|The 20-MW Eos Aurora battery facility turns off-peak wind energy into dispatchable peak power. Photo Courtesy: Eos Energy Storage|
Renewable energy is on the rise more than ever. As the industry has advanced and the general public has become increasingly interested in evolving renewable technologies, utilities have begun to integrate renewable resources into their portfolios at greater and greater rates. State and corporate policies that mandate minimum renewable capacities have further spurred growth in the industry. Despite certain setbacks in funding and incentives, future growth in the business seems assured-indeed inevitable. However, this progress has done little to resolve a fundamental challenge for renewable power resources: intermittency.
Energy storage promises to remedy this problem. By generating power when the sun is shining and the wind is blowing, and then storing that power until it is needed, power producers can incorporate increasing amounts of renewable energy resources while overcoming many of their inherent shortcomings. In October 2013, California adopted a mandate that requires investor-owned utilities to buy 1.3 gigawatts (GW) of energy storage by the end of 2020, and it seems reasonable that other states will follow suit. It’s hoped that measures such as these will further spur development of technologies, business models, and regulatory structures which are necessary to both store energy efficiently and integrate that energy into existing infrastructure and distribution grids.
According to a report from Navigant Research, worldwide revenue from batteries designed for utility-scale storage will grow from $164 million in 2014 to more than $2.5 billion in 2023. During the same period, storage capacity from advanced batteries will grow from 412 megawatt-hours (MWh) to more than 51,000 MWh.
Additionally, in a recently published report, the Energy Storage Association (ESA) and GTM Research assert that the country is “on the cusp of a breakout year for energy storage”. According to the report, energy storage deployments will increase from 62 megawatts (MW) in 2014 to 220 MW in 2015, more than three times the growth of the preceding year. By 2019, the U.S. energy storage market is expected to reach 861 MW annually, and be valued at $1.5 billion, about 11 times its size in 2014.
Energy Storage Technologies
Past efforts to develop cost-effective, grid-scale energy storage solutions have made limited progress, with many technologies still languishing in the demonstration stages, but large-scale efforts in research and development may yet accelerate amid the current climate. Though research is being conducted in many areas of inquiry, current energy storage technologies can be broken down into five major categories: chemical batteries, compressed air, flywheels, pumped storage hydro, and thermal energy storage.
Chemical batteries represent a major segment of the energy storage industry. At its most basic, battery storage is not a new concept. Some argue the so-called Baghdad Battery proves that such technologies were used even in antiquity, though these claims are often contentious and consigned to the fringes. The practical use of batteries dates to the 19th century, when rudimentary batteries provided the main source of electricity prior to the advent of grid-scale power. (In any event, this editor can attest to the use of batteries at least as far back as the early 80s, when his Sony Walkman liked to eat AA Duracells for breakfast.)
More recently, Duke Energy has completed the largest battery yet constructed, a 36-MW lead-acid storage facility near a wind farm in Notrees, Texas. EOS Energy Storage is also developing a DC integrated battery system using zinc hybrid cathode technology. Housed in a 40-foot ISO container, this system is capable of delivering 1 MW of electricity for six hours at a targeted price of $160 per kilowatt hour (kWh). Many more companies are developing batteries using lithium ion, sodium sulfur, sodium nickel chloride, and other technologies.
Compressed air energy storage (CAES) utilizes surplus power to pump air into underground pressurized caverns from which it can later be retrieved to be heated and expanded within turbines that power generators. According to the ESA, CAES has been used since the 1870s to provide on-demand energy for cities and industry, and the first utility-scale CAES system was installed in the 1970s. Currently, all operational CAES systems are diabatic, but future adiabatic CAES systems are planned which will harness and exploit stored energy at much higher efficiencies.
Because it is not possible to store air at the high temperatures created during the compressions process, diabatic methods of CAES must release a great deal of waste heat into the atmosphere during operation, thereby necessitating the subsequent injection of heat prior to the re-expansion of the air for purposes of power generation. Adiabatic CAES methods attempt to store the heat generated during compression so that it can be reused during the process of re-expansion. Adiabatic methods provide for theoretical efficiencies of nearly 100 percent (assuming perfect insulation), though real-world efficiency rates are closer to 70 percent, which is still higher than diabatic CAES systems. Harvested heat can be stored in a solid substance like stone, but is more often stored using hot oil or molten salt. Though adiabatic CAES projects are promised in the coming years, to date no utility-scale adiabatic CAES system has moved beyond the development stage.
Flywheels utilize a spinning rotor to store electrical input in the form of kinetic energy, capturing intermittent renewable energy over time and later dispatching that energy at a continuous and predictable rate. An input of energy is initially required to begin rotor rotation, but because of its inertial mass, the rotor can then continue to rotate even after this initial input of energy is reduced or suspended. Subsequent energy investment is only required to recharge the rotor when power is harvested by the grid or the rotor slows due to frictional interference.
