate storage plant near such a bottleneck could in some circumstances defer the need to invest a larger sum in expanding the grid to solve the problem. As the UK’s Imperial College stated in its 2014 report on the viability of storage: “If addition of storage is more economically attractive than network reinforcements, this will lower the cost of transmission, distribution and local network investments.”

In other words, the storage on offer has to be cheaper than the cost of curtailment. Pockets of such opportunities for storage providers exist, but they are limited in number, constrained in size, and could be of short duration. Even so, power system operators recognise that if storage has the opportunity to earn its keep from meeting multiple requirements, the po26

tential to defer grid expansion by easing congestion is one of the “revenue stacking” options.

Both in California and the UK, power system operators are giving battery storage the chance to prove its mettle for provision of system services. San Diego Gas & Electric has brought online the world’s largest battery storage bank using lithium-ion technology, one of three similar projects in the state, and is calling for five more. The purpose is not primarily to boost grid reliability, but to reduce reliance on gas following the chaos caused by a major pipeline leak.

UK Power Networks, after trialling a 6 MW/10 MWh lithium-ion battery installation to demonstrate how it could provide multiple flexibility services, is going ahead with a commercial tender and will select more such systems if the price is right. The trial proved the ability of the battery bank to shave peaks off demand in sufficient quantities to defer the network reinforcements needed to deliver more energy.

Australia has also declared its intention to employ a giant 100 MW/129 MWh battery from Tesla to support frequency stability on the South Australia grid network. Supporters believe it could also be a competitive option for shaving off high electricity prices at times of peak demand.

SYSTEM SERVICES In some circumstances, storage may make a useful and affordable contribution to the provision of one or more of the various grid support services that maintain quality of electricity supply. Electricity systems must be sufficiently flexible to rapidly respond to changing circumstances, with or without renewable energy as part of the mix.

If storage has the opportunity to meet multiple power system requirements, revenue stacking can offer a route to profitability

The ability to continuously match supply and demand is essential for keeping voltage levels stable.

Sudden power station or transmission system faults will cause rapid loss of supply. On the demand-side, unforeseen events, such as the arrival or disappearance of hot or cold weather bringing demand for cooling or heating, can trigger unexpected changes in electricity consumption.

System operators contract with generators to provide “ancillary services” to cope with these eventualFORESIGHT

ELECTRICITY STORAGE

digital technology are outpacing increases in volatility. These advances are generally bringing down the cost of system management.

Three of the six defined types of storage (table pages 18-19) can technically provide some system services: pumped hydro, CAES and batteries. Flywheels may be able to provide response, heat storage and power-to-gas cannot easily provide response, but may be able to provide reserve. Grid operators are unconcerned where the service comes from, provided the technology can fulfil the functional requirements.

FREQUENCY RESPONSE FIRST

ities, which include frequency response and reserve power. Most of these services are paid for through an availability charge for being on standby, plus an energy charge for the electricity provided when needed.

It is not a large market. Power used for system support represents a single digit percentage of all the electricity churning through the wires. Within that confined sub-market, storage would need to elbow out other established providers of support services by offering greater value for money.

The expectation that increasing proportions of variable energy would require additional flexibility to cope with the fluctuations in output is not being proved in practice, as Germany, Texas and elsewhere are demonstrating. Better management of balancing markets, accurate forecasts of solar and wind generation, better coordination between control areas and more just-in-time adjustments thanks to advances in FORESIGHT

The first line of defence when power system frequency deviates from the network standard (50 Hz in Europe, 60 Hz in North America) is frequency response.

As the most demanding of the system services it tends to be the most valuable and its higher market prices can help storage economics. Britain’s National Grid estimates that providers of frequency response are paid around €60/kW/year for making the required generating capacity available as needed.

Most thermal plants are able to respond automatically to frequency changes and will increase output when the frequency falls, and vice versa. Groups of wind turbines with appropriate technology can do the same. Typically, the total holding of frequency response is just under 2% of the peak demand on an electricity system.

Battery storage is looking well placed to get a good bite of this relatively small cake, given latest improvements in the technology. A recent auction by the UK’s system operator for a new ancillary service, dubbed “enhanced frequency response,” saw batteries successfully bid for the majority of the 200 MW that was called for. The birth of the new service was likely prompted by the ability of the new breeds of cheaper battery to provide or absorb power very quickly. The specification was for response within one second, with compensation for such fast response set correspondingly higher. The range of winning bids was €7.7/MWh to 13/MWh, an average of €10.3/MWh and an average price for the 200 MW of €100/kW/year.

CALL IN THE RESERVES The second line of defence, when the mismatch between supply and demand is likely to extend over more than a few minutes, is to call on reserve power, also referred to as spinning reserve. Generating facilities increase or decrease their output in response to system need, with notice periods from minutes to a few hours.

Reserves have mostly been provided by thermal plant, although wind power will offer the same facil27

SPECIAL REPORT

ity as it increasingly replaces thermal generation. By operating at part load, generators can increase or decrease output as required, including wind generators.

Part load operation is less efficient than operating at full load and bids to provide the service are set higher than for continuous supply, though are lower than those for response.

Storage, however, has no such efficiency penalty attached to it when supplying to the reserve market, which can give it a fighting chance among competitive bids, particularly if it can also “revenue stack” by supplying frequency response. Batteries may face technical barriers in supply of reserve. Specifications can demand provision of reserve power for periods of an hour or more, which would rule out several battery types.

The total holding of reserves on a power system is typically around 6% of its peak demand. The holding must increase as the volume of variable renewable energy increases. But instead of increasing reserves, system operators can call for a reduction in electricity use. Paying for “demand response” can serve the same purpose as reserve power, at less cost. The flexibility offered by demand response gives storage tough competition for most purposes. The cheapest bid among the flexibility options will decide which among them are the winners and losers for system services.

