FEATURE: Energy Storage Moves Mainstream
How fast is energy storage growing? One measure is the proliferation of new companies and established manufacturers that are entering or expanding the global market. When the likes of LG, Mercedes-Benz, NEC, Siemens and Samsung join pioneers like AES, Sonnen and Tesla that is a strong market indicator, albeit anecdotal. Another measure is its success as a commercial venture, such as the Capacity Markets awards in December 2016 by the UK's Electricity Storage Network for battery-based systems - the first time that 15-year contracts were awarded to projects with storage components, signaling commercial faith in technology that did not exist in open markets 10 years ago.
Storage is growing as a market in tandem with renewable generation technologies and independently from those markets. Led by a record-breaking final quarter in 2016, energy storage in the US reached 336MWh, growing 100 percent from 2015's installed capacity. The US energy storage market is set to grow from 336MWh in 2016 to 7.3GWh in 2022 when it is forecast to be a (USD) $3.3 billion market, according to GTM Research.
Another measure of storage's strength the proliferation of trade shows, conferences and industry events focusing on the new technology. While storage was previously a subset within larger solar energy events or power electronics conferences, it now enjoys its own limelight. Energy Storage Europe is one event that exemplifies growth in both interest and opportunity for storage. In 2012 this event (Duesseldorf, Germany) saw 350 attendees and 18 exhibitors. The 2017 iteration celebrated new milestones: more than a 10x attendance increase over six years at the same time exhibiting companies grew 10x as well. It is noteworthy that interest in storage soared between 2015 and 2016, growing 60 percent in that year alone.
When assessing the growing importance of energy storage to power electronics manufacturers, it is impossible to ignore the impact that renewable energy has had on the overall storage market. Unlike centralized generation schemes, renewable energy (wind, solar and water) are decentralized and largely non-dispatchable. The fact that renewable energy can be unpredictable somewhat forced commercial-scale utilities to consider how to best level/balance power loads while accommodating the variability of feed-in power frequencies. And while storage is a nearly perfect way to utilize energy during off-hours, the issue of harmonizing all varieties of generated power is no longer just an interest within the renewables community, but also has the potential to solve issues across global electric power infrastructure regardless of the fuel they use to generate.
From residential to grid-scale and micro-grids, and every place in between, storage has become an essential topic of conversation as technologies have improved, costs have shrunk and investment potential has risen. No matter whether generation relies on burning fossil fuels, or capturing the "˜free' energy of solar, wind or water resources, storage can benefit everyone. Considerations of core battery technology safety; software's role in energy storage; the proliferation and cost of storage systems; large scale load leveling and micro-grid applications; not to mention the long-term future and financial viability of storage systems "“ all these need to be considered by power electronics manufacturers.
Safety
Since the majority of today's advanced energy storage systems depend on lithium-ion batteries due to their size and power density levels, it is no wonder that concern over the large-scale manufacture and distribution of battery-based systems continues to grow thanks to widely publicized mishaps tied to consumer devices utilizing Li-ion cells. Anyone that has watched video of a phone smoking and bursting into flames due to a Li-ion battery mishap might have cause to worry over whether a stack of similar batteries connected to a kilowatt-sized rooftop PV inverter system could be a recipe for disaster.
While the lithium batteries found in consumer products share some characteristics with the much larger cells used for energy storage, adequate testing procedures and standards have yet to be developed. This is true even in countries where renewable energy plays an outsized role as it does in some Western Europe countries like Germany and Denmark.
Lithium-ion battery concerns typically center on the flammability of battery electrolyte. In worse-case scenarios, a heat buildup in one area of a poorly designed or badly built cell could lead to material failure and could produce its own oxygen during a so-called "˜thermal runaway' event. One burning cell could potentially ignite adjacent cells, leading to a "˜hazardous propagation event.' But beyond the safety of battery chemistries in long-term use situations where deep discharge is expected, other points of concern can include battery management software and the role that essential power electronics (controllers, switches, amplifiers, logic and conversion circuitry,) all play in maintaining safe operation. Another underlying issue is the relative youth of lithium-ion battery technology compared to decades-old lead-acid batteries that have been exhaustively tested in many dozens of use case scenarios, while Li-ion batteries have seen barely 10 years' experience in the storage market.
