2016 The Year Energy Storage Matured – A Year Review
In 2016 milestone projects got under way with increasing Mega Watts and new ground broken. Companies found new applications and efficiencies for energy storage for both large-scale and residential, paving the way for Industry growth and maturity.
The energy storage sector in 2016 gained widespread media visibility within residential applications through Elon Musk and Solar City’s launch of the Tesla Power-wall and their new solar roof solutions. Much like Apple created it’s brand with a level of fanaticism and product appeal a parallel could certainly be drawn with the approach from Tesla and SolarCity. This type of development and advancement for residential energy storage is good for the sector as a whole as it creates consumer demand, bypassing other forces of inertia.
This was the most publicised of the media headlines however there are 100’s of other headlines from other companies in the sector, making headway in the dawn of a new era for energy and energy storage.
2016 A Transitional Year For Energy Storage
2016 has been a “transition year” for U.S. energy storage, said Brett Simon, energy storage analyst with GTM Research. And Alex Eller, energy storage analyst with Navigant Research, said “2016 has seen a much more diverse energy storage market, both in terms of the types of systems (market segments) being deployed and the business models.” While utility scale installations dominated the market in previous years, Eller said 2016 has seen more progress at all market levels. He pointed to contracts for demand response capacity and utility ownership programs as key drivers in that transition.
In June, for instance, Consolidated Edison, along with SunPower and Sunverge, announced a $15 million pilot program for a virtual power plant.
The project, which is part of New York State’s Reforming the Energy Vision (REV) effort, will outfit about 300 homes in Brooklyn and Queens with leased high-efficiency solar panels and lithium-ion battery energy storage systems as a way of demonstrating possible revenue streams that from could come from energy storage uses such as peak shaving and frequency regulation.
How Energy Storage Costs Have Changed In 2016
Costs are an important factor in the adoption of Energy Storage solutions and In 2016 the improved over those seen in 2015. However making a comparison isn’t as easy as just showing a rate card from one year the next. Instead Lazard’s financial analysts have worked hard to make the best measurement of energy storage costs for 2016. They’ve taking data from storage manufacturers and developers to determine the levelled cost of storage for a particular use, and then compared that with the best available incumbent alternative. The model steers clear of systematically determining value, a most elusive quality that changes from place to place.
For instance, pumped hydro boasts a very low price per megawatt-hour, ranging from $152 to $198 in this report. That won’t make it competitive, though, for a project in the middle of a flat desert, where there’s no pump-able body of water to use. This report gives the cost and lets users apply that to their own use cases, and offers a few value snapshots at the end.
Energy Storage Costs Year On Year Comparisons
As shown above in the chart, the use-cases examined will be familiar to storage industry observers. In front of the meter: transmission assistance, peaker replacement, frequency regulation, distribution substation and distribution feeder. Behind the meter: micro-grids, island grids, commercial and industrial systems, commercial appliance (sized smaller, not meant for grid services) and residential.
Lithium-ion costs have dropped noticeably since last year’s report. For peaker plant replacement, which holds tremendous potential both for decarbonising the grid and reducing overall capital costs, lithium-ion now ranges from $285 to $581 per megawatt-hour; last year it was $321 to $658 per megawatt-hour. That’s a 12 percent drop in the median cost in one year.
Lithium-ion also fell 24 percent for the transmission use case and 11 percent for residential. Its lowest-cost use is for frequency regulation, where the minimum cost fell from $211 per megawatt-hour last year to $190 per megawatt-hour.
The cost ranges for flow batteries got more expensive since last year but also tightened, reflecting a more precise modelling of reality.
The range for flow batteries in peaker displacement and transmission last year exceeded $600 per megawatt-hour. This year that range was considerably reduced; zinc-bromine flow batteries have the most precise range, $434 to $549 per megawatt-hour for transmission and $448 to $563 for peaker replacement. That reflects the ongoing maturation of this technology and the increase in available data on it.
Energy Storage Growth Heading Into 2017
A report from Navigant Research completed in 2016 also forecasts the deployment of 77.3 GW of distributed renewables between 2016 and 2025, with solar power driving the majority of capacity additions. The report examines the U.S. market for distributed renewables, with forecasts by state for photovoltaic (PV) solar, distributed wind, and biogas.
Distributed renewables technologies have unique characteristics that can act as generation and/or load control on the grid, yet they each represent a dynamic resource that is challenging the industry’s prevailing business models and operating procedures, Navigant said.
