Leading the Energy Transition: Electricity Storage is part of a series of Factbooks on the energy transition conducted by the SBC Energy Institute. This Factbook seeks to capture the current status of and future developments in electricity storage, detail the main technological hurdles and areas for Research and Development, and analyze the economics of a range of technologies.
Integrating intermittent sources of energy requires additional flexibility resources and results in a new momentum for electricity-storage solutions.
Power systems are challenging to operate since supply and demand must be precisely balanced at all times. As a result, power systems have always had to be flexible. At present, flexibility comes primarily from the generation side: system operators adjust the output of generators upwards or downwards. By storing primary energy sources, such as coal and gas, or water in hydro dams, system operators have avoided the need to store electricity.
Wind and solar photovoltaic systems make demand-supply matching more difficult since they increase the need for flexibility within the system, but do not themselves contribute significantly to flexibility. Flexibility management can be optimized by perfecting models for forecasting output from wind and solar plants or fine-tuning market regulations, but additional flexibility will be needed in the form of demand-side participation, better connections between markets, greater flexibility in base-load power supply or electricity storage.
FIGURE 1: WIND & SOLAR PHOTOVOLTAIC GENERATION VS. DEMAND IN NORTHERN GERMANY IN DECEMBER 2012 (MW)
SOURCE: SBC ENERGY INSTITUTE ANALYSIS BASED ON 50HERTZ DATA ARCHIVE (WIND AND SOLAR ACTUAL IN FEED 2012, CONTROL LOAD 2012)
Electricity storage is a three-step process that consists of withdrawing electricity from the grid, storing it and returning it at a later stage. It consists of two dimensions: the power capacity of the charging and discharging phases; and the energy capacity of the storing phase. As a consequence, electricity storage has very different uses, depending on the combination of the power rating and discharge time of a device, its location within the grid and its response time.
The primary purpose of electricity storage consists of ensuring power quality and reliability of supply, whether it is to provide operating reserves, uninterrupted power-supply solutions to end-users, or initial power to restart the grid after a blackout. A secondary purpose of electricity storage is driven more by energy requirements. This involves leveling the load. Leveling enables the deferral of grid investment on a congestion node and optimal utilization of low-cost power plants, and presents opportunities for price arbitrage. The increased penetration of variable renewables is making these applications more critical. It is also creating a new application, known as intermittent balancing, to firm their output or avoid curtailment. For these reasons, variable renewables have resulted in renewed interest in electricity storage.
The features of storage technologies must match application requirements.
Unlike liquid or gaseous energy carriers, electrical energy is difficult to store and must usually be converted into another form of energy, incurring conversion losses. Nevertheless, many storage technologies have been developed in recent decades that rely on mechanical, electrochemical, thermal, electrical or chemical energy. Most of them are currently clustered in the investment “valley of death”, i.e. at the demonstration or early deployment phases, when capital requirements and risks are at their highest.
FIGURE 2: ELECTRICITY STORAGE TECHNOLOGY MATURITY CURVE
SOURCE: SBC ENERGY INSTITUTE ANALYSIS
The applications electricity storage technologies are able to fulfill depend on their chemical and physical characteristics. Technologies must be assessed at the application level, taking into account power rating, storage duration, frequency of charge and discharge, efficiency and response time, and site constraints that determine power and energy density requirements.
In general, mechanical-based pumped hydro storage (PHS) and compressed air energy storage (CAES) are the most suitable for bulk storage applications. However, both technologies face site availability issues.
Batteries are a major component of the storage landscape and can serve a wide range of applications with intermediate power and energy requirements. They differ according to their electrodes and electrolyte chemistries. Sodium-sulfur (NaS) and lithium-ion (Li-ion) are the most suited for stationary storage thanks to their higher power and energy densities, and greater durability. Nevertheless, durability remains, together with costs and safety concerns, one of the biggest hurdles to commercial development.
In addition to conventional batteries, research is being conducted into flow batteries, which use the same reaction but with two separately stored electrolytes, allowing for power and energy decoupling. They are, for now, more costly due to their complex balance of system, and further development and demonstration efforts will be needed.
