By Jason Goodhand, Global Business Lead – Storage, DNV GL – Energy
Many future power systems will be governed by variable and intermittent generation from renewables. Operators will therefore need to maintain the reliability and efficiency we all expect, while integrating the low-carbon technologies we all want. Viable storage and other flexibility options will be crucial.
According to DNV GL’s latest Energy Transition Outlook (ETO) report, there will be significant growth in energy storage over the coming years. Although this can include the likes of heat, flywheels and compressed-air storage in caverns, only pumped-hydro and batteries are considered to have any significant impact. The following factors will impact the flexibility of options on offer:
- Improving connections between neighboring grids enables balancing of supply and demand over larger geographies, ‘smoothing’ variability and improving robustness to failures
- Electricity systems already make substantial use of generators with the ability to start quickly and vary their output rapidly. Examples are hydro and diesel generators, and open-cycle gas turbines
- Integrating demand side response (DSR) measures to encourage reduced power consumption at peak times reduces strain on the grid and lowers costs for the consumer
- With more distributed generation and DSR, greater flexibility in markets will evolve to enable power systems to operate efficiently
- Flexible and interconnected markets and regulation will be important in facilitating closer cooperation and coordination between market participants, such as cooperation within each synchronous area for efficient frequency control.
- The portion of electric vehicle batteries that provide grid services, a form of energy storage called V2G (Vehicle-to-grid), will be a significant resource.
DNV GL’s ETO 2020 provides an independent forecast of developments in the world energy mix to 2050. In a dedicated power and supply report, the study presents the demand, supply, and investment forecast for wind, solar and new energy technologies to 2050, and focuses on the outlook for deep decarbonization and climate change ambitions.
Of the options summarized in the image above, pumped hydro energy storage is where DNV GL’s ETO model predicts most significant growth (Figure 2).
Pumped Hydro
For instance, as a mature renewable technology, pumped hydro is set to grow by 40% over the next three decades due to increasing demand for electricity, while its share in electrical generation declines slightly from approximately 16% to 14%. However, long lead-times, high capex, limited geographical locations, and concern over potential environmental and social impacts limit its growth over the next three decades.
Reservoirs for hydropower store enormous amounts of energy and are key for seasonal balancing of electricity systems. The ability to support power quality and balance on different time scales may become increasingly appreciated by system operators, which DNV GL predicts will result in hydro generation almost doubling by 2050.
Battery-storage technology
Lithium-ion (Li-ion) is today’s dominant battery chemistry for utility-scale storage, electric vehicles and information and communication technology. Approximately 95% of storage projects that DNV GL is currently involved in through feasibility assessment, development and construction, are Li-ion. With a cost-learning rate (i.e. the rate at which costs fall with every doubling of capacity) of 19%, the costs for batteries will continue to plunge. Further improvements in the cost, energy density, weight and volume of electric batteries will enable wider use of battery storage systems.
In many regions there will be an inflection point when penetration of variable renewables is sufficiently high to accelerate energy storage deployment. This penetration will result in greater power-price fluctuation, where the cost of battery storage is sufficiently low that the value of battery storage is compelling.
In larger markets for utility-scale battery storage, for example, in China, South Korea, Japan, and the US, there is now a shift in the charge/ discharge duration required from projects. As storage capacity approaches 1% of today’s low intermittency grid capacity, the trend is for business models to shift from frequency services as a primary application, often requiring only one-hour duration or less, to energy shifting or, in some markets, capacity provision. We’ll see the need for frequency and other balancing services increase as renewables increase their presence
New battery chemistries will have to compete with existing Li-ion energy density, manufacturing capacity and costs. If significantly cheaper batteries based on earth-abundant materials emerge, this could cause a step change in addressing some existing energy-storage challenges in power production and transport.
Managing supply and demand
As the volume of variable renewable energy resources grows, storage will become important for managing supply and demand, potentially delaying or avoiding grid upgrade requirements.
Apart from providing ancillary services, the impact of energy storage in wholesale energy markets greatly depends on how much and how quickly fossil-based power generation is phased out. Adding new storage technologies to the grid may result in different fault conditions, moving from classical short-circuit currents to short high-current pulses.
The use of flexible hydropower and pumped storage is on the agenda for large-scale storage, but commercial viability of this option is very country dependent. The ETO expects that the global capacity of battery storage will exceed that of pumped hydro before 2030.
Electric Vehicle capacity
By 2030 half of the passenger vehicles sold globally will be Electric. The ETO expects 300 Million EVs to be in the market and their lithium battery packs sit idle much of the day. When not in use this fleet of EVs represents a massive untapped storage resource which will compete with grid connected utility scale storage projects. The degree to which the EV market adopts V2G services could displace some of the anticipated growth of other storage in the near term.
Seasonal and flexible storage
One significant challenge of the energy transition is to provide sufficient flexibility in energy systems to cope with seasonal variation in demand and generation. Seasonal storage helps by storing energy during one seasonal condition (summer or winter) and discharging it in the other seasonal condition, depending on the load demand. Seasonal storage is thus closely related to seasonal variations in temperature, wind speed and solar irradiation, as these mainly determine the need for heat and cooling demand and the generation of solar and wind power.
Hourly and daily fluctuations in the balance between electricity demand and generation can be solved to a large extent with short-term storage and demand response. Yearly fluctuations require different measures because of the long storage times and limited number of cycles per year. Solutions for fluctuations between years are only needed every couple of years and may be considered adequacy measures – a measure that is collectively financed, for example, through a system operator.
If the need for fully decarbonized, fossil-fuel free electricity supply is high enough, it will reflect in a significantly higher carbon price, making seasonal storage viable. When the need is high enough, seasonal storage becomes a business opportunity.
For certain industrial sectors there can often be flexibility in their load if there is sufficient incentive to, for example, postpone production or adjust the time of water treatment. At a system level it is much cheaper to adjust load rather than install low-utilized generation.
Electrification of heating processes in industry for example, will impact sector coupling between gas and electricity, and increase opportunities for flexibility. Manufacturers with dual-fuel systems may be able to switch between gas and electricity depending on pricing or could store energy as heat for later use in processes. There can also be flexibility through onsite generation.
Facilitating the role that DSR can play will require market mechanisms that recognize the value that flexible assets can provide at the system level rather than simply at the project level. Some of the changes will include:
- Enabling the full capabilities of storage as both a flexible generator and a load to be realized
- Allowing DSR to participate in capacity markets
- Operating flexible markets at closer to real time.
Post-pandemic investment urgently needed
Renewable energy has been the most resilient form of power generation during lockdown; however, urgent investment, innovation and collaboration is needed to scale systems and technologies and digitalize power grids to help meet climate goals.
From inexpensive capital for renewables and energy storage projects to substantial investments in power systems, post-pandemic economic stimulus packages will drive the uptake of low or zero carbon solutions.
Support for global supply chains and partnerships are needed to reduce costs, making projects economically feasible and drive long-term progress for the industry globally and locally.
About the Author
With over 15 years of experience in the cleantech energy sector, global segment leader for energy storage Jason Goodhand has developed and managed businesses and projects involving grid-scale renewable energy, hydrogen fuel cells, and energy storage in Canada and the USA. Jason holds a Master of Business Administration degree from the Richard Ivey School of Business and a Mechanical Engineering degree from the University of Western Ontario.