Battery storage could be well placed to get a good bite of this relatively small cake

BLACK START AND VOLTAGE SUPPORT Other system services, such as providing black start capability and voltage support, represent smaller markets for storage. When power systems need to recover from shutdowns, batteries in stand-alone mode are ideal and they have long been used to enable some types of power stations to restart after a grid failure leaves a large area without electricity.

Voltage support is the ability to produce or absorb reactive power to maintain a specific voltage level and only a small percent of generators on any market are required to provide it. Early renewable energy technologies struggled to meet reactive power requirements but no longer is that the case. Where voltage support is needed in areas remote from power stations, the majority is met by batteries. But across the whole of the United States, opportunities for batteries to provide voltage support are limited to 150 applications. • 28

TYPES OF STORAGE

NO SIGN OF A SILVER BULLET

There is no universally exploitable, affordable and proven method for storing large volumes of electricity Most storage technologies in use today have been playing a part in electricity supply for a number years, though only pumped hydro has been deployed at any significant scale (see table 18-19). The lack of investment in storage is a reflection of the forces of supply and demand, which indicate a limited need for the product, evident in its low market price. The services storage offers are often already provided from supplies of electricity as it is generated and at less cost, also on power systems with high proportions of renewable energy.

All types of storage yet developed are constrained by technical and economic limitations on their use. In principle, however, each technology can contribute to meeting a number of power system requirements.

PUMPED STORAGE As the only storage technology capable of storing large amounts of electricity, pumped hydro is widely deployed. It is proven and reliable and comes at a cost that makes it suitable for several applications.

Lack of suitable sites for reservoirs, however, limit its global expansion. Around the world, pumped hydro capacity amounts to well under half the volume of wind capacity alone.

Pumped hydro requires two reservoirs, one at an upper level, the second at a lower level. The difference in height influences the power output and the volume of the reservoirs influences the time for which the installation can operate. One of the world’s best examples of a pumped hydro facility is at Dinorwig in the UK. It has six 300 MW water turbines that can provide power for up to six hours. Full load output can be achieved in about 75 seconds from standstill.

That speed of response means that pumped hydro is well suited to numerous applications.

The largest installation in the world is in the United States and has a capacity of 3000 MW. More large facilities are under construction, particularly in China.

COMPRESSED AIR Compressed air energy storage (CAES) requires a large, sealed space to contain air which is compressed, thus absorbing power, and then released, often through a combined cycle gas turbine, when power is required. Abandoned mines could provide locations for CAES in addition to salt caverns.

FORESIGHT

ELECTRICITY STORAGE

Rated capacity of all existing and proposed grid storage The minimal role of electricity storage on the United States grid

SOURCE US Energy Information Administration

Battery 26%, 304 MW

Flywheel 3%, 40 MW

Compressed air 35%, 423 MW

Pumped hydro 95%, 23.4 GW

Other 5%, 1.2 GW

Significant amounts of heat are generated when the air is compressed and that has to be dealt with, adding to the cost. The heat can be stored as hot water, or in another heat storage medium and converted back to electricity through a steam turbine. Energy is also needed to reheat the cold air released from the store.

The round-trip efficiency of CAES is in the region of 65-70%, meaning 30-35% of the energy is lost during the process. The output of the facilities that have been constructed is modest, mostly in the range tens of megawatts to around 300 MW. Across the United States, CAES has a combined capacity of 600 MW out of a reported world total of 2600 MW. The complexities of the process and its cost have prevented CAES from making any significant market breakthrough, despite considerable government expenditure over time and dollops of venture capital still being spent on the concept.

BATTERIES The principal advantage of batteries over other storage technologies is their rapid response time, which is virtually instantaneous. They can provide grid support services faster than other storage technologies and potentially faster than generation supplied FORESIGHT

Thermal storage 36%, 431 MW

directly from the grid. The principal disadvantage of batteries is their large size at grid scale and their weight, which has made lowering their cost through reduction of material a major challenge.

Lithium-ion: Of the various types of battery, Lithium-ion batteries account for the biggest contribution for grid scale storage applications by a large margin, with a combined 400 MW installed globally, about 14% of the total grid storage battery capacity. Other batteries offer more stability and longer duration, but lithium-ion beats them on price and simplicity, dominating the grid-scale battery market as a result.

Nickel cadmium: The commissioning of a more conventional battery type, a 40 MW nickel cadmium battery in Alaska in 2003 attracted much attention, but it can only sustain its output for seven minutes. The local utility regards battery backup as “an economic and ecological alternative to spinning reserve” and it also stabilises the local grid. The project may still rank as the world’s most powerful battery, but the claim for the largest battery, in energy terms, is now made for a lithium-ion project in California with capacity to store 80 MWh — enough to power eight average American homes for a year — and a power output of 20 MW. 29

SPECIAL REPORT — ELECTRICITY STORAGE

Not all storage is equal but power to gas is biggest and longest Relative capabilities for delivery of useful quantities of energy over significant periods

One year

One day

One hour

One minute

1 kWh

10 kWh

100 kWh

1 MWh

10 MWh

100 MWh

1 GWh

10 GWh

100 GWh

1 TWh

10 TWh

100 TWh

STORAGE CAPACTY Flywheel

Batteries

Compressed air storage

Flow batteries: For the past three decades flow batteries have held tantalising promise and a number of grid scale demonstration projects have come and gone. The largest have capacities around 1 MW and storage capacities around 4 MWh. A flow battery stores energy in tanks of liquid chemicals and the larger the tank the larger the store. When charging, a chemical reaction occurs and the liquid flows to a tank for charged chemical. Spent or discharged chemical is held in a separate tank.

The challenges lie in dealing with the harmful chemicals, the degradation of the battery’s capabilities over time resulting from charge and discharge cycles, and the need for periodic maintenance to restore their capacity. Development work is ongoing into new non-corrosive chemical solutions that can hold a charge for longer than lithium-ion and enable flow batteries to be built from cheaper materials.

