Changes in power storage economics are poised to change our infrastructure in the future.
Power Storage and the New Power Grid
Power Storage and the New Power Grid
Changing the landscape of energy infrastructure
A recent academic project had me come across the advancements made in power storage. After a deeper dive into the sector, I found the advancements made in the field very exciting as they could drastically change the way we currently know energy infrastructure.
Developments in Power Storage
Cost of storage is declining rapidly. Lithium ion batteries and flow batteries specifically have seen a staggering 79% fall in cost since 2010 . Along with a numerous startups entering the space, large industry players such as Sonnen, Tesla, Panasonic, LG Chem and contract manufacturers such as Flextronics are currently experimenting, developing and piloting energy storage projects. A survey conducted by Accenture Utilities, found that a majority of industry players see power storage as an undeniable future . The video below put together by Bloomberg depicts recent advancements as well as some which are up and coming:
Currently, battery storage technology is mainly large-scale projects integrated into existing utility infrastructure. However, by 2020 ‘behind-the-meter’ battery implementation is expected to become the largest segment in the USA . A majority of this growth will come from the commercial and industrial sector . With the potential of using battery storage, commercial clients may just come of main grid power and continue their normal usage rates .
There is a large degree of uncertainty as to whether energy storage will be a threat or opportunity for utility companies in terms of potential revenues. For pure-play utilities, energy storage has the potential to significantly hurt revenues. The large-scale use of battery technology could be disruptive for utilities, specifically effecting peak demand. Peak demand is the main driver for distribution network investments. If peak demand significantly reduces, investments previously made into energy infrastructure could be made redundant . The question for utilities is whether to own/control power storage or access it through third parties. It also raises questions regarding the power a utility has in controlling “behind-the-meter” storage and how it effects their business model.
Battery Power, Renewables and the Grid
Considering that recent estimates have solar power now being cheaper than coal, integration of renewables with storage technologies represents a high probability case for the future . This combination of technologies paves the way from implementation of smart-grids and distributed generation technologies. In this scenario, storage is used to optimize the output and reactive power capabilities from renewables generation. Storage capabilities allow power to be stored at times of high generation for use at times of low generation. This can serve as an advantage for utility companies in that there is improved predictability of demand, reduced opex for ramp-up/ramp-down of nuclear plants and increased frequency and voltage control which improves power quality for customers .
Regulatory policies will play a large role in determining where revenues move. California and New York have implemented policies which are fueling storage and distributed energy technology growth. The video below depicts what New York Governor Andrew Cuomo hopes to transition his state’s grid to through the use of storage power and renewables:
Whatever the end case may be, changes are definitely expected in the way we traditionally consume energy.
Henze, “Tumbling Costs for Wind, Solar, Batteries Are Squeezing Fossil Fuels,” 28 March 2018. [Online]. Available: https://about.bnef.com/blog/tumbling-costs-wind-solar-batteries-squeezing-fossil-fuels/. [Accessed 9 July 2018].
Lacey, “How Distributed Battery Storage Will Surpass Grid-Scale Storage in the US by 2020,” 10 March 2016. [Online]. Available: https://www.greentechmedia.com/articles/read/how-distributed-battery-storage-will-surpass-grid-scale-storage-in-the-us-b#gs.M4B=sog. [Accessed 25 June 2018].
Accenture Utilities , “Storage: Threat or Opportunity,” 2016. [Online]. Available: https://www.accenture.com/t20160609T021431Z__w__/us-en/_acnmedia/Accenture/next-gen-2/insight-digitally-enabled/Accenture-POV-Energy-Storage-DEG.PDF. [Accessed 2 April 2018].
ABC News, “Solar power cheaper than fossil fuels in most capital cities: Climate Council,” 23 February 2017. [Online]. Available: http://www.abc.net.au/news/2017-02-23/solar-power-cheaper-than-coal-climate-council-finds/8296232. [Accessed 11 July 2018].
An MBA candidate with an interest in procuring sustainable products and services for the public. He supports his technical skills acquired through the completion of a Bachelors in Civil Engineering with 4 years of contribution to the public infrastructure field delivering capital works projects.