“The deployment of distributed renewables in the U.S. is heavily concentrated in a few states, and the top 10 markets are expected to deploy 89 percent of new capacity,” said Roberto Rodriguez Labastida, senior research analyst with Navigant Research. “As distributed renewables continue to evolve from their identity as fringe generation resources to become the workhorse of the power sector, it is important that all electricity sector stakeholders execute a new strategy around renewables in order to remain relevant.”
Top Energy Storage News Items From 2016
Regulation & Politics
1) Massachusetts Passes The 3rd ever US Energy Storage Mandate
Massachusetts began paving the way for more far-reaching storage policies over a year ago, when the governor announced a $10 million energy storage initiative in May 2015. The initiative includes a funding commitment from the state’s Department of Energy Resources (DOER) and a two-part study from DOER and the Massachusetts Clean Energy Center to analyze opportunities to support Massachusetts energy storage companies and develop policies to encourage energy storage deployment.
Under the recently passed bill, H. 4568, DOER has until year’s end to decide whether to set a procurement target for electric companies to procure “viable and cost-effective energy storage systems” by a target date of January 1, 2020. If found appropriate, DOER would have until July 1, 2017, to adopt the procurement targets. The targets would then be re-evaluated not less than once every three years.
Under the law, a storage system must reduce greenhouse gas emissions, cut demand for peak electrical generation, avoid new investment in generation, transmission or distribution assets, or improve the reliability of the grid.
The energy bill also requires the state’s utilities to purchase power from hydroelectric plants and from both onshore and offshore wind farms. The law calls for long-term contracts for 1,600 MW of offshore wind power and 1,200 MW of hydropower or other renewables.
2) FERC Moves To Open Up Energy Storage Wholesale Markets
The United States commission, which governs interstate power transmission and wholesale markets, proposed a rule in November 2016 that would require each regional transmission organization and independent system operator to create rules for energy storage to participate in wholesale markets. The new regulations would have to recognize “the physical and operational characteristics of electric storage resources,” which differ from traditional grid infrastructure in that they can act as both a load and a generator, and perform a multitude of functions if given the chance.
If approved, the proposed rule could greatly expand the role of energy storage in wholesale markets — and the size of the industry itself. So far, storage has been relegated to the few areas that passed enabling policies.
The FERC proposal could accelerate the integration of storage into the grid far beyond the status quo trajectory, but ultimately the more local decisions will govern the details of how storage actually participates in the markets.
3) Paris Climate Agreement MadeBetween 190 Countries
As 190 countries agreed on the Paris Climate Agreement this year Energy Storage will become more important internationally as it is integrated balancing renewable energy sources. Even one of the world’s top three polluters, India, made specific reference to energy storage in its voluntary target.
Both of the world’s top two polluters — China and the U.S. — already have significant battery industries and will likely keep pushing the technology.
Another three of the top 10 polluters — Japan, Germany and South Korea — are also starting to invest heavily in residential and grid-scale energy storage. These countries will likely see some of the strongest growth in storage adoption in the coming years.
Ravi Manghani, a senior storage analyst at GTM Research, called storage is “a useful tool for nations to meet their carbon reduction targets.”
“Storage can provide countries with growing energy appetite and weak grids an opportunity to leapfrog carbon intensive infrastructure development through growth at the grid edge, paired with solar, wind or other renewables. In developed nations with already high renewable penetration and stable grid, it can aid adoption of even more renewables without integration concerns,” said Manghani.
4) Donald Trump Voted The 45th President Of America.
Biggest Deals In 2016
5) Tesla and SolarCity Power Entire Island With Solar-Battery Micro-grid
Ta’u, an island in American Samoa, has turned its nose at fossil fuels and is now almost 100 percent powered with solar panels and batteries from the newly combined Tesla and SolarCity.
The microgrid is operated by American Samoa Power Authority and was funded by the American Samoa Economic Development Authority, the U.S. Environmental Protection Agency and the Department of Interior.
Radio New Zealand reported that the $8 million project will significantly reduce fuel costs for the island, which is located more than 4,000 miles from the west coast of the U.S. Ta’u’s 600 residents previously relied on shipments of diesel for power. At times, a shipment could not arrive on the island for months, meaning the island had to power ration and faced reoccurring outages.
