Growing public awareness of the environmental impacts of fossil fuels alongside rising electricity and utility infrastructure costs, declining battery prices, and concerns over the capacity and resilience of energy grids is fueling the growth of energy storage installations worldwide. With the rise of energy storage—often coupled with renewables such as wind and solar—a new system of energy generation and distribution is emerging.
“In the future, the grid looks less like broadcast [television] and more like the internet,” says Haresh Kamath of the Electric Power Research Institute.
Bloomberg New Energy Finance predicts 1,095 gigawatts of energy storage will be deployed worldwide by 2040. It will be deployed across the residential, commercial and industrial, and utility sectors. Woods McKenzie predicts similar expansive growth, reporting that a 12 gigawatt-hour market in 2018 will grow to a 158 gigawatt-hour market in 2024.
Energy storage is the glue that will hold our rapidly evolving energy ecosystem together as we move from central energy generation to a system of distributed generation.
What Exactly is Energy Storage
There are many ways to store energy: pumped hydroelectric storage, which stores water and later uses it to generate power; batteries that contain zinc or nickel; and molten-salt thermal storage, which generates heat, to name a few. Most often they contain Lithium-Ion batteries like the ones that power your smartphones or electric cars. They are often coupled with wind, solar, or even the grid itself to absorb power for later use.
Energy storage systems contain power electronics that are the smarts of the operation—safely and reliably transferring energy into thermally managed banks of batteries to store energy. The systems can absorb or release energy as needed and can be tied to a power grid or integrated into a standalone microgrid.
In addition to the batteries and power electronics—the hardware side of energy storage—major software components include:
- Systems Integration: low-level software that integrates and controls all components around the battery (e.g. power conversion and thermal management).
- Economic Dispatch: software that determines when to charge and discharge the system to gain maximum economic benefit from the stored energy. It enables the system to “value stack” across multiple revenue/savings streams for the owner to get maximum return on their investment.
- Fleet Aggregation: manages fleets of smaller distributed energy storage systems and can deploy as if it were a single larger system.
Lithium-Ion batteries are currently the dominant battery of choice for deployed energy storage systems worldwide. Lithium is a lightweight metal that an electric current can easily pass through. Lithium ions make a battery rechargeable because their chemical reactions are reversible, allowing them to absorb power and discharge it later. Lithium-ion batteries can store a lot of energy, and they hold a charge for longer than other kinds of batteries. The cost of lithium-ion batteries is dropping because more people are buying electric vehicles that depend on them.
While lithium-ion battery systems may have smaller storage capacity in comparison to other storage systems, they are growing in popularity because they can be installed nearly anywhere, have a small footprint, and are inexpensive and readily available—increasing their application by utilities. In fact, more than 10,000 of these systems have been installed throughout the country, according to “U.S. Energy Storage Monitor: Q3 2018” from GTM Research, and they accounted for 89% of all new energy storage capacity installed in 2015.
A megawatt-hour (MWh) is the unit used to describe the amount of energy a battery can store. Take, for instance, a 240 MWh lithium-ion battery with a maximum capacity of 60 MW. Now imagine the battery is a lake storing water that can be released to create electricity. A 60 MW system with 4 hours of storage could work in a number of ways:
You can get a lot of power in a short time or less power over a longer time. A 240 MWh battery could power 30 MW over 8 hours, but depending on its MW capacity, it may not be able to get 60 MW of power instantly. That is why a storage system is referred to by both the capacity and the storage time (e.g., a 60 MW battery with 4 hours of storage) or—less ideal—by the MWh size (e.g., 240 MWh).
From 2008 to 2017, the United States was the world leader in lithium-ion storage use, with about 1,000 MWh of storage, and 92% of it, or about 844 MWh, being deployed by utilities. The average duration of utility-scale lithium-ion battery storage systems is 1.7 hours, but it can reach 4 hours. Batteries account for the biggest share of a storage system’s cost right now—a storage system contains an inverter and wiring in addition to the battery.
When connected to the grid, energy storage is principally divided into two categories:
Front of the meter: energy storage that is interconnected on distribution or transmission networks or in connection with a generation asset. Applications are largely driven by ISO/RTO market products (e.g. electricity, ancillary services) or network load relief.
Behind the meter: energy storage that is interconnected behind a commercial, industrial or residential customer’s utility meter primarily providing bill savings (e.g. demand charge management).
Energy storage can benefit both utilities and energy consumers in a variety of ways. Energy storage can help address the intermittency of solar and wind power and it can also, in many cases, respond rapidly to large fluctuations in demand, making the grid more responsive and reducing the need to build backup fossil fuel-based power plants.
Energy storage can also help meet electricity demand during peak times, such as on hot summer days when air conditioners are blasting or at nightfall when households turn on their lights and electronics. Electricity becomes more expensive during peak times as power plants have to ramp up production in order to accommodate the increased energy usage.
Commercial and industrial facilities are charged demand charges by utilities that are typically 30 percent of their energy bill. NREL estimates that approximately 5 million commercial customers across the country may be able to achieve electricity cost savings by deploying battery storage to manage peak demand.
Energy storage allows greater grid flexibility as distributors can buy electricity during off-peak times when energy is cheap and sell it to the grid when it is in greater demand.
In 2018 the U.S. Federal Energy Regulatory Commission (FERC) issued a landmark order (Order 841) mandating that Regional Transmission Organizations (RTO’s) and Independent System Operators (ISO’s) adopt new participation models for energy storage that require storage be able to participate in all markets and services for which it is technically capable regardless of location. This important ruling and the ability to monetize energy storage systems by selling energy into markets is considered key to making many energy storage projects financially viable particularly at commercial and industrial facilities.
Back Up Power & Microgrids
Critical Back Up Power
As extreme weather exacerbated by climate change continues to devastate U.S. infrastructure—government officials, companies and utilities are becoming increasingly mindful of the importance of grid resilience and the role energy storage can play in hardening the electric grid against extreme weather events.
Energy storage with islanding capabilities—the ability to operate separate from the grid—can help provide resilience since it can serve as a backup energy supply when the electric grid is interrupted. That battery backup power can last for minutes or can extend for days or even indefinitely if coupled with renewable energy generation sources such as wind and solar. This alone has powerful benefits for businesses, government agencies and individuals.
Not always easily calculated, battery backup power can supply a tremendous value to businesses during times when the grid goes down. Facility-sited energy storage can provide energy for short or extended periods of time. This critical backup power can save businesses tens of thousands of dollars in lost production time and spoilage. Eight key U.S. market segments studied by energy consultant E Source forfeit about $27 billion per year due to power outages. Many of these loses could be avoided with the presence of a fast-acting energy storage system to ride through power outages.
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