Electric vehicles: The steady transition to electric vehicles potentially provides a virtual battery store already paid for, though of relatively modest size 30

Pumped storage

Hydrogen

(power-to-gas)

Methane

(power-to-gas)

compared with non-battery storage technologies.

Batteries designed for vehicles, however, are not well suited for use as two-way power stores, as Tesla’s Elon Musk has pointed out. They can nonetheless add additional flexibility to grid operation if encouraged to charge in off-peak periods using time-of-use pricing.

A commercial opportunity exists for demand side aggregators to sell “negative load” to the grid from vehicle batteries by paying their owners to shift charging times on request. Aggregators could also potentially sell stored electricity in vehicles to the grid. Even if that should become technically possible and affordable, drawing power from large numbers of parked and charged vehicles and selling it back into the system is a logistical challenge of serious magnitude if the owners are not to be inconvenienced.

HEAT STORAGE Traditionally, heat storage of electricity has not been reversible. Night storage heaters typify one-way storage technology, aiding power system management by reducing the difference between daytime and night FORESIGHT

SOURCE School of Engineering, RMIT University

DISCHARGE TIME

One month

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ELECTRICITY STORAGE

time demand. As a result, less generating capacity is required, a saving for consumers. Electric space and water heating is generally more expensive than gas or oilfired heating, but transitioning to more electric heating could provide a large source of one-way storage and inexpensive demand-side management. As a passive one-way store, electric water heating can be modulated without significantly affecting the comfort of the consumer as can space heating, though to a lesser extent.

Two-way heat storage that can act as a sink for surplus wind and solar, with conversion of the heat back to electricity, is possible, but with a severe efficiency penalty. Siemens is developing a heat-based storage technology with the Technical University of Hamburg and local utility Hamburg Energie. Electricity is used to heat an assembly of rock-fill about the size of a football pitch and with an insulated cover. A steam turbine converts the heat energy back to electricity.

The capacity of the experimental store is 36 MWh and it can deliver 1.5 MW for 24 hours, enough for the annual needs of ten European households. The overall efficiency of the pilot system is estimated to be 25%, with expectations of increasing it to around 50% in future.

Combined heat and power (CHP) systems also provide storage for surplus electricity, diverting it to heat water in giant centralised holding tanks. The Studstrup facility in Denmark, one of the world’s largest biomass power stations, incorporates a giant squat storage tower that holds about 30,000 cubic metres of hot water.

In countries without well developed district heating networks, large scale heat storage requires further development of effective latent heat or thermochemical systems, as the UK Energy Research Centre recently concluded. The storage volumes required

Converting power to gas as a storage medium is a technique long under development, but short on realisation and with uncertain cost

would otherwise be too large and difficult to integrate into existing domestic dwellings. Thermochemical systems use materials such as calcium hydroxide, which changes into calcium oxide and water on heating, in a reaction which is reversible. Continual upgrades of existing CHP facilities, where they exist, is a more readily available storage option.

FORESIGHT

POWER TO GAS Converting power to gas as a storage medium is a technique long under development, but short on realisation and with uncertain cost. Most proposals convert surplus electricity through electrolysis to produce hydrogen as a fuel for road transport or for injection into the natural gas grid. Another possibility is to combine the hydrogen with carbon dioxide and produce methane.

These various conversion processes bring with them an efficiency penalty and further efficiency losses are incurred if the gas is to be converted back into electricity. Not all the proposed uses of hydrogen or methane necessarily involve conversion back into electricity. One recent analysis by Germany’s Karlsruhe Institute of Technology concluded: “Power-to-Gas (PtG) might play an important role in the future energy system. However, technical and economic barriers have to be solved before PtG can be commercially successful.” •

STORAGE PROSPECTS

NOT ESSENTIAL BUT NICE TO HAVE As an aid to power system operation, storage can play a useful role, provided it can pay its way.

For a few specific tasks, some types of storage may have advantages over alternative options Storage of electricity is not essential for reliability of supply on a power system with significant volumes of fluctuating renewable energy. Just as with coal, gas and nuclear power, reliability of supply from renewable energy can be secured from a range of generating options and from sophisticated management of both supply and demand. Grid stability is not reliant on storing electricity for later use.

Achieving the high reliability standards demanded of a modern electricity system does not require renewable energy to mimic the behaviour of thermal plant and wrap its supplies into a “firm power” product. Balancing the variations in wind and solar supply can be done without using stored power, which rules out paying for storage solutions at any cost. When and where the value of storage is greater than its cost a market will evolve that is driven by power system need, not by the needs of storage providers to make ends meet.

From the perspective of the grid as a whole, storage can be useful in helping system operators match supply and demand. But even when charging on cheap wind and solar, storage systems add cost.

35

SPECIAL REPORT — ELECTRICITY STORAGE

When the grid comes under pressure, rather than relying on stored power it may often be cheaper to curtail generation surplus to requirements, to shift demand away from times of peak use and to call up other supplies, preferably from clean sources of generation. An abundance of cheap wind and solar does not change this fundamental market force.

For storage providers, the business case improves greatly if they can supply a whole range of grid requirements over weeks and months, tapping into multiple revenue streams, or “revenue stacking” to use the latest jargon, but there are limitations. Not all types of storage can meet all requirements and storage multi-tasking may not be needed by a power system, depending on the mix of generation available.

In markets with the highest proportion of renewable energy, demand for storage is not growing exponentially. As experience of managing power systems with high proportions of renewable energy grows, the expected sizable market for storage is not materialising. Power system operators, however, are awake to the falling cost of batteries and the advantages of having instantaneously available electricity to draw on for some system services, whether or not renewables are a large part of the mix.

BATTERIES EDGE INTO SUB-MARKET The ability of batteries to rapidly respond to demand and their plummeting price is, for the first time, giving them an occasional edge on the grid services sub-market for ultra-fast frequency response; they can potentially provide other grid services, too. Lithium-ion battery prices have fallen from $2000/kW in 2009 to around $600/kW in 2013 and continue downwards, taking advantage of the economies of scale that come with mass manufacture in large factories.

