Along with the rise of renewable energy, the last decade saw the development of energy storage progressing further. Although pumped hydro storage was already used to balance energy needs in many countries, new solutions like li-ion batteries, thermal storage, flywheels or hydrogen are progressively bringing new opportunities in this sector. Many people see the development of storage necessary for the development of renewables which consequently affects the development of these new storage solutions. Nevertheless, development of storage alone is also becoming a possibility today as the variety of new solutions could help a lot for the development of the energy sector, independently from renewables.
In 2017, large scale storage was still largely dominated by pumped hydro with 176 GW. China (32.1 GW), Japan (28.2 GW) and the US (24.2 GW) both represent half of the world capacity, but also take part in the development of new storage solutions like thermal storage, flywheels and CAES (Compressed Air Energy Storage). The development of batteries also became a major center of interest with 1.9 GW of capacity in 2017, mostly from Li-ion batteries. Countries like South Korea and Australia invested a lot in the development of batteries, with the development of the 150 MW Hornsdale power reserve in Australia by Neoen and Tesla for example. Many countries wish to exploit the benefits of combining solar energy with batteries, like Japan who plans to install a FIP scheme this year or India who associates solar PV and batteries in auctions. Since 2019, however due to technical constraints like fires in storage plants in Korea and California, development has slowed down. Though, the biggest problem that storage faces is more related to policy support and market facilitation: because the market is still very young, the processes are complex and the rules sometimes unclear. The recent COVID crisis will also likely further slow the development of storage.
Despite being a very promising field attracting a lot of people, storage development is heavily burdened by unclear legal status and the absence of proper support from the authorities yet. One example is the legislation around uses for storage assets and the position of grid operators in their operation: in the US some states allow grid companies to own and operate storage plants and some not; in China, this is not an option. In EU countries, Australia or Chile, grid companies are authorized to own and operate storage plants but only under specific cases and mostly just in case of emergency. Because this status remains unclear in many cases, using storage as a transmission/distribution asset today is very uncommon, leaving only uses related to load and generation. Another problem is that storage is complicated to define properly due to many potential applications involving many different actors. Consequently, it takes time for authorities to create a proper status for storage in their system. In the EU, the implementation of the Clean Energy Package (CEP, Clean Energy for All Europeans, EU Commission, 2019) now offers the possibility of generation, transmission and load for storage but support is needed to speed up the currently slow development of new projects in member countries. Along with the unclear definition of storage in policies and legal texts, there is another problem related to standardization, especially for batteries. Because of many different internal structures, no particular model has been established yet in order to accelerate the processes for development or dismantling. Finally, due the lack of support schemes and efficient policies, storage providers struggle to develop new projects outside of PPAs. Many providers turn to emergency backup for the grid in order to compensate and gain value by helping distribution (DSO) and transmission grid operators (TSO). However, in order to help storage gain more importance in the future, which will be needed to support the spread of renewables, opportunities from the government would be preferable than TSOs and DSOs. Indeed, TSOs and DSOs will likely compare the costs of new storage solutions and choose according to their expenses. This won’t help the development of new solutions because they need time and experimentations to become more competitive in the first place.
To tackle the development issues, organizations like Deloitte or IEA have recommended policy makers to focus on some points. Some factors like the rise of renewables, the global idea of being more sustainable, the modernization of the electricity grid, the decreasing prices of technologies, the disappearance of Net metering and FIT programs in many countries have already impacted national policy in favour of storage development. The rise of wholesale electricity markets in many countries also represents an opportunity for expanding the storage market. In some countries like the US, Chile or Italy, batteries are already taking part in markets for ancillary services. This gives more financial value for energy storage. Like mentioned before, proper and clearer regulations would facilitate the work of developers and could also open more opportunities related to transmission and distribution, not only generation and load. Finally, IEA recommended separating the development of storage and renewables to ensure their mutual development is based only on what is necessary.
