Is battery storage the next solar?

Is battery storage the next solar?

Innovation moves the power and utilities industry, it creates opportunities for technologies that once operated on the fringe. The incredible growth in the solar industry is a good example, where falling technology costs and supporting policies have accelerated the adoption of utility-scale and rooftop solar.

Could battery storage be next?

Traditionally, battery storage has been hamstrung by cost as well as technical factors like reliability and durability. But that may be changing.

The market

Earlier this year, Navigant Research projected the global market for advanced batteries for utility-scale energy storage applications will grow from $164 million in 2014 to more than $2.5 billion in 2023.

"The regulatory environment is very favorable towards energy storage right now," said Andy Tang, senior
vice-president of business at Greensmith, which provides energy storage management software and services. The company has commissioned 23 MW of projects this year and is predicting dramatic growth in grid-scale storage.

In an interview with Utility Dive, Tang pointed to regulators pushing storage in New York and California, as well as Hawaii and Puerto Rico where storage is needed in conjunction with solar production.

"The market is growing very, very nicely, and there really aren't any stumbling blocks," Tang said. "One thing that could make it better is the continued decline of the cost of the batteries. We've just come off the last three years where lithium ion batteries declined in price about 40% and over the next three to five years they'll probably decline another 40%."

"So three years from now, when the prices are 40% lower then where they are right now, then the market will really start humming," Tang predicted.

The company continues to look for spots where it can collaborate with utilities and large users on storage solutions. Greensmith is "working with a handful of developers" to develop ramp rate solutions for Puerto Rico, Tang said, and supported several third parties who participated in a Hawaiian Electric storage request for proposals.

Storing energy behind the meter

Today, Greensmith is focused on utilty-scale solutions, but the technology could filter down.

"There will be a robust set of applications for individuals to use in the so-called behind-the-meter marketplace," Tang said. "But right now, where costs are, this is really a much more cost effective solution for utilities. You need some evolution in tariff structures to make the behind-the-meter case economically attractive."

"With all due respectand I'm a former utility guythe days of kind of putting your head in the ground and ignoring the impacts of distributed generation are behind us," said Tang, who spent eight years in the utility industry and helped run Pacific Gas & Electric's smart metering efforts. "Penetration levels are starting to get meaningful. So when you start to look around at what are the possible solutions to maintain distribution reliability, storage behind substations makes a lot of sense."

Tang has watched as storage projects in the industry have grown from the kilowatt-hour scale to the megawatt and multi-megawatt levels. "And our internal projects have grown along with that," he said.

That same growth pattern is being witnessed at Imergy Power Systems. The company develops vanadium flow batteries, and can make batteries today that provide power for a little under $500 per kilowatt-hour. But as projects scale up, that price will fall by almost 50%, according to President and COO Timothy Hennessy.

"Anything under $500/KWh makes it economical," Hennessy said in an interview with Utility Dive. When you reach that level, the whole market dynamic changes. You're able to do peak shaving, arbitrage, demand shaving. All of these things become massive opportunities."

'Utilities ... have to change their models'

Like Greensmith, Imergy is focused on New York, California and Hawaii. "Hawaii is the most interesting," Hennessy said, where fuel oil produces power at over 40 cents per kilowatt-hour.

The big push is to get off the grid, he said, because solar can produce power for about 20 cents per kilowatt-hour. With a battery, that's about 30 cents per kilowatt-hour.  

Currently, Imergy's largest project is a 4-hour, 1-MW installation. Though Hennessy could not discuss details, Imergy is currently working on a 10-MW storage project for a utility in California, he said. By the end of 2016, he expects a large-scale rollout of these types of systems.

"They are definitely, on the regulatory side, helping move this forward," Hennessy said. "At the same time though, there is a competitive threat to the utility and that's why you need innovation from the PUCs in general."

"Utilities are going to have to change their models," he added. "They're under pressure to change the way they think, and by definition they don't move quickly. They don't take risks; it's not their job to. And many of these early technologies are risks."

Source: Utility Dive

SMART GRID Bulletin September 2017


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