Energy Storage – the Blind Spot in the Current Energy Landscape?

Energy Storage – the Blind Spot in the Current Energy Landscape?

As discussed in one of our recent blogs (you can find here), energy storage systems can be an economically viable add-on for renewable energy projects on a case-by-case basis, but the main question still remaining deals with the role of storage within the holistic energy landscape.

The rise of renewable energy generation remains a challenge for the utility sector, as these types of power plants produce highly-intermittent power, resulting in a certain imbalance in the energy exchange markets as well as in the power grid. Keeping an eye on recent developments in Germany proves to be real evidence, especially expressed in the dramatic fall-from grace of E.ON – once the largest European Power Utility with a dominant position on the market, now a two-split electric utility which has to bear the full cost of decommissioning nuclear power plants and disposing nuclear waste. Alongside other political decisions and the complex market situation in Europe, the long-lasting downward spiral for E.ON is primarily caused by the abandonment of nuclear energy as baseload power and the distortion of energy exchange markets through the massive governmental interventions by feed-in tariffs and offtake obligations of renewable energies.

E.ON is not a unique fate. A lot of European utilities are faced with similar challenges, being in trouble to utilize their conventional power plants, which would be highly needed in order to ensure a sufficient level of baseload electricity, but are currently blown out of the market. Also owners of renewable energy assets will be faced by a problematic market situation, where baseload is needed, and their renewable energy assets (once fallen out of the subsidy scheme) will only produce peak load electricity.

But Renewable Energy is not the enemy. Rather energy storage is the missing key in the energy landscape. What I’ve heard the most from other partners and colleagues in the energy sector is that energy storage is far from market and will not play a role in the short- and midterm. I definitely disagree with that argument. Although there is not the unique holy-grail in storage technology, as varying site conditions and modes of application determine the most effective storage method, there are several viable storage technologies already on the market.

The four large groups of storage technologies are: (1) Mechanical, (2) Electro-Magnetic, (3) Electro-Chemical and (4) Chemical storage technologies.

The Flywheel storage, Pump storage Hydro Power Plants and Compressed Air Storage belong to the group of mechanical storage technologies, which are currently relatively mature and ready for deployment on the market. PSHPP and CAES can be utilized for long-term, seasonal storage, while flywheels are perfectly deployed for short-term storage purposes and load balancing.

Electro-Magnetic Storage technologies as Superconductors are currently at an early stage in the development and can take a viable part in the non-interrupt electricity supply, if their technical development arrives at some stage of maturity, which will last at least some years from now.

While Chemical storage as Hydrogen storage or