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5 trends that show Energy Storage is set to drive the Energy Transformation

Earlier this month, UK’s National Grid had to issue a notice on ‘electricity margins’. It stated the possibility of a tight electricity supply for the afternoon of November 4, the peak hours of a weekday.

The grid was forecasting a deficit of 740 MW (1.5%) in the extra power plant capacity that it needs to maintain at all times. The situation was even more challenging, as several natural-gas power plants in the U.K. are currently offline for maintenance. Finally, for support, the out-of-service old coal-fired power plants, that are catastrophic to the environment were fired-up.  

The reason for this shortfall was not overburdening of the grid but was for over-dependence on renewable energy. As per reports, the wind farms in Britain aims at producing an average of 16.9 GW of Energy. However, on November 4, because of calm weather, it was going to generate only 2.5 GW of Energy. Out of which, “system constraints” were said to prevent the use of 1.2 GW.

The incident raised a series of questions and scepticism around the preparedness towards the Energy Transition. In the process, it did make clear the significance of Energy Storage Systems and Technologies in bolstering the Energy transformations. 

Storage is critical for the Energy Transformations

The drive towards cleaner sources of energy generation requires a robust Energy Storage System to ensure Flexibility, Reliability and Resilience. It is as critical as the energy transition itself. 

Data points from recent Energy Industry reports give a clear indication of this fact, where some of highlights are:

  • According to The International Energy Association (IEA), countries together need 266 GW of energy storage by 2030, from 176.5 GW in 2017. It would be pivotal to maintain global warming below 2 degrees Celsius, along with the move towards renewables.
  • Currently, utility-scale stationery batteries are dominating the global energy storage market, as stated by The International Renewable Energy Agency (IRENA). Meanwhile, small-scale battery storage systems are expanding at a rapid pace and will be growing remarkably by 2030.
  • The same report highlights that in the emerging markets globally, energy storage deployment will increase by over 40% each year until 2025.
  • Also, there was a spectacular growth of 243% in the US Energy Storage Market in 2015, the highest on record.

A short focus on the US, shows that in 2010 it had about 59 MW of installed energy storage power capacity, from 7 storage systems. It went up to 869 MW, storage systems installations hitting 125.

Source: U.S. Energy Information Administration

Trends and significance in the Energy Transition 

For industries and organisations that have embarked on the journey of Energy Transition, storage technologies are taking centre stage to ensure business continuity.  

Here we have captured five trends that brings forth the changing dynamics of Energy Storage Systems and what is facilitating it:

1 – Move towards renewable – Energy Storage ensures a better and faster transition 

Net Zero commitments have expedited the shift in the energy mix, and renewable energy sources will be acquiring the maximum fraction in the coming years. If we go by predictions, renewable energy will make up to 80 percent of global electricity production by 2050. However, being an intermittent source of energy generation, reliability will remain questionable.

The situation in the UK explicitly indicates that to rely entirely on renewable energies, we need comprehensive battery technology to store the excess energy at the time of production. It is a crucial factor that decides whether we are ready to rely on renewable energies entirely or not.

2 – Innovative digital technologies enhancing the energy storage market

Energy 4.0 is about bringing efficiency and reliability by leveraging consistent digital advancements in the segment. The ubiquity of digitization is making Energy Storage systems more viable and meaningful for its users. It unlocks the potential of available data into actionable insights. Backed by technology, new business models such as battery aggregation and storage-as-a-service are offering companies and grid operators innovative ways to attain convenience and flexibility.  

Advancements in digitisation are also facilitating consumers to participate directly in the energy markets. Organisations are leveraging blockchain-enabled peer-to-peer (P2P) trading platforms equipping customers and businesses to share stored or self-generated energy.

3 – Declining costs of Energy Storage Systems

News reports earlier this year noted that the cost of lithium-ion batteries dropped by about 80% in the last five years. There were also reports on the US utility-scale battery storage costs that fell nearly 70% between 2015 and 2018. These cost declines can be attributed to the large scale government incentives and private investment in the utility-scale battery storage segment. 

Additionally, Rocky Mountain Institute recently analysed four major energy-storage markets; China, the United States, the European Union and India. The report highlighted two specific markets that would impact the cost of storage systems in the near future are;

1) Rising mobility markets, and 

2) The nascent grid storage market 

The declining costs of storage technologies is boosting interest in energy storage in an unprecedented way.

4 – Increased focus on Building Resilience

We are living in highly challenging and unpredictable times. Today, organizations are increasingly shifting their focus on building ‘Business Resilience’ as a first step. In this scenario, an efficient storage system provides energy and facility managers with the required independence, along with increased control over its energy management processes. Commercial business owners are improving their bottom lines and ensuring business continuity by generating and storing their energy systems.

A proper storage system helps energy managers not only diminish utility challenges, but also manage cost implications by allowing them to store energy when the electricity price is lowest, and use later during peak prices. 

5 – Increased focus on grid reliability as power demand set grow multi-fold in the coming years.

According to The U.S. Energy Information Administration (EIA), the energy consumption of the world will grow by nearly 50% between 2018 and 2050. The industrial sector encompassing refining, manufacturing, construction, and agriculture, will be responsible for the largest share of energy consumption.

Developments in an electric grid need to maintain a robust and reliable electricity delivery system. Energy Storage enhances the operating capabilities of a grid. It facilitates the lowering of costs while promoting higher reliability. It also defers and reduces infrastructure investments. An efficient storage system is instrumental for emergency preparedness and for providing backup power as well as grid stabilisation services. 

In a nutshell;

Storage ensures seamless power supply by enabling electricity to flow from alternative sources even when the sun is not shining, or there is not enough wind. It confirms reliability and resiliency. 

The criticality of energy storage requirements has risen substantially over the years. Today, implementing a robust storage system along with renewable generation sources is a pressing issue and is going to continue its growth in the years to come.