By Conor Sheehy, V.P. of Green Economy Investments at IDA Ireland
Exciting electrochemical storage technologies are emerging as the world races to meet bold climate-action goals designed to foster carbon neutrality and temper the long-term effects of global warming. Battery energy storage systems (BESS) are essential to this pioneering revolution as they capture energy from electricity grids, solar, wind and other renewable power sources and store the energy in rechargeable batteries for later use.
According to global industry analyst StrategyR, the U.S. BESS market alone was estimated to reach $1 billion by year-end 2021. Globally, the market for BESS, estimated at $3.2 billion in 2020, is projected to reach $12.9 billion in 2026. Europe’s share of this demand is expected to exceed $709.3 million by 2026.
BESS are expected to lead the way in energy storage in the coming years. That’s why so many companies at the heart of Silicon Valley’s battery ecosystem are boosting production to meet this growing industrial and consumer demand. With plentiful access to wind energy and their desire to reach lucrative markets in Europe, some of these U.S. companies are looking to Ireland to expand their operations.
Ireland’s wind resources are many times larger than the country’s total demand for domestic electricity. Distinguished as the third highest globally of per-capita wind energy capacity, Ireland is now looking to wind to not only supply energy but also as a means for storage and delivery.
Ireland and France are currently collaborating on the Celtic Interconnector, a $1 billion submarine power cable between the southern coast of Ireland and the northwest coast of France that should be operational by 2026. The interconnector will allow Ireland to offer well-priced clean energy to Europe.
Capturing Offshore Wind Opportunities
Offshore wind is definitely gaining traction. In the last 15 years, technology for offshore has matured, costs have declined and deep water techniques such as floating offshore wind turbines are unlocking greater opportunities. But as the capacity of wind increases, so too do the challenges. The greatest barrier is the intermittent nature of wind. Energy storage systems offer the solution because they can store electricity when wind speeds are high and discharge when wind speeds are low.
Paul Leahy, who lectures on wind energy engineering at University College Cork, says Ireland stands out for having some of the largest offshore wind energy potential in northwestern Europe.
“In terms of the actual amount of power that you can get out of a single turbine, there’s almost nowhere better on the planet than the offshore wind of Ireland,” says Leahy. And because Ireland’s wind resource is so much bigger than its total demand, he says, there is a huge potential to use wind energy to provide low-carbon energy to industrial users, to export markets via the existing and proposed interconnectors, to the transport sector and even chemical production through the ‘power-to-X’ concept.
Where does the opportunity lie?
Tech leaders like Meta, Amazon and Microsoft are already harnessing Ireland’s wind power to benefit their operations and further their commitments to non-polluting energy.
Statkraft, the largest energy generator in Europe, plans to develop 500 MW of offshore wind energy in Ireland and has developed an energy storage battery in partnership with Fluence. The hybrid battery and wind project combines 11 MW of battery with 23 MW of onshore wind.
Marek Kubik, managing director of Fluence, a global energy storage product, services and digital applications company formed originally as a joint venture between AES Corporation and Siemens, says a country’s energy ecosystem is critical when determining where energy storage companies land. Countries with ambitious renewable targets, an openness to innovation, and access to markets that provide a funding mechanism for projects are the most attractive. Layer on limited interconnection between other geographies where the need for storage is high, and the value grows even more.
“Storage has a big role to play in shoring up the transmission and distribution infrastructure,” Kubik says. This includes such essential tasks as balancing fluctuating supply from renewable energy with demand and using batteries to create “virtual powerlines” that offset constraints in power flow. Grid-sized BESS will be a vital part of the future electrical distribution systems, he says.
Several other factors make Ireland an attractive market for Fluence. “Because it’s a physical island system and the country has an aging fossil fuel generation as well as locational constraints between where the electricity generation resources are positioned and where the energy demand is,” Kubik says. “All of this put together creates a significant need for flexibility of many different types in the electricity grid, and that is something battery-based energy storage is universally well placed to provide.”
BESS Behind the Scenes: What U.S. Companies Need To Know
Policy, regulatory and commercial framework is a key part of the energy storage market. Here are some key points for U.S. companies endeavoring to exploit the EU energy storage market:
Software: Energy arbitrage needs reliable software to manage energy flowing in and out of factories. Arbitage is the shifting of energy consumption to times of lower-cost or lower-emissions energy production, as well as regulating the frequency, voltage and the ability to ensure networks stay within thermal limits. Network access costs are reported to be as much as 50% of total electricity supply costs, and so solutions that use AI and machine-learning algorithms to optimize energy management are critical.
Infrastructure upgrades: Rollouts of EV systems for cars and other complex technologies will require upgraded communications systems, cybersecurity software and digitization of payment systems. Serious technology know-how is needed to reach this complex goal.
Regulations/contracts and payments: The EU Clean Energy Package provides helpful provisions to remove barriers to a European-wide storage roll-out of BESS. The Recast Renewable Energy Directive is part of the EU’s Clean Energy Package and establishes a common system to promote energy from renewable sources across different sectors. It also sets a binding EU target of 32% of all energy consumption to be renewable by 2030. These articles were transposed into Irish law by the Renewable Energy Regulations 2020, which means that any company set up in Ireland will meet Irish requirements in line with EU requirements.
About the Author: Conor Sheehy is Vice President of Green Economy Investments at IDA Ireland. Based in Dublin, he works closely with North American decarbonization and energy companies, helping them to establish and grow operations in Ireland.
He can be reached at [email protected].