For applications where providing power in short bursts is the priority, flywheel, superconducting magnetic energy storage (SMES) and supercapacitors appear to be the most attractive, as a result of their high power density, high efficiency, high response time and long lifespan. However, costs are high and these technologies are currently at the demonstration phase.
Finally, despite its poor overall efficiency and high up-front capital costs, chemical storage seems to be the only way to provide the very large-scale and long-term storage requirements that could result from a power mix generated primarily by variable renewables.
FIGURE 3: ELECTRICITY STORAGE APPLICATION AND TECHNOLOGY MATCHING (Discharge time vs. power requirements/ratings)
SOURCE: SBC ENERGY INSTITUTE ANALYSIS BASED ON US DOE (2011), "ENERGY STORAGE PROGRAM PLANNING DOCUMENT"
With the exception of pumped hydro storage, the deployment of electricity storage is at an embryonic stage.
Electricity storage is not a new concept. At the end of 2012, installed capacity amounted to more than 128 GW. However, its development has been restricted to one technology: pumped hydro storage, which accounts for 99% of global installed capacity and for 78% of future storage projects.
FIGURE 4: ELECTRICITY STORAGE INSTALLED CAPACITY IN 2012 (MW)
SOURCE: BLOOMBERG NEW ENERGY FINANCE DATABASE EXTRACTED ON 12TH APRIL 2013; JUN YING (2011); "THE FUTURE OF ENERGY STORAGE TECHNOLOGIES AND POLICY"
Compressed air energy storage has experienced a slow start: the first plant, a 290 MW facility in Germany, was commissioned in 1978; the second, a 110 MW plant in the US, was not built until 1991. It may take off in the next few years, with 450 MW under construction in the US and further projects planned in Germany and South Korea. However, the outlook is uncertain, given that several other compressed air projects have been suspended in the US, including a 2,700 MW venture in Ohio.
At the same time, large batteries are also being developed, with installed capacity amounting to almost 750 MW. Driven by development in Japan, sodium-sulfur batteries became the dominant technology in the 2000s and account for nearly 60% of stationary batteries installed. In recent years, lithium-ion batteries have become more popular and account for the majority of planned battery projects. Although at a very early phase of deployment, with few projects announced, flow batteries could be a game changer in the medium term.
With the exception of thermal storage, developed in recent years in conjunction with concentrating solar power plants, all other electricity-storage technologies remain marginal in terms of installed capacity.
Overall, interest in electricity storage is increasing, as indicated by the development of roadmaps by the International Energy Agency, the US and the UK.
Research, Development & Demonstration is making inroads into solving technological obstacles.
R,D&D priorities vary according to the technology. For pumped hydro storage, the primary objectives are addressing the constraint of site availability and minimizing environmental impact by using sea-based or underground reservoirs. Research is also being directed at upgrading existing plants and increasing their flexibility, using variable-speed turbines, for instance.
Several compressed air energy storage concepts, which should increase efficiency by reducing or avoiding gas use, are also in development: adiabatic compressed air involves the storage of waste heat from the air-compression process and its use to heat up the air during expansion; the isothermal design, meanwhile, aims to maintain a constant temperature. As with pumped hydro storage, artificial reservoirs, especially pressurized tanks, are also being developed in response to the limited availability of natural storage formations.
Battery research is focused on new materials and chemical compositions that would increase lifespan, enhance energy density and mitigate safety and environmental issues (e.g. lower-cost materials for the negative electrode of the lithium-ion battery). Liquid air and liquid metal concepts are often considered potentially disruptive, but their commercial prospects remain uncertain.
Finally, R,D&D of hydrogen-based technologies is highly active. Efforts are focused on: improving the viability of water electrolysis; assessing the suitability of blending hydrogen with gas; developing methods of using hydrogen to manufacture synthetic fuels; and continuing to investigate hydrogen storage in the form of metal hydrides and in underground formations.
Despite growth in activity, funding for electricity storage R,D&D is still lagging behind that of other low-carbon-enabling technologies, such as smart grids.
The business cases for electricity storage are very complex and rarely viable under current market conditions and existing regulatory frameworks.