They are providing energy for $350/kWh and on the current downward trajectory are projected to fall to below $100/kWh in the next decade.

An opportunity for major improvements to the economics of providing grid services from battery energy storage systems (BESS) is co-locating them with a renewable energy facility of sufficient size. When a wind plant is not generating at full power, its grid connection has spare capacity that can be used to import electricity from the grid to charge the batteries and discharge them as needed. By sharing the site’s grid connection, the BESS can inject bursts of power to maintain grid frequency, a service renewable energy struggles to provide, at far less overall cost.

Swedish utility Vattenfall is building 22 MW of battery storage on the site of a 228 MW wind farm in Wales, the largest in Britain outside Scotland, to gain access to the grid for commercial storage through the 36

existing connection line. It reports a huge cost saving, without which the grid connection would have made the storage facility prohibitively expensive. Renewable energy would appear to be offering a chance for storage to be financially viable for the first time, though it is a limited market.

Supply of ancillary grid support services represents only a fraction of the overall market for electricity. As a sub-market its total value is relatively modest.

Storage providers will share that constrained market with electricity generators. Still, battery energy storage system sales are projected to grow from under 1000 MW in 2015 to 8000 MW in 2021, according to the International Renewable Energy Agency (IRENA), quoting a Navigant Research report. To put that into perspective, the annual market for new renewable energy capacity reached 160,000 MW in 2016, most of that from 70,000 MW of new solar capacity and 50,000 MW of new wind turbines, reports IRENA.

THE BOTTOM LINE Electricity markets can be structured to achieve a variety of desired outcomes, including making storage of electricity a profitable business for storage providers. Whether such a market benefits consumers, or is needed, is questionable. Ultimately it is up to legislators to get market structures right for an affordable renewable energy future.

Renewable energy, by sharing its existing grid connection, may be offering a chance for battery storage to gain financial viability for the first time, though that market is limited

Energy efficiency regulations that encourage less consumption in peak periods, when electricity is most expensive to procure from generators, will reduce the overall cost of power supply, as will slick management of both supply and demand. In contrast, supporting homeowners and businesses to install solar panels on the roof and batteries in the basement is a more expensive means of only potentially achieving the same aim of a reliable green power supply, even should the batteries hold sufficient charge for long enough to maintain stable supplies.

A power system operator can use weather forecasts to project likely volumes of rooftop solar generation along with the resulting drop in demand for FORESIGHT

It’s green – and it’s good business Denmark and Danish companies have shown that environmental policies and economic growth can go hand in hand.

As the first country in the world, Denmark has decided to lead the transition to a green growth economy and become entirely independent of fossil fuels by 2050.

Today, more than 40 per cent of Danish electricity consumption is covered by wind power.

For decades, Danish companies and research institutions have developed solutions to make this transition possible. The solutions are already here and ready to inspire.

Find them at www.stateofgreen.com, follow @stateofgreendk on Twitter or State of Green Denmark on LinkedIn.

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SPECIAL REPORT — ELECTRICITY STORAGE

The merit order for power system flexibility

Steps on the way for generators and the building bocks of a maturing green energy market

Concentrated Solar Power District heating

Existing hydro, pumped hydro and natural gas storage (Geographic limitations) Natural gas generation and coal cycling

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Heating and transportation Ice and heat

Improving pricing and demand response

Penetration of variable renewable energy

grid power. Solar is predictable. But the system operator cannot predict how much of the privately owned battery capacity is fully or partly charged, or if the owner is prepared to use it now or later. The unpredictability of demand reduction from home-based BESS means it is likely to increase rather than reduce overall volatility in demand and supply.

The more volatility that has to be managed, the greater the cost to customers. If electricity markets are designed to encourage the uptake of storage solutions with little understanding of their purpose on a power system, the risk of making the energy transition far more expensive than it need be is serious. In most cases today, uptake of storage is more likely to drive total costs up rather than down, while serving no essential purpose.

38

While “most cases” may reduce to “many cases” in future, without a proper understanding of the different types of storage and their specific uses, the right decisions on future market design and regulations are unlikely to be made.

For an affordable transition to clean energy, utilisation of existing thermal capacity, bought and paid for, to occasionally supplement renewable energy, is a common sense option. The need for support from thermal plant should decline as renewable energy increasingly displaces fossil fuel and nuclear generation and as management of the entire energy system evolves to combine electricity markets with those for heating, cooling and transport. Electricity storage is not the key to a sustainable future, but one piece of the giant energy puzzle, a piece that may never be that large. • FORESIGHT

SOURCE OECD/IEA

Flexibility cost

M RTAIL

U RE C

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SPECIAL REPORT — ELECTRICITY STORAGE

AT A GLANCE

KEY TAKEAWAYS ON GRID STORAGE ¥¥ Power system operators have for decades included modest volumes of stored electricity in the mix of options for balancing supply and demand, provided the value of the stored electricity has been greater than the cost of paying for it. ¥¥ The value of stored electricity is not necessarily increased by the uptake of high proportions of renewable energy. ¥¥ Balancing supply and demand can be done without using stored power, which rules out paying for storage solutions at any cost, also on power systems supplied with electricity from a mix of variable and dispatchable renewable energy sources.

C

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¥¥ Storing electricity is always more expensive than using the same electricity directly. The fundamentals of electricity storage economics are non-negotiable and are not changed by the falling price of batteries or abundant supplies of low-cost solar and wind. ¥¥ No storage technology can deliver sufficient electricity over several days to make up for a deficit of wind and solar supply, with the exception of pumped hydro, which is geographically limited.

CM

MY

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sell their discharged electricity for around €40/MWh more than the price they paid for it, just to break even.

¥¥ Storage can potentially increase the range of options for meeting any or all of four principal requirements for reliable supply: the provision of bulk power; the provision of system services; management of variability to reduce price peaks; and the relief of grid congestion.