Inside the EU, the European commission also emitted guidelines (Study on energy storage – Contribution to the security of the electricity supply in Europe, 2020) for member states to improve the implementation of storage plants. In order to attain the 2030 goal of 97 GW throughout the EU countries in total, policies and support schemes could be implemented based on the following recommendations:
- Create a clear environment in the legal framework and National Plans for the development of projects and equipment related to storage, and a clear definition of storage taking into account all the services it can offer.
- Progressively eliminate net metering (differentiate electricity fed in the grid and electricity consumed from the grid) and implement clear remuneration schemes for storage providers.
- Encourage dynamic pricing of electricity and Time-of-use grid tariffs: compared to fixed prices, peak hours, seasons and the evolution of the wholesale market could influence the electricity prices. It would make electricity storage an interesting feature to invest in the market or save money by selling when prices are expensive and storing when they are low. Although not in the EU, the UK is already conducting experiments with Time of Use prices during the night in some markets.
- Eliminate double fees due to charge/discharge cycles and encourage public and private financing.
- Implement local support schemes based on local needs. The EU commission acknowledges however that no efficient support method has been widely recognized yet.
- In order to ensure the proper development, manufacturing and disposal of storage technologies, create security standards for storage projects. In the case of batteries, standard models should be implemented to allow business between countries inside the EU.
- Decide on the role of DSOs and TSOs in storage operation.
- Encourage interactions between EVs and the grid to reduce the need for stationary storage.
As of now, future development for storage focuses a lot on batteries. According to the IRENA, different batteries with different properties are expected to be implemented similarly to different energy sources: in order to store energy depending on the local climate, situation (city, village, island, mountain, industrial zone…). For very high shares of renewables in the grid, different types of batteries could be able to store energy for hours, days, weeks or even months based on the needs to which policy makers will have to adapt. Battery prices are still high today but they are decreasing. The price for Li-ion batteries already feel by 80% between 2010 and 2017, benefiting from the spread of EV and the development of solar PV to which it is often associated. Even if the costs of storage combined with renewable energies are still not as competitive as the gas prices in the US, many states like Hawaii, California, Massachusetts, or New Jersey have plans for storage development in the next decade.
The IEA estimates that by 2030, 266 GW of storage are needed worldwide to follow the Paris Accords. Among those 266 GW, half is expected to be pumped hydro storage due to its already advanced stage of development today, but batteries will be a major part of the rest. Although they are very advantageous, batteries also have drawbacks. Li-ion batteries are notably criticised because they can’t be completely recycled yet, the processes for dismantling are also complicated due to all different battery models and a bit dangerous because they still require manual assistance. In comparison, lead-acid batteries are surely less powerful, less durable than Li-ion but they can be completely recycled today. The demand for lithium (and cobalt, nickel, copper) is also an issue as resources are not unlimited, but the demand is expected to reach 80150t/year in 2025 according to the IRENA. However, given the versatility of storage solutions today and the progress of research, it is very likely that new storage technologies in early development today could respond to this issue in the near future. In fact, only Li-ion batteries benefit from serious development today among the many different types of storage. But the development of flow batteries or thermal storage will likely take more importance in the next years and will need support from governments and private entities as well.
- Energy Storage. Retrieved March 22, 2020 from https://www.iea.org/reports/energy-storage
- IRENA (2017, October). Electricity Storage and Renewables: costs and market to 2030 https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2017/Oct/IRENA_Electricity_Storage_Costs_2017_Summary.pdf?la=en%26hash=2FDC44939920F8D2BA29CB762C607BC9E882D4E9
- European Commission (2020, March). Study on energy storage – Contribution to the security of the electricity supply in Europe. Directorate-General for Energy, Directorate B — Internal Energy Market, Unit B4 — Security of Supply. https://www.ense-epe.pt/wp-content/uploads/2020/05/Contribution-to-the-security-of-the-electricity-supply-in-Europe-Study.pdf
- Deloitte (2018). Supercharged: Challenges and opportunities in global battery storage markets. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-energy-and-resources-global-energy-storage-renewable.pdf
- World Energy Council (2020, February). Five Steps to Energy Storage (Insights Webinars – Business Models and Technologies). https://www.worldenergy.org/publications/entry/innovation-insights-brief-five-steps-to-energy-storage