Safety guidelines for handling, transport and utilization of lithium-ion cells are being evaluated by many international regulatory bodies. Virtually every industry organisation is also looking at Li-ion battery safety. Countries that see high levels of trade and international travel are especially concerned about lithium battery safety, along with nations that have high amounts of renewable energy resources within their overall power mix. Many groups in Germany (which generated more than 30 percent of its power last year with renewables,) have developed safety standards for lithium ion technology. But regardless the national or political background, compliance with these standards is in many cases voluntary; there are no comprehensive industry standards maintained internationally.
Germany's Fraunhofer ISE partners with other organizations to provide active and comprehensive investigations of the safety, quality and grid suitability of residential storage technology. Why residential first? Energy storage interest is accelerating here compared to commercial sectors due to size and the number of residential deployments compared to commercial enterprises. In Germany alone the government estimates 34,000 homes with solar PV have already bought energy storage systems, typically to provide for self consumption. In recent work the groups have tested 20 different energy storage systems targeting residential applications up to 10kWh. The goal is to establish benchmark performance levels, as well as determining how systems should perform as they age, and what can be done to improve overall safety to both reassure the buying public and also to safeguard energy systems for long-term operation.
While work continues to establish benchmark lithium-ion safety standards that can be applied internationally, battery manufacturers are themselves working to improve not only the lifetime of their products but also to reassure customers of their safety. Since Li-ion electrolytes can be the source of problems, Alevo has created a new electrolyte formulation that is non-flammable, thereby dramatically increasing its prospects for safe operation. The lifetime any battery can function efficiently is another concern, with existing lithium-ion based systems typically rated (charge and discharge,) between 7,000 and 9,000 duty cycles. Alevo indicates that the chemical properties of its non-flammable electrolyte used in the company's GridBank storage system also enables a more constant power output level over a much longer period - 50,000 full depth of discharge cycles. Researchers at universities, institutes and power electronics companies across the globe are also examining ways to increase the safety of lithium-ion cells while sodium-ion and various "˜redox flow' batteries are also studied and brought to market.
Software
While energy storage systems are typically thought of as large, interconnected collections of batteries, every system has one thing in common - a need to manage energy input/output while identifying soon-to-fail cells, and a means to maximize both safety and high-efficiency duty cycles. Software platforms are emerging as crucial elements that make energy storage safe and productive. Energy storage system (ESS) software is also essential to overcoming barriers for further adoption. Software is involved in every aspect of system architectures, from cost analysis and design to development, deployment, active daily management, and finally - decommissioning. From the purchasers' viewpoint, designing a flexible system that is adequate and not overbuilt is a driving concern. From the operation and maintenance (O&M) perspective, yield, safety and proactive maintenance are vital concerns. Investors want to know that energy production resources are working at their highest level of efficiency, and along with safety and proactive maintenance all contribute to overall plant profitability.
A key benefit of comprehensive ESS software is the ability to limit, reduce or outright eliminate barriers to entry. A major factor keeping energy storage off some radars is cost. While advances in battery technology have reduced costs, planning a system in the past meant "˜from-scratch' designs that added to bottom line costs and did not necessarily reassure the purchaser of a proposed systems' true value or competitive nature. The range of different energy storage options, the cost of integration and understanding key technologies make planning without coordinating software a real challenge. A number of companies today offer software packages tailored to the needs of quickly and accurately designing a system that meets needs at the lowest cost. They can also design systems that more naturally lend themselves to aggregative operation as well as stand-along functionality.
Having the correct software with advanced capabilities also enables growing opportunities within the segment by helping educate vendors and suppliers along with consumers, investors and regulators concerning the benefits of emerging technology, including storage. Innovative new software platforms can provide all parties with a means to visualize system performance (real time and over set time periods) based on data gathered from other projects and/or industry samplings. The ability to optimally and cost-effectively design and control an ESS through advanced software is bringing down many of the barriers that have held back the development of energy storage. As the industry continues to mature, software's significance will expand by allowing for communication and coordination between systems distributed throughout the grid, providing essential links for a clean and resilient power system.
Microgrid Evolution
While the name itself - microgrid - seems to imply diminutive size, the term in fact applies to a wide range of electric grid sizes, with gigawatt and terawatt-sized systems comprising a "˜grid' while microgrids tend to be anything between tens of megawatts up to several hundred. Microgrids can also typically operate independent of larger grids within which they reside, but isolation or island-like operation is not required.
Today's microgrid is much more likely to be made up of one or more small grids that share common generation and/or transmission infrastructure. Microgrids previously were seen as isolation power grids, typically in remote locations without access to larger community or regional grids"”think literal islands with generation often tied to expensive fossil fuels like diesel or natural gas. When microgrids gained wider access to inexpensive renewable energy, systems began expanding the generation types they could accommodate, often incorporating wind or solar PV to supplement fossil fueled generation.