The economics of electricity storage are difficult to evaluate since they are influenced by a wide range of factors: the type of storage technology, the requirements of each application and the system in which the storage facility is located.
The initial investment in a storage facility comprises two principal components: a cost per unit of power ($/kW) and a cost per unit of energy capacity ($/kWh). These costs vary significantly according to the technology being deployed. Reflecting their attractiveness in power-driven applications, flywheels and supercapacitors are characterized by low capital costs for power ($200-$400/kW) but prohibitively high investment in energy capacity. Conversely, compressed air energy storage has relatively high capital costs per unit of power (from $400 to $800 per kW), but is considerably cheaper per unit of energy. The combination of power rating and energy capacity is therefore crucial in assessing the competitiveness of different technologies.
FIGURE 5: CAPITAL COSTS OF ELECTRICITY STORAGE TECHNOLOGY PER UNIT OF POWER ($ per kW) AND PER ENERGY CAPACITY ($ per kWh)
SOURCE: SBC ENERGY INSTITUTE ANALYSIS BASED ON KYLE BRADBURY (2010), "ENERGY STORAGE TECHNOLOGY REVIEW"
Applications dictate another major component of storage economics: the frequency of charging and discharging cycles. Cycling affects the amortization of capital costs and annual replacement costs, which have significant impacts on battery economics.
Finally, the price of electricity is equivalent to fuel cost. Consequently, electricity-price distribution – depicted by the location-dependent price-duration curve – is a key factor in storage economics.
Overall, compressed air energy storage and pumped hydro storage are the most cost-effective technologies for large-scale electricity storage with frequent cycles. Flywheels and supercapacitors will be preferred for very short storage periods and frequent use. Batteries are likely to be the cheapest solutions when the number of cycles is low.
However, the economics of electricity storage remain shaky. The benefits of storage can be evaluated according to three methods, based on: the market; avoided costs; or the intrinsic value of storage, using the willingness-to-pay of the customer. Costs tend to outweigh the financial benefits, although price arbitrage and grid-investment deferral may make investments in storage profitable in some countries. Bundling several storage applications together seems a strong lever in helping electricity storage to become profitable. Removing regulatory barriers, such as making storage plants eligible to participate in ancillary services, rewarding fast response assets, or allowing network operators to own storage facilities, is also required to enable the monetization of storage.
Environmental and social impacts vary according to the technology and might hinder development in some cases.
As with the economics, the environmental impact of electricity storage is difficult to assess. It is necessary to consider direct and localized impacts, which vary according to the technology used, as well as the impact of the generation source, electricity displaced upon discharging and the increase in generation needed to balance storage energy losses.
In terms of individual technologies, pumped hydro storage faces the greatest environmental problems. Due to its low energy density, requirements for land and water are high. Higher elevation differentials and new concepts using seawater and wastewater could mitigate the technology’s environmental impact.
Compressed air energy storage uses very little land, but is the only technology that directly emits greenhouse gases. That said, emissions are very low and have been reduced in newer plants where exhaust gas is used to heat up the air. Moreover, emissions will be avoided in adiabatic and isothermal plants. Compressed air energy storage also has high water requirements for the formation of underground salt caverns and for cooling during operation.
Meanwhile, there are concerns over the energy intensity of batteries. This results from their cycling life and the materials of which they are made, underlining the need for continuing research to improve durability and investigate new materials. Important safety issues that could compromise public acceptance must be addressed in the case of batteries and hydrogen solutions.
FIGURE 6: RATIO OF ELECTRICAL ENERGY STORED IN THE LIFETIME OF THE STORAGE DEVICE TO ITS EMBODIED PRIMARY ENERGY (MJ/MJ)
SOURCE: CHARLES J. BARNHART (2013), "ON THE IMPORTANCE OF REDUCING THE ENERGETIC AND MATERIAL DEMANDS OF ELECTRICAL ENERGY STORAGE"
Finally, better communication and education are needed to improve the understanding of electricity storage among energy professionals, policy makers, students and the general public.
To read more, download the full factbook presentation here (5.69 MB PDF).