Why is battery storage so important? Batteries can be a crucial pathway towards grid decarbonisation. They will support the removal of fossil fuel-powered plants that are still necessary for the energy sector today due to the intermittent nature of renewable energy generation. Battery storage has the potential to be a key weapon in our fight against climate change. Its impact is already being felt, especially in the residential and utilities sectors.
Global energy storage capacity almost doubled between 2017 and 2018, setting a new record for growth. Behind-the-meter storage saw the largest quantum of expansion during this time, with a threefold increase from 2017. The rising demand for energy storage compensates an increasingly dynamic generation and consumption patterns of energy. The increasing quantities of renewables in the global energy mix, combined with EVs has led to a higher demand for batteries to stabilise power flows, replace peak power plants and digitise the electricity ecosystem.
Utilities look towards battery storage to stabilise peak loads, regulate voltage and frequency, ensure stability from renewable generation and create a more flexible transmission and distribution system. Utility customers look towards the use of behind-the-meter storage to reduce costs incurred during periods of peak demand. Both utility-scale storage and residential storage systems showed record levels of growth in 2018 to reach over 8 GWh with similar investment levels.
Utility-scale storage has shown considerable growth and companies are now looking at new business models to generate added revenues
Utility-scale energy storage increased by almost a third to 1.2 GW in 2018. This was driven largely by a combination of favourable regulations and the increased demand for electric vehicles (EVs) in various countries. Now, utilities and other commercial enterprises are looking at pathways to generate new value from these storage systems, and be much more than just peak load stabilisers.
Applications like voltage and frequency regulation are being explored to make intermittent renewable energy generation more reliable. Other commercial centres with large energy storage systems like EV-charging garages and large data centres are looking for ways to “share” the stored electricity with utilities when battery power isn’t required. This will allow utilities to get rid of unnecessary infrastructure from the system, and make grids more efficient and sustainable.
The need for dynamic business models might encourage a larger number of energy service companies to exploit new opportunities
Along with developing new business models to generate new revenue streams, utilities will have to make significant investments in their information technology (IT) infrastructure. This will support increasingly complex power-flows that will need advanced data analytics to run smoothly to meet evolving customer and regulatory demands.
Most utilities, however, lack the required IT infrastructure. It might be more efficient and economical for these companies to partner with third-party analytics vendors. The adoption of such dynamic business models will most likely be carried out by new energy service companies looking to expand its revenue streams by adding energy storage services and advanced data analytics to its list of offerings to various industrial and commercial enterprises.
Residential storage has seen an even stronger surge due to favourable conditions and global megatrends
Residential battery storage has shown much stronger growth than utility-scale storage with a total capacity of 1.9 GW in 2018, as more people are being made aware of its benefits in today’s world.
To cite an example, in the US for example, residential energy storage is already an attractive proposition for 20% of households in the country. Strong growth in the sector is set to continue over the next few years. The per-kilowatt-hour cost of residential storage has been falling rapidly in the last couple of years. This has led to more and more people flocking to the sector to reap its benefits.
Many global trends like climate change and population expansion has led to an increase in the risk of power disruption in many countries. People opt for residential storage as a safety net to increase the reliability of the energy that they consume. In many countries, time-of-use tariffs push people to use battery storage. This helps them minimise the amount of power they consume from the grid during periods of peak pricing. Other factors like falling costs of solar storage solutions, government purchase incentives and grid service payments, where residents receive compensation for selling energy back to utilities fuel the residential storage economy.
Residential storage is a critical cog in the future of electricity networks. But, it still has to pass various tests to prove itself reliable
Before residential storage can be widely considered supplementary to commercial grids, it needs to pass certain tests. Customers need to be confident that their battery systems will continue to be reliable for home use while they are simultaneously being used for grid services. Distributed energy generators will also need to validate the fact that residential batteries can be dispatched reliably over a prolonged period of time without any mishaps.
Utilities will need to develop the right kind of tools to predict suitable timings for residential battery dispatch. Regulators will need to create incentives to encourage the widespread integration of the residential storage systems with the grid. Providing grid services is a critical task. It could result in savings to the tune of billions for utilities and network operators, but the technology needs to be proven reliable enough to provide such a crucial service on a scale that is comparable to fossil fuel-based generation today.
Battery storage is capable of filling a vital gap in the energy system to potentially save billions for utilities and accelerate climate change mitigation efforts
Battery storage systems will be a critical tool in electricity networks of the future. Keeping the grid stable during intermittent energy flows due to variable renewable energy, and variable energy consumers like EVs, will allow utilities and network operators to forego large investments on peaking plants and expensive network upgrades. This will also keep the network resilient and dependable. Batteries have the potential to be a driving force behind global energy transition and suitable regulations. Significant investments are crucial to ensuring that the technology lives up to its hype.