Storage offers microgrid operators advantages that were not practical before 2012, namely the ability to store power for non-generating hours or emergencies and not just as a means of incorporating various generation types when a primary generator goes off-line. Beyond flexibility, storage also benefits microgrids by helping eliminate the frequency fluctuations common to different generators; lack of harmony can cause a resonation effect, which is hard to overcome without substantial power loss through conversion and/or additional frequency tuning hardware that reduces power yields. The limitations of working with different power resources can complicate new microgrid applications. Storage capabilities give microgrid operators the opportunity to "˜bank' generated power at a single or multiple points, so regardless of whether wind, solar power or fossil fuels are utilized for generation, the energy that is drawn from batteries (of any major type) can solve some of the problems associated with generator idiosyncrasy.
Whether for a university campus, a neighborhood, or an isolated facility far from conventional electric power resources, storage paired with microgrids are unquestionably a consideration that will be utilized more often as more decentralized power resources are brought online. The opportunity to combine alternate sources of generation, intelligent switching, control and protection with storage provides an unbeatable combination of primary and back-up resources that help ensure the continual delivery of power under all but the most catastrophic circumstances.
Follow the Money
If growing the role that energy storage plays in renewable or conventional energy plants faces any hurdles at this point, it is in the area of financing large-scale projects. While a home owner might add a few kilowatts of storage to a residential PV project for around (USD) $4,000, funding storage in the megawatt range almost always involves outside financing. Therein lies the challenge: while storage is clearly mainstreaming, it lacks the time-in-market of other energy technologies, and as an industry, power generation and transmission is highly risk averse due to liability considerations. Public utilities typically demand long records of positive growth combined with dependable investment returns to spark interest. The challenge of adding storage is not just for 100 MW PPAs or community-scale solar, but almost any project larger than residential. Large projects often cannot depend on conventional battery technology to be practical, and while many "˜flow batteries' are moving from demonstration projects into the mainstream, they also lack the decades-long service records that public utilities need to entice bond purchasers or other investor groups.
If we look to the UK for a ready example, we'll find that listed funds own a significant share of the nation's utility-scale PV assets. However, they are not convinced at this point that storage technology - despite interest from across the energy marketplace"”are worth supporting at the same level. Even while UK photovoltaic projects now total about 7.5GW, storage is rarely included at utility-scale. Despite the success of tenders reported this past December that saw multiple, 15-year contracts awarded to companies offering storage in various generation projects, the investor community remains unconvinced.
Michael Bonte-Frienheim, chief executive of NextEnergy Capital, remarked following the T-4 capacity auction last fall in the UK, that current investors are not happy with the risks of relatively new technology. The financial industry wants more data and longer-term results by which to evaluate and determine the true value of energy storage.
"The only way storage will work for us is if we can use existing grid connections and stack revenues "¦ load shifting (by itself) is not worthwhile," he remarked.
But this situation may be on the cusp of change. More and more renewable energy and combined generation projects are coming online. Typically funded by regional or national governments, these storage programs point to growing confidence in the technology and the companies manufacturing it, which should signal private investors that underlying technology has progressed enough that prospects for longer-term investors have improved.
A multi-million pound EU-funded project is set to provide the UK's Isles of Scilly with a new smart energy system that includes storage; it also utilizes new software platforms to manage supply and demand of renewable resources and electric vehicles paired with charging stations. The project is led by Hitachi Europe, which will use the Isles of Scilly project as a test platform for future work developing smart grid technology.
Around £8.6 million, (USD) $10.5 million, has been secured from the European Union's Regional Development Fund (ERDF) and will be added to over £1.4 million of Hitachi's funding, with the remaining £754,000 expected to come from local resources and project partners.
The project is not dependent on funding beyond what has already been secured, but the fact that more municipal governments and regional/national electric power authorities now consider energy storage to be reliable for their long-term investment points to the possibilities of greater acceptance within private investor communities.
A Bright Future
No matter the measure, energy storage is following a strong growth trajectory. Whether looking at the number of projects that are coming on-line compared to five years ago, the growth in companies moving into the market, or the turn towards more investor interest, energy storage is emerging as a vertical market that will persist and grow independent of other technologies, thanks to increasing acceptance from traditional energy utilities as well as partners with green roots. As more governments adopt storage-friendly policies, and more projects come online, the likelihood that energy storage continues to grow will increase while costs decrease and long-term performance benchmarks become the rule.