¥¥ For storage merchants, the wider the price spread between buying electricity when it is cheap and selling it when market prices rise, the better the financial proposition. For electricity consumers, the narrower the price spread maintained by the market, the lower the average price of their electricity.

¥¥ At a 40% load factor, typical cost of around $1400/kW and assuming a 30 year life of the hardware and 6% borrowing rate on the cost of capital involved, storage merchants need to

¥¥ When a storage facility has the opportunity to multi-task and supply electricity for several needs on a power system, the “revenue stacking” that follows can mitigate the inherent

40

FORESIGHT

economic disadvantage under which storage labours. ¥¥ The extra cost of electricity generated and stored by homeowners, compared with grid scale operations, feeds through to the economy and is paid for by society, one way or another. ¥¥ If the green energy transition is to be fast and affordable, managing variability by occasional use, for short periods, of some of the paid for thermal generation already in place can be a compromise worth making. ¥¥ A green grid that strongly connects power systems delivers the reliability that storage is perceived to provide.

For more information: www.eurelectric.org

Media partners:

42

FORESIGHT

TEXT Henrik Bendix ILLUSTRATION Hvass & Hannibal

BUSINESS — ELECTRICITY STORAGE

The big attraction of batteries for grid support services is their superior ability to rapidly inject bursts of electricity into the grid just when it is needed. But demand for battery storage in power systems is limited and is not proving to be greater in countries furthest ahead with transitioning their electricity supply to variable sources of renewable energy

BATTERIES ARE FOR GRID SUPPORT NOT BULK SUPPLY

Vivid imagination Despite all the colourful talk about batteries they cannot store and discharge energy for long enough and in sufficient quantities to be either a practical or affordable technology for making up shortfalls in bulk power supplied by generators over grid networks

Today’s 169 GW of pumped hydro electricity storage, well tried and tested, makes up 96% of the global capacity for storing electricity in grid networks and will continue to be the dominant means of grid storage for years to come, says the US Department of Energy (DOE). Of the remaining 5 GW of grid storage capacity, 1.8 GW is provided by various types of battery.

That small proportion of the global grid storage capacity, however, is destined for massive growth, if the predictions of a swathe of energy market analysts hold true.

Among the analysts, consulting company McKinsey predicts an increase in total grid storage capacity to 1000 GW over the next 20 years and Morgan Stanley, a bank, believes that utility scale batteries will absorb most of an annual demand for storage capacity of $2-4 billion by 2020, up from $300 million today. Navigant Research, another consultancy, FORESIGHT

predicts a market for power system batteries of $3.6 billion already by 2025.

Batteries can be located anywhere in a power system and can be easily scaled to the capacity required. In contrast, pumped storage has a major disadvantage. It is geographically limited. Only hilly and mountainous areas provide the necessary topography for water to be pumped uphill into a reservoir for later release, through turbines, to a lower reservoir.

Pumped storage, however, remains the only way to affordably absorb and discharge enough electricity to make up for deficiencies of renewable energy over periods of many hours or days. At a cost range for energy delivered of $152/MWh to $198/MWh, according to a 2016 report by Lazard, a financial consultancy, it is the cheapest means of electricity storage available.

Lazard’s cost for energy delivered from lithium-ion battery storage technology, is $285/MWh to $581/ 43

BUSINESS

GIANT SCALE BATTERY SHOWCASES The world’s largest lithium-ion battery energy storage system is connected into San Diego Gas & Electric’s grid network in California. It was brought online in January this year as a showcase demonstration project to “enhance regional energy reliability while maximising renewable energy use,” says SDG&E. The system can provide bursts of power to stabilise the grid and can also meet a proportion of bulk power needs during evening spikes in demand. The batteries are charged during periods of plentiful supply, which can be at times of peak solar generation in the middle of the day.

The system consists of 400,000 batteries grouped in 20,000 modules placed in 24 shipping-scale containers. The batteries have a combined capacity of 30 MW, equal to ten typical modern wind turbines. They can store up to 120 MWh of energy, enough to meet the demand of 20,000 of SDG&E’s customers, should the stored electricity be used for that purpose, but only for four hours.

The project is one of three battery

THE COBALT CATCH FOR LI-ION The challenge of acquiring sufficient quantities of cobalt, a base element used in lithium-ion batteries, is an ongoing threat for their production ramp-up, says Tejs Vegge from the Department of Energy Conversion and Storage at Denmark’s Technical University. Most li-ion batteries derive their high energy density from the energy discharge process facilitated by application of a cobalt oxide cathode. The batteries contain more cobalt than lithium.

44

storage experiments expedited in a hurry

by California governor Jerry Brown after leaks at the Aliso Canyon natural gas storage facility in 2016 caused severe electricity supply disturbances, leading to a declared state of emergency. The other two battery systems each have a capacity of 20 MW. All three were installed by Tesla, Greensmith Energy and AES Energy Storage in a combined effort.

“Experience with these large scale battery installations on the grid will teach us much about how they could and should be used,” says George Crabtree, energy storage research director at the United States Argonne National Laboratory.

A 100 MW li-ion battery storage system offering 129 MWh of storage capacity is up next and is currently being installed in Australia. Tesla won an invitation issued by the South Australia government in July for supply of 100 MW of battery storage. Tesla received a purchase contract in September for energy delivered from the battery bank.

Renewable energy makes up 43% of the state’s 5.3 GW of generating capacity with gas and liquid thermal making up the remaining 57%, according to the Australian Energy Market Operator.

“If we’re to use the lithium-ion chemistry we have today for stationary storage systems on a global scale, we’re going to run short of cobalt. The resource limitations mean that li-on is not a never-ending, scalable solution. The lack of cobalt will put a limit on how far prices can come down,” he says.

From Benchmark Mineral Intelligence, analyst Caspar Crawles agrees. “Security of supply is a major concern for many cathode and cell manufacturers. The supply chains for the minerals are currently under a lot of strain, and this is at a time when electric vehicles are really yet to take off,” he says.

