Long-term trends will change the global economy, putting unique strains on both large cities and outlying areas. PwC has identified five megatrends actively shaping our world: rapid urbanization, technological breakthroughs, shifts in global economic power,...
Battery Storage from Residential Solar to Utility Scale
Enough sunlight reaches the earth each day to meet all of our energy needs for one year including powering all buildings, industry and transportation. Renewables will account for about 70 percent of new generation capacity added worldwide from 2012 to 2030, according to Bloomberg New Energy Finance.
Seven U.S. states now provide over 80 percent of their energy from renewables: Washington, Oregon, Idaho, Nevada, South Dakota, Iowa, and Maine. Since the sun does not always shine and the wind does not always blow, storage will be needed to be 100 percent powered by renewables.
When Tesla announced energy storage products for solar power, it had a billion dollars of new orders with two weeks. Many in the industry were stunned with the aggressive pricing of $3,500 for a 10 kWh battery pack. Any homeowner who ever lost power due to a snow storm, wildfire, or grid mishap, saw the advantage of backup power for their homes.
Listening to J.B. Straubel, CTO of Tesla, many at Intersolar 2015 were more excited about the commercial potential of the 100 kW Tesla Powerpack, priced at a more aggressive $250/kWh, for zero-net energy (ZNE) buildings and mission critical buildings. Utilities can use arrays of Powerpacks for solar and wind farms, microgrids, substations, and peak generation.
Batteries will have a growing impact in residential, commercial, and utility-scale applications. Every storage application will be justified differently: back-up power, ramp management, ancillary services, rate arbitrage, and much more. Tesla will continue to have lots of competition from other companies, new battery chemistries, flow batteries, and other approaches to energy storage.
Currently, less than one percent of grid-connected solar installations include energy storage, but lithium battery costs have been dropping 14 percent annually. In 2010, packs cost $1,000/kW; today, $250. Although a dramatic improvement, installed storage cost can be double the cost of the battery packs when adding bi-directional inverters, installation labor, other hardware, software, and utility interconnect fees. Prices for batteries and balance of system continue to drop.
GTM Research expects rapid growth of solar+storage from only 4MW of grid connected last year to 769 MW by 2020, with most of installation occurring in California with its storage mandates for major utilities. Storage for solar homes is generating excitement, but the potential is greater in commerce, industry, government, and much greater in improving many aspects of utilities generation, transmission, and distribution.
Beyond solar+storage, a massive 160 GW of electricity storage is used globally, using everything from pumped hydro to flow batteries to advanced battery chemistries.
Commercial and Industrial
A number of food processors use energy storage. Gills Onions converts biogas into energy. It uses a 600 kW / 6 hour vanadium redox flow battery for peak-shaving and keeping monthly electricity use below a level that would push it into a higher rate for the entire month. Demand charge reduction is a leading cost-justifier for industrial battery storage.
For hotels, energy is one of their biggest expenses. A guest using a 1,500W hair dryer for 15 minutes, could cost a hotel $45, points out Karen Butterfield with Stem. At the Intercontinental Hotel San Francisco, where much of the Intersolar Conference took place, a 54 kW Stem system is used.
You probably use Amazon Web Services (AWS) for everything from online shopping to watching videos on Netflix. AWS, with over one million customers, is the leader in cloud services. AWS is committed to transition to 100% renewable energy. Today, three AWS Regions are already 100% carbon-neutral. States James Hamilton at AWS, “Batteries are important for both data center reliability and as enablers for the efficient application of renewable power. They help bridge the gap between intermittent production, from sources like wind, and the data center’s constant power demands. We’re excited to roll out a 4.8 megawatt hour pilot of Tesla’s energy storage batteries….”
While battery storage gets the most press coverage, thermal storage is often more cost effective. Software leader SAP at its LEED Platinum Newtown Square campus uses thermal storage. Beneath a main building is an ice storage unit featuring 16 Calmac containers that create 3,500 tons of ice each night and then melt down during the day.
People in the U.S. Northeast lost power for three to ten days when hit by Superstorm Sandy and recent blizzards. Backup power is priceless to someone who walked down 20 flights of stairs every day because water was not pumped to their apartment. Solar+storage allows residents to keep the lights on, the water pumping, and lives saved.
Glenwood, a builder of luxury homes, installed its first energy storage system two years ago at its Barclay Tower property. It is now implementing an additional one MW of distributed energy storage systems.
Recently, 83 New York projects were awarded for microgrids with municipal solar power, combined heat and power (CHP) and storage.
SolarCity is now providing attractive leases, power purchase agreements (PPA), and sales of solar+storage. It is not surprising that they are offering the Tesla Powerwall, since Tesla CEO Elon Musk is also Chairman of SolarCity.
Utilities Start Deploying Storage Everywhere
Utilities have been storing energy for decades with pumped hydro. At night, cheap energy is used to pump water uphill; during peak daytime hours, water falls through turbines creating energy. Pumped hydro continues to be used, but now batteries are economical throughout a utility’s business in generation, transmission, distribution, and behind the meter.
Kansas City Power and Light serves 14,000 customers with its Green Impact Zone SmartGrid that includes 1 MW / 1 MWh Dow Kokam lithium-polymer battery in its smart substation.
San Diego Gas and Electric, serving 3.4 million people, generates 33 percent of its energy from solar and wind. At Borrego Springs, a 500 kW / 1.5 MWh lithium-nickel-cobalt-aluminum battery supports a microgrid that can adjust load based on price signals and island during a grid outage.
Electricity wholesaler, PJM, has an active market for energy storage and demand response for 13 states and Washington DC. RES Battery Utility of Ohio supports PJM frequency regulation with a 4 MW / 2.6 MWh lithium-iron-phosphate battery.
When demand for electricity is greatest, many utilities use natural gas peakers for hours of added generation. These peakers are polluting, especially considering the environmental impact of fracking to supply more natural gas. Utilities are starting to use large batteries instead of peakers. Intensifying price competition, Tesla Powerpacks can be installed in arrays that scale to 100 MWh and guarantee capacity in 20-year PPAs.
Many utilities are deterred by obsolete regulation from using energy storage. Some utilities can only generate electricity, some can only transmit and distribute. Obsolete regulation may classify storage as generation or distribution or render storage mute, by requiring matching generation. Storage is often excluded in states with net metering and/or renewable portfolio standards (RPS).
Utilities with more enlightened regulators, however, are using storage in every aspect of their business.
SCE which serves 14 million in Southern California, is meeting a growing demand for electricity even as it shuts down two large nuclear power plants. SCE is deploying multiple forms of large scale electricity storage. AES is installing 100 MW of large-scale lithium battery storage in a 20-year power purchase agreement (PPA); Stem, using big data and analytics, will manage 85 MW of distributed, behind the meter, lithium battery storage; Advanced Microgrid Solutions 50 MW; Ice Energy Holdings will install 25.6 MW of thermal storage, making ice off peak for use in cooling during peak.
Battery storage is enabling leading utilities to replace old generation with renewables, build more reliable grids, and enable large-scale distributed generation. With falling battery costs, storage is destined to be a money maker for millions of homeowners, businesses, and governments. Navigant Research forecasts that the annual revenue of cell sales for advanced batteries for utility-scale applications will grow from $222 million in 2014 to $17.8 billion in 2023.
Photo courtesy of Tesla Motors.
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