Traditionally, rotors were built of steel and rotated on standard bearings, allowing for only a few thousand revolutions per minute (RPM). Because of their increased weight, these heavy steel rotors provided greater energy density, but they also incurred greater centrifugal penalties and experienced greater wear and failure, even at lower RPMs. More recently, rotors have been constructed using composite carbon, which has greater tensile strength and so wears more gradually. While these lighter carbon composite rotors provide less energy density, they are also subject to minimized centrifugal forces and can rotate much faster. In order to reduce inertial losses due to friction, these advanced rotors are operated in vacuums utilizing magnetic bearings, allowing for rotational speeds of up to 60,000 RPM.
Pumped Storage Hydro
Pumped storage hydro is currently the most common type of energy storage. In concept, it is similar to CAES and has been used for decades. During times of surplus energy, water is pumped from a lower reservoir to a higher one. Later, when energy is in greater demand, this water is released through a turbine, harnessing gravity to generate power.
Pumped storage hydro actually results in a net consumption of energy because of the electricity required to pump water into upper reservoirs. However, because of its ability to exploit price differentials between peak and off-peak energy rates, and because of its efficiency rates which can exceed 80 percent, pumped storage hydro proves to be an economical way to balance load across the grid.
Thermal Energy Storage
Thermal energy storage allows power to be maintained in the form of hot or cold substances and used later as required. Using storage mediums such as molten salt, oil, and stone or other materials of high thermal mass, thermal energy storage can effectively balance loads from solar power and other forms of intermittent renewable resources, allowing energy to be harvested at peak availability, and used as demand necessitates.
The Good and the Bad
The energy storage industry is poised for growth, but while it enjoys the benefits of many market drivers, it is also hampered by a number of barriers.
Ravi Manghani, senior energy storage analyst at GTM Research, sees good news in the decreasing costs of energy storage. “We have seen 50 percent cost reductions in lithium-ion batteries since 2011. These cost reductions have been made possible by scaling up manufacturing capabilities for electric vehicles. This has had a multiplier effect on other battery technologies as investments have flowed into other battery technology development,” he says.
Manghani also cites growing renewable penetration as cause for optimism in the energy storage industry. “This penetration, with some state markets having over two percent of grid capacity, has led to power quality and integration challenges,” he says. “Energy storage has been accepted as a technology to mitigate some of these challenges, and enable higher penetration levels.”
“California, New Jersey, and New York have incentive programs directed toward energy storage deployments,” Manghani continues. “Other states have incentivized microgrid projects that include energy storage. Also, earlier in this decade, there were several deployments financed through funding provided by the American Recovery and Reinvestment Act. These incentive programs have improved the overall economics for end customers and, in certain cases, facilitated the financing of projects through third parties.”
Manghani is also pleased with the changing regulatory landscape. Referencing California’s aforementioned energy storage mandate, he notes that certain incentive programs represent pieces of broader state-level regulatory programs that encourage energy storage. “Other states such as Hawaii and New York are also looking to incorporate energy storage on the grid,” he says. “Even in regional transmission organization (RTO) and independent system operator (ISO) markets, energy storage plays a growing role, driven by the Federal Energy Regulatory Commission’s (FERC) order 755 that requires RTO/ISOs to include and appropriately compensate energy storage in fast responding frequency regulation markets.” Manghani also points out that PJM Interconnection has already deployed over 100 MW of energy storage participating in its fast regulation market.
Reductions notwithstanding, energy storage costs are still above levels that will facilitate mainstream deployments. Manghani says further cost reductions from both battery and non-battery components and processes are needed. He also notes that institutional and commercial lending “is going to be critical to see broader deployments, particularly for emerging technologies, but also for lithium-ion technologies used in new applications.” To help lenders become comfortable with energy storage, he sees a need for several months of operational data and performance to back energy storage.
Manghani also sees regulatory hurdles that the industry must clear. “Energy storage can provide multiple use cases which are often stackable. In order for the economics of storage deployments to add up, the costs have to come down, but use cases also need to be correctly valued and monetized. There are regulatory hurdles that prevent such monetization when benefits are accrued across multiple stakeholders. This is not only a regulatory challenge, but also a technical one, needing improvements in energy storage management systems and battery performance to operate and optimize multiple use cases.”
Manghani further recognizes a growing consensus to consider storage as a generation asset if it is deployed upstream on the utility side of the meter. “There are use cases that could deploy energy storage as a transmission or distribution asset,” he says. “This somewhat unique ability of storage to be deployed as a transmission, distribution, or generation asset has caused some uncertainties around interconnection requirements and processes. There are similar issues around rate structures for storage during charging and discharging.”