FORESIGHT

“We are already in a situation where Benchmark is forecasting deficits in both the lithium and cobalt markets by 2021, so the supply of these critical minerals could potentially impact the amount of cells that can be produced,” Crawles adds.

Cobalt is mined in several countries, including Australia, Chile, Indonesia, China and Peru, but 64% of the global resource lies in the Democratic Republic of Congo, a politically unstable country where child labour is a major concern.

Li-ion battery producers are working to reduce the amount of cobalt employed in the storage and discharge process.

ELECTRICITY STORAGE

MWh. Tesla’s Elon Musk has since tweeted he can provide a giant battery for $250 per kWh of storage capacity, indicating a cost of energy of at least $100/ MWh once the needed inverter, shipping, infrastructure and installation costs are included and assuming it is charged with electricity bought at a low $50/ MWh, the battery has a long 20 year life and the capital was provided at a weighted average cost of just 6%.

If the price of batteries drop sufficiently, they could technically be used for longer periods of bulk power supply, but very large quantities of stacked batteries would be needed, requiring huge areas of land.

SLOW BUT STEADY Forecasts of major growth for the energy storage market are based on the assumption that displacement of fossil fuel and nuclear generation by renewable energy will trigger more need to store electricity for later use. Evidence of rising demand for storage devices, however, is in short supply. The use of batteries in power systems has increased by no more than 5-7% in recent years, steady but slow compared with the growth of renewables.

Rather than matching the growth of renewables, the use of batteries in power systems has increased by no more than 5-7% in recent years

Countries and regions furthest ahead with transitioning their electricity supplies to renewable energy are largely balancing supply and demand without incurring the cost of additional storage.

The more likely use for batteries in electricity systems is not filling gaps in bulk supply, but in providing short bursts of power to support a range of grid support services, among them, frequency response reserve and voltage control. The falling price of batteries, their increasing capacity and their ability to automatically respond to deviations in frequency within a second, or less, makes them a potentially attractive option in the sub-market for supply of ancillary services to grid operators. The value of that limited market is not likely to grow with greater uptake of renewables, depending on the supply mix and system configuration.

Advances in the ability of batteries to charge and discharge bigger volumes of electricity for longer periods at lower cost have been driven by the electrical equipment and electric mobility industries. Prices FORESIGHT

have dropped to a level where the power supply industry sees potential in greater application of stationary batteries for supplying a range of grid services, where low weight and high density are the vital parameters for reducing cost.

Lead acid, nickel cadmium and sodium-sulfur batteries for use in power systems are still on the market, but the longer life, greater energy density and falling cost of lithium-ion batteries has given them a dominant position. Japan’s NGK achieved a degree of success with its sodium-sulfur molten salt battery for grid scale electricity storage, but the high operating temperature at 300°C makes it difficult for the device to compete with li-on technology.

Japanese and South Korean companies like Panasonic, LG Chem and Samsung have dominated the market for li-ion batteries, which are primarily produced in the Far East. New players have arrived, not least in China where the government is providing solid support to new battery technologies. Chinese producers, CATL and BYD among them, are continuously expanding their manufacturing facilities.

PLUNGING PRICES “By going from MWh scale to GWh scale, manufacturers have managed to drive down the cost of battery cells significantly from over $1000/kWh in 2009 to under $150/kWh today. It is these low cost producers with large facilities which are likely to be the future of the industry,” says Caspar Rawles, a battery raw material analyst with Benchmark Mineral Intelligence.

“As we move forward we will see fewer, larger battery manufacturers. We are already starting to see this with the growth of the lithium-ion mega factories — these are battery cell production facilities with a capacity of greater than one gigawatt hour a year. Three years ago there were only three of these mega factories at the planning stage. Today there are 17 due to be in production by 2021, the latest being Northvolt’s 32 GWh facility to be located in Sweden,” adds Rawles.

Production of li-ion batteries is predicted to double and double again in the coming three to four years, mainly driven by the electric vehicle industry.

The greater demand should drive further price cuts.

Tesla’s Elon Musk says two thirds of the batteries produced at the company’s new factory in Nevada are destined for electric transport, with the remaining third intended for power storage, both at grid scale and for application by customers “behind the metre” to reduce their purchases of electricity from the grid.

Tesla is building the factory together with Panasonic.

It is scaled to produce batteries for provision of 35 GWh of battery storage capacity each year. • 45

BUSINESS â&#x20AC;&#x201D; ELECTRICITY STORAGE

LI-ION NOT ALONE

No battery is yet capable of affordably storing and releasing significant volumes of electricity.

Lithium-ion batteries are sufficiently mature to have developed a competitive edge for some uses, but flow batteries hold greater potential for meeting expectations for grid scale storage, should their cost and technical challenges be overcome. Other lithium based technologies are being intensively explored

THE RACE TO BUILD BETTER BATTERIES R

esearch into better batteries is fast and furious. Existing batteries with potential to play a role in boosting the resilience and reliability of future power systems are hampered by one or more of a number of challenges, including insufficient life spans, lack of capacity, reliance on scarce raw materials and an unfortunate tendency to burst into flames.

The battery storage marketâ&#x20AC;&#x2122;s most successful rechargeable products so far are based on lithium-ion technology, in which an electricity charge contained in lithium-ions moves from one electrode to another.

During charging the ions move one way and during discharge they change direction.

The difference between the various types of li-ion batteries primarily lies in the material used for the positive electrode (the cathode). Most development work has been in this area. Lithium-ion batteries have been on the market since 1991 and are widely used in electronic equipment, from mobile phones to electric vehicles. Compared with other battery types, 46

they have greater energy density, are lighter, do not require much maintenance and work well at room temperature, all of which gives them a competitive edge through price and convenience advantages.

On the downside, lithium-ion batteries are reliant on metals in short supply (page 44). They can also overheat and risk exploding if not properly designed, as Samsung discovered to its cost when a newly released mobile phone demonstrated explosive behaviour once sold to customers, forcing a general recall of the model.

