Bloomberg New Energy Finance predicts that 50% of world’s electricity generation in 2050 will come from renewable sources. In Europe, renewable energy penetration is expected to reach 85%. Much of the predictions are due to the declining costs of wind, solar, and lithium ion batteries, but the headlines leave out a critical element in the clean energy landscape: long duration energy storage.
Industry players and investors have started to pay attention to long-duration storage. U.S. Department of Energy recently announced $30 million project funding to support research in long-duration technologies. Billionaires Bill Gates and Jeff Bezos are investing $1 billion in startups currently working on various types of long duration battery chemistries. Google has a moonshot program to store energy in molten salts.
Why does the grid even need energy storage?
Energy storage has become a necessity for the grid to effectively manage the intermittency of renewables. With energy storage, excess solar or wind energy can be stored when electricity generation exceeds demand and utilized when renewable generation recedes - after sundown or when the wind stops blowing.
In this growing energy storage market, lithium-ion batteries grab most of the media attention for driving cost reductions while effectively responding to short duration (<4 hour) fluctuations on the grid and replacing gas-fired peaker plants. However, to reach the projected high levels of renewable penetration, the grid will also need long duration energy storage technologies to bridge the 10+ hour gap between sunset and sunrise and more importantly during cloudy days or when the wind stops blowing.
To illustrate the role long-duration storage fills, let’s look at a 48 hour period in this past April on the California grid. In this example, the black line shows Net Demand (total energy demand minus wind and solar generation) on the grid, the x axis is time and the y axis is Gigawatts of power.
There is a big dip in Net Demand during the middle of the day when Solar production (yellow line) peaks - this is already causing negative pricing and curtailment because it’s expensive to turn off (and later on) other forms of generation. Negative pricing and curtailment are already occurring with wind and solar comprising ~20% of California’s annual electricity consumption.
As California and the world push forward to higher renewable energy levels, let’s see what happens if we triple wind and solar output to theoretically achieve 60% of electricity consumption in California.
There is now so much wind and solar on the grid that Net Demand is extremely negative in the middle of the day. To utilize all of this energy, it must be stored and then used at for a 10+ hour period at night when the sun isn’t shining.
And this isn’t just a California phenomenon, existing levels of intermittent resources are already causing negative prices for wholesale electricity in the US, Europe, and Australia. All of these areas are planning for more wind and solar capacity.
Why different types of energy storage make economic sense?
Why can’t lithium ion batteries handle all of the grid’s storage requirements? Technically they can, but long duration load shifting technologies, such as thermal, flow batteries, etc. are less expensive for shifting large quantities of energy over long durations. To illustrate the cost disparity between short and long duration technologies, we refer to the US Energy Information Administration charts below, taken from a May 2018 study on battery trends
The left chart shows that short duration (primarily lithium ion) batteries have a low cost per power capacity ($/kW) compared to long duration. Power is the rate at which electricity can be transferred. However, short duration battery capacities are 5x more expensive than the long duration forms of energy storage when it comes to energy capacity, as shown in the chart on the right. Energy capacity is the quantity of electricity available.
With these cost structures in mind, it makes intuitive sense that short duration, lithium ion systems, provide the most economical grid services that respond quickly to power requirements (spinning reserve, frequency regulation, peak shaving, load following, etc.). But, longer duration systems fill the need for significant load shifting on the grid.
In summary, the grid needs a combination of different short and long-duration technologies. An analogy to this is the global shipping industry where goods being sent from point to point is parallel to energy being shifted from one time period to another. Airplanes are used for urgent, immediate needs (like short duration batteries); whereas ships are used for hauling large volumes of goods over longer periods of time (like long duration storage). There is a role for each technology and it wouldn’t make sense to develop one metric to pick a winner between trucks, trains, planes, and ships for moving goods around the world.
Finding the right solution for your needs
Because the requirements and associated benefits of energy storage can be site-specific, we recommend customers evaluate multiple technologies based on their requirements.
For behind the meter projects, most companies can generate customized proposals that showcase site-specific savings from a previous years worth of building load data. Utilities can do the same thing based on their specific needs at the time: frequency regulation vs peak capacity vs load shifting etc. In some cases, it will make sense to issue separate RFP’s to meet the different requirements instead of bundling all of the storage into one procurement target.
At Axiom, we have decided to entirely focus our Refrigeration Battery solution around one specific customer: supermarkets. And by specializing, we have also created value-added services such as backup cooling in case of a power outage and advanced visibility / diagnostics for the largest energy consumer in our customers buildings: the central refrigeration system.
While Lithium Ion may make sense for some entities, there’s numerous solutions, even dual solutions that can easily assist in managing and storing energy.
About Anjan Mahrok and John Lerch
John serves as the Director of Sales and is responsible for growing Axiom Exergy's orders and pipeline by executing contracts and developing related sales materials.
Anjan Mahrok interned at Axiom Exergy and is currently an MBA student at Cornell University. She is passionate about renewables and the energy storage industry. Outside of work, Anjan is always up for a good hike.