Large-scale energy storage appears to be nothing short of the perfect complement for an intermittent energy source in a world that is increasingly betting on renewables. As a result, energy storage is more in demand now than ever before. Falling capital costs, amongst other factors, have led Bloomberg NEF to predict huge growth in the next 20 years that will see the global energy storage market grow to a cumulative 942GW by 2040 – approximately 7% of the world’s energy capacity. This, in turn, will enable an uninterrupted supply of renewably sourced power facilitating further growth in the renewables sector.
BNEF’s ‘Long Term Storage Outlook’ report, published at the end of last year, predicts that nine markets worldwide will represent two thirds of this increased capacity in 2040. The graph shown below is taken from this report and illustrates this prediction.
The report foresees costs of investing in lithium-ion battery storage falling by 52% between now and 2030, fuelling sharp growth in the sector. BNEF predicts that investment in the global energy storage market will reach $620 billion by 2040, and that the market will primarily be made up of utility-scale installations until the mid-2030s at which point it will come to be dominated by ‘behind the meter’ applications.
The report lists the UK as one of the nine markets worldwide that will make up two-thirds of the increased capacity that it predicts. At the start of 2017, the UK Energy Research Centre released its ‘Costs and Impacts of Intermittency’ report which reviews the evidence on integrating variable renewable sources into power systems. Significantly, this report stated that “perhaps the single most important conclusion is that there is a substantial body of evidence that variable renewable integration costs are hugely dependent on the flexibility of the system to which they are being added”. The report goes on to cite storage as a crucial factor that can lend such flexibility to a system. At the end of 2017, large-scale battery storage in the UK reached approximately 200MW. This figure is currently closer to 500MW and it has been predicted that this will double within three years.
Large-scale battery installations in the UK are primarily used to ‘balance’ out the supply of energy and the demand for energy within the National Grid at any given moment. In addition to this, there is a growing new trend which has seen the installation of batteries at solar PV plants and wind power plants. These so-called hybrid sites allow renewably sourced power to be stored and sold at times of peak demand.
‘Behind the meter’ installations are another type of energy storage system to have emerged. These set-ups involve the energy storage installation being located on the customer’s property and on the customer’s side of the utility meter. The effect of this is ultimately to reduce the customer’s utility bill. One such ‘behind the meter’ installation that has received a lot of press attention has been the Tesla system installed at London’s Arsenal football stadium.
We asked Matthew Boulton, COO at Pivot Power to comment on why he believes that batteries are needed and the challenges he foresees. He told us ‘We want a renewables-based grid and see a big future role for batteries in providing the required balancing. Batteries can provide all sorts of valuable ancillary services to the grid, but these aren’t huge markets, so they need to pay for themselves by trading energy – buying when the system has too much and selling when it’s short. Behind-the-meter batteries offer additional value by avoiding peak network charges, but leave you taking bets on how those charges may be affected by future regulation changes, and having to work out how battery owner and landlord (if not the same party) will share the risk and the reward. It’s a world away from 20-year government-backed feed-in tariffs, but a lot of fun.’
As the energy storage sector continues to grow both in the UK and globally, owners, asset managers and regulators will have to work hard to keep ahead of developments. Whichever way the sector ends up evolving, one view that everyone seems to share is that it is headed towards significant expansion.
At QE, we provide asset management services to a range of storage projects including hybrid ground mount PV-battery sites, rooftop PV-battery sites and behind-the-meter installations. If you would like to speak to us about this, or any related matter, please contact Leandro Sancho via the enquiries section of our website.
This article is written and edited by Shirine Azzi. She can be contacted at: firstname.lastname@example.org