NEW TECHNOLOGIES But li-ion batteries are far from the only battery technology being further developed, says George Crabtree of the Illinois-Chicago university and energy storage research director at the United States Argonne National Laboratory. â&#x20AC;&#x153;The most promising new technologies beyond li-ion are lithium-sulfur, lithium-air, magnesium batteries and flow batteries. Of these, lithium-sulfur has FORESIGHT

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BUSINESS — ELECTRICITY STORAGE

Go with the flow

The larger the tanks the larger the store

Charge flow

Positive electrode

Negative electrode

Flow during discharge cycle

Cell

ELECTROLYTE TANK (CHARGED)

Pump

ELECTROLYTE TANK (DISCHARGED)

Membrane (power capacity)

the shortest time horizon, magnesium batteries next, and lithium-air batteries the farthest out,” says Crabtree, who sees good potential in flow batteries.

Lithium-sulfur battery technology is challenged by a relatively short life cycle and for this reason is not an obvious replacement for lithium-ion batteries in stationary applications, says Tejs Vegge from the energy storage department at Denmark’s Technical University. He includes rechargeable zinc-air batteries on the list of challengers to lithium-ion. Like Crabtree, he believes the scalability of flow batteries makes them a strong contender for application in power systems.

A flow battery stores energy in tanks of liquid chemicals (electrolytes), with separate tanks for charged and spent electrolytes separated by a membrane. The larger the tank, the greater the store. Modern flow batteries are also durable and capable of a relatively high number of charge and discharge cycles before losing their storage ability.

The most advanced type of flow battery employs metal in the form of vanadium-ions in the chemical storage medium. In China a 200 MW vanadium-flow 48

Pump

battery able to deliver 800 MWh of electricity is being installed on the Dalian peninsula to assist with stabilising the region’s grid network.

ORGANIC FLOW BATTERIES “Vanadium-flow batteries are incredibly durable and can withstand over 100,000 cycles. But they are also very expensive, not least because of the vanadium content used to store the energy,” says Vegge. “We’re looking at new types of flow battery based on organic chemicals and that technology has seen recent advances. The price of organic connections is much lower than for vanadium and organic flow batteries would be able to compete with li-ion. At the moment, however, the challenge is their short life expectancy.

It’s difficult to boost it,” says Vegge.

Crabtree adds: “Organic flow batteries have the most promise, because they can be made of inexpensive and earth-abundant elements such as carbon, oxygen, nitrogen and hydrogen, can be recycled and offer enormous design diversity. But li-ion batteries will remain the dominant battery for the next decade or more.” • FORESIGHT

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CITIES — ELECTRICITY STORAGE

A full-scale smart city energy laboratory in Copenhagen aims to demonstrate how electricity, heating, cooling, and electric vehicles can be integrated into an intelligent energy system.

The four year project includes a grid-scale lithium-ion battery that when fully charged can power 60 households for 24 hours

AN URBAN ENERGY BIG BATTERY TRIAL IN COPENHAGEN

50

demand that would otherwise require costly network reinforcements to deliver sufficient power, says Poul Brath from Radius, part of Danish utility Ørsted and the owner of the Nordhavn battery.

He sees a future where electric vehicles could overload an urban network if large numbers are plugged in at the end of a working day. “We need to find inexpensive and sustainable solutions,” says Brath. •

BATTERY FACTS

Storage capacity 460 kWh Power capacity 630 kW Technology Li-ion Operational March 2017 Weight 3.5 tonnes Project participants Denmark Technical University, Copenhagen City, CPH City & Port Development, utility HOFOR, Ørsted subsidiary Radius, ABB, Danfoss, Balslev CleanCharge, Glen Dimplex, Metro Therm, PowerLabDK

FORESIGHT

TEXT Sandra Meinecke

T

he potential of a 3.5 tonne battery bank to support electricity supply in a micro-urban setting is being explored by EnergyLab Nordhavn, part of Copenhagen’s big dockland regeneration. The lithium-ion battery in a multi-storey car park was grid connected in March 2017.

“We are working with different scenarios. What happens if the battery is only used to support the grid? Or what if we use the battery to store the local solar power? And what are the effects of storing power in electric vehicles? All this has to be tested,” says Chresten Træholt from Denmark’s Technical University, one of a mix of private and public partners behind EnergyLab Nordhavn.

How batteries could trigger energy markets to develop in new directions is also being considered. “Going forward, batteries can transform into platforms for transaction that we can’t even imagine today, like Tesla selling a car with mileage included because the projected energy use is matched by installation of new solar power,” Træholt says. He notes such bundled solutions are spreading.

Rising demand is spurring rapid development of durable batteries, but they are still an expensive solution, Træholt warns. “It would become very expensive if we were to scale the use of batteries to a European or global level to meet the need for energy storage.” Even so a battery could sometimes be a viable option for some tasks, such as meeting peaks in

Reaching 2020 Energy Efficiency Goals in Public and Commercial Buildings In the EU and the US buildings account for 40% of the total energy consumption, and the CO2 emissions from buildings amount to 36% of the total emission in the EU and 39% in the US.

COORDICY is a strategic DK-US interdisciplinary research project for advancing Information and Communications Technology-driven (ICT) research and innovation in energy efficiency of public and commercial buildings.

The project contribute to the Danish goals of achieving a 75% reduction in energy consumption in new buildings by 2020 and a 50% reduction in existing buildings by 2050, and the United Statesâ&#x20AC;&#x2122; goal of doubling its energy productivity by 2030.

Center for Energy Informatics University of Southern Denmark Campusvej 55, DK-5230 Odense M

COORDICY will do so by considering relevant factors such as occupant behavior, weather conditions, construction typologies, thermal properties, building systems and controls, and their complex interactions.

The developed approach will enable public and commercial buildings to play a central role in a future sustainable energy system.

The COORDICY project links universities, technological service institutes, public bodies, municipalities and industrial partners in a joint international effort on research and innovation of ICT-centered building operation technology of commercial interest to a fast growing global market.