But the new microgrid replaces this reliance on dirty fuels with more affordable solar energy, as Peter Rive, SolarCity co-founder and CTO, commented in his blog “the microgrid is designed to optimize system performance and maximize savings”.
6) Steag Inaugurates $100m 90MW Energy Storage System
In the last quarter of 2016, the Major German utility Steag and automation company Nidec ASI, formerly known as Ansaldo Sistemi Industriali, inaugurated an energy storage system in German that is the largest installation of its kind at 90MW.
The project consists of six 15MW Nidec ASI storage systems that aid Steag in the stabilisation of the country’s grid via frequency regulation and voltage control.
Germany’s largest battery system was celebrated in an inauguration ceremony held in Duisburg-Walsum, attended by North-Rhine Westphalia minister of Economic Affairs Garrelt Duin and Saarland’s Minister President Annegret-Kramp-Karrenbauer. During the ceremony, the select systems were officially put into operation at the Weiher power plant.
“The battery storage system makes an important contribution to the energy turnaround,” said Duin at the ceremony. “On the one hand, it stabilizes the power grid and increases supply security; on the other hand, emissions are reduced by saving fossil fuels. In the current energy environment with a high dynamics of change, we welcome the investments made by STEAG, especially in view of the fact that the project is implemented without subsidies. It shows that good ideas can be developed to market quickly with decisive action “.
7) India Built Largest Solar Power Plant in the World
Following eight months of construction, India finished its new solar power farm in Kamuthi which will replace California’s Topaz Farm as the world’s biggest solar plant.
The massive facility packs 648 megawatts, which should suffice to power over 150,000 homes, and consists of 2.5 million solar modules, 576 inverters, 154 transformers as well as 6,000 kilometers of cables.
The solar plant spreads over 2,500 acres (or 10 square kilometers) of land and cost a total of $679 million to build. By comparison, Topaz Farm, which can generate up to 550 megawatts of power, took almost two years and over 2.5 billion in funds to build.
Adani Group sponsored and oversaw the project. “Before us, the largest solar power plant at a single location was in California in the U.S. That was 550 MW and was completed in around three years. We wanted to set up a solar plant of 648 MW in a single location in less than a year,” said Adani CEO Vneet Jaain.
With the introduction of this solar farm, India is expected to become the world’s third-biggest solar market from next year, trailing behind only China and the US.
8) Tesla completes its $2.6 billion acquisition of SolarCity
Elon Musk said that merging the two companies would allow them to scale their battery and solar energy operations. The resulting firm would be “the world’s only vertically integrated sustainable energy company.”
Musk has said the deal is “blindingly obvious” because, in his mind, the desires of Tesla customers overlap with those of SolarCity. But the acquisition could be incredibly dangerous for Tesla, and Musk himself. It’s a long-term investment with no real short-term payoff, and both Tesla and SolarCity will need a lot of cash to stay operational until this deal starts to bear fruit.
Merging the two companies is part of Musk’s Master Plan, which has Tesla expanding its offerings to include integrated energy generation and storage. The first product to come out of the newly combined company is the Solar Roof which integrates with the Tesla Power Wall energy storage home battery.
Innovation & Disruptive Models
9) Bitcoin & Blockchain to Transform Energy Economy, Unlocking A New Market
“It’s Like The Early Days Of The Internet. When the internet was first introduced, it was hard to conceive of the drastic impact it would have on the world. We’ve got all the parts to do some really interesting things” Scott Clavenna – CEO of Greentech Media on Blockchain.
Solar technology and battery storage are important. But what has been missing is a technology on which to organize, co-ordinate and secure a true peer-to-peer power grid.
In Brooklyn, a microgrid operated by Transactive Grid is now counting the electrons generated from solar panels on one side of President Street, and storing the data on a decentralized blockchain. On the other side of President Street sits a row of homes interested in buying excess solar energy from their neighbors. Until now, there has been no way to enable this transaction.
“We are in the process of rolling out our first demonstration network on President Street in Brooklyn and it will be a great proof of concept. We hope that street will be remembered in the future as the start of a step change in the energy industry,” said Transactive Grid co-founder Lawrence Orsini.
If you want to know more about this and other topics directly from end users of energy storage technologies join us at one of these annual events: The Energy Storage World Forum (Grid Scale Applications), or The Residential Energy Storage Forum, or one of our Training Courses.