November 3, 2020 — Industry Trends
Are you ready for the storage boom?
Operators must prepare to add batteries to portfolios as capacity booms.
Edmund Hood Highcock
Senior Data Scientist, Greenbyte
It’s been a long time coming, but the energy storage boom has finally arrived.
Just this autumn, LS Power switched on its 250MW Gateway Energy Storage project in California, which is now the largest operational battery in the world. Oil giants BP, Shell and Total have also unveiled strategies for achieving net zero carbon emissions, which all rely on the expansion and evolution of energy storage.
Meanwhile, in the world of forecasts the bullish predictions for storage continue unabated.
In September, the well-respected folk at Wood Mackenzie have forecast that global energy storage capacity would rise to 741GWh by 2030. This would represent an eye-catching compound annual growth rate of 31%. It’s one of many forecasts that tell a story of huge growth. The pipeline of storage developments planned globally in 2021 is enormous: in the US alone, around 3GW of storage capacity is expected to be installed, according to Guidehouse Insights.
Renewables growing up
The main reason for this is abundantly clear. Wind and solar are both on course for massive capacity expansion in the 2020s. Their increase, relative to traditional generation, means that the long-postponed problem of how to deal with fluctuating production is now inescapable.
We often hear the analogy that renewables are growing up and ready to thrive in the adult world of merchant risk. They’re flying the nest. But, in the real world, moving away from home is rarely smooth. Most of us called on a kind adult at some point: to put up shelves, cook a nutritious meal, or help with the expense of real life.
Storage can help deal with a similar growing pain for renewables: intermittency. It can act as that bit of energy you hold back for when life gets a bit tough! Transmission system operators (TSOs) will need a mix of short-duration and long-duration options to cope with that fundamental challenge, while renewable operators will be able to use storage to bank excess production and boost their returns.
Storage can be likened to magic dust for the whole grid, adding resilience and predictability to transmission, generation and consumption. This is why we increasingly see regulators making storage a compulsory part of new renewable energy developments.
All of this means more operators will run portfolios including wind, solar and storage in the next decade. It’s time for you to start thinking how you’ll manage these assets.
This raises another big question: how?
After all, very few operators in the renewable energy industry own batteries now. We see some, but most operators that own energy storage assets aren’t collecting much data from them. The assets themselves are usually controlled directly by TSOs and have full-service agreements in place. Operators aren’t really getting involved.
This model will be inevitably short-lived.
For one thing, operators will start realizing that owning and operating a storage asset themselves can open up the possibility of multiple revenue streams. A battery can be more than a sealed box that is best managed by a TSO that pays you every so often.
On the contrary, batteries – and other storage systems – are complex instruments that can carry out a wide range of tasks including frequency stabilization, peak power and smoothing production. I discussed all of these potential revenue streams earlier this year in a case study which considered adding storage to a renewable energy site.
The case study considered how batteries can enhance generation, but as we mentioned earlier, storage devices can serve additional vital functions in transmission support and demand management. Opportunities are being thrown wide open, but maximizing returns will only increase in complexity as the market expands. Managing such complexity is an area where Greenbyte is committed to helping our clients.
So let’s not focus on how different storage is from renewable energy assets.
Rather, let’s focus on how managing storage assets is similar to what we at Greenbyte help our clients to do now in the solar and wind sectors. The industry embeds sensors throughout both so that we can track their production, identify problems, and find ways to address them.
We can already predict the fluctuations in wind and solar production, and we already have a wealth of operational expertise applicable to storage technologies.
In short, we already have the technology that we need to demystify the performance of storage assets. And the more we demystify, the better-placed we’ll be to profit.