Contact: Phone: 65 50 35 48 E-mail: bnj@mmmi.sdu.dk

Funded by:

PHOTO ESSAY

A young girl stands sentinel over her father’s fishing boat as it works the shoreline along a stretch of Ghana’s rapidly eroding Cape Coast. With the land being washed away from under their feet, many of the villages that line West Africa’s shores know their whole way of life is threatened. The steady destruction of the land is partly caused by the harsher storms and rising sea levels that come with climate change, but the damming of rivers is also to blame. The Akosombo Dam on the Volta River is a prime example. Opened in 1965 its hydro power plant provides over 70% of Ghana’s electricity, but at the same time it disrupts the natural flow of sediments from the north. No longer are sediments transported south by the rivers, leaving the shoreline with no means of replenishment to counter the Atlantic Ocean’s constant feasting upon it. The result is massive coastal erosion

VA N I S H I N G COAST Text and photo — Lars Just

Policy

INTERVIEW

TO SPEED UP POLICY CHANGE GREENTECH MUST ENGAGE WITH BIG BUSINESS Connie Hedegaard, as Denmark’s first Minister for Climate and Energy from 2007 and the EU Commissioner for Climate Action from 2010 to 2014, pushed spending on climate change mitigation into the political mainstream. Under her watch the climate-related share of the EU budget was raised to 20%. Having laid the groundwork for Europe’s climate policies, she is calling for the “externalities” of energy use to be included in economic modelling and for greentech to step up and make its voice heard. In conversation with FORESIGHT, Hedegaard explains how.

Q: What are the main barriers hindering the global transition towards a fossil free economy?

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PHOTO Lars Just

A: I think one of the biggest challenges is that we need to get better at pricing externalities. Externalities need to be incorporated in tax systems and we need to improve the way we use life cycle assessments in public procurement. These instruments ought to be integral to how finance ministries conduct economic modelling. Too often recommendations from finance ministries are short-sighted and we need to include long-term effects.

But as we speak, some of the largest barriers have actually already fallen. The price of renewables has fallen drastically in recent years and in combination with the Paris Agreement, the UN Sustainable Development Goals, and the fact the all EU countries are presenting national energy plans, this shows that we have overcome many of the earlier barriers. That is why I think the most pressing obstacle right now is to maintain the political focus. Politicians are overloaded with all sorts of serious and pressing problems. For example, just consider the amount of time, resources and political focus that goes into preparing Brexit. So it’s very important not to lose focus on the long-term challenge of climate change.

Another important and often overlooked barrier is the mental barrier. The science of climate change has been done. The economic case for a renewable-based FORESIGHT

Policy

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Policy

energy system has more or less been done. What we are missing is the behavioural case. What is it that ensures that we act on what we know and that we are willing to change our behaviour? I don’t believe in top-down policies. It’s absolutely crucial that we as citizens get engaged. One thing is to price pollution and get our national climate policies aligned with tax systems, but even then, there is the component of the individual’s choice. And we need to improve our understanding of this component.

Q: As EU commissioner you succeeded in mainstreaming climate action into the relevant policy areas and getting 20% of the EU budget focused on climate change in the midst of a global financial crisis, high unemployment and other pressing issues.

How did you succeed in not only maintaining a climate focus but getting it to the top of the agenda?

A: To begin with I did not think the idea would have a chance. It just goes to show how important it is that you have a critical mass of high-level politicians who are aware and talking about these issues. It is also very important to note that climate action is not about de-growth. It’s a new way of generating growth and when you’re able to show the economic case for action then it is possible to succeed and persuade others. This is how we succeeded with the mainstreaming agenda. It was a major arm wrestle within the Commission. A lot of preparation and political capital went into that process.

“It is almost built into the system that large companies will lobby to avoid too many changes”

Q: Well, that sounds relatively easy. Prepare your case and reason will eventually prevail. If that’s the case why would we need to stress the importance of climate policies even more now than back in 2010?

A: It was essential that we could show that investing in a greener economy would create more jobs, give us a technological edge, improve innovation and potentially weaken our dependency on Russian gas.

You need to present different arguments for the different stakeholders. It probably took one-and-a-half years from when we first introduced the idea of mainFORESIGHT

streaming climate action into the relevant sectors at a seminar in the Commission until it ended up included in the EU budget. To get climate policy mainstreamed into the entire EU budget is a pretty big thing.

The take-away is that these systems are not as bureaucratic and complex as they are often made out to be. And sometimes the EU Commission is able to think more long term than, for example, member states. Many industries might not be the biggest advocates of ambitious climate policies. It is almost built into the system that large companies will lobby to avoid too many changes, but new companies that might be big companies five years ahead do not have the strength to roll out a targeted lobbying effort. So, there is a problematic asymmetry between those that defend the current set up and the green companies of the future.

Q: What would your advice be to the future companies that focus on selling renewable energy?

A: They should continue to push their agenda and try to find common ground with like-minded companies.

One of the main challenges is counteracting the influence of some big pan-European lobby organisations.

BusinessEurope is a very large lobby organisation and sometimes they tend to represent the interest of fossil fuels instead of renewables. I think it is very important that companies selling renewables increase their focus and effort within these organisations to make sure that their voice is heard. I understand that this is not the first priority for the entrepreneur who just invented a new smart device, or a small greentech company, but it is very important to get engaged in these industry associations and the political process if you want to get heard.

Q: You have spent a large part of your adult life dealing with energy and climate issues. Why did you choose to dedicate so much of your time to this particular cause?

A: The more you learn about the challenges posed by climate change, the more you realise how serious it all is. I became energy minister in 2004 and I attended my first climate conference in Buenos Aires, Argentina, and I thought it was a nightmare. I hated it. I had recently learned about how urgent the matter was and then you enter the UN system, which is anything but fast. But a small group of dedicated people can change things and I thought it was fascinating to try to change things for the better at an international level, but also at the European and national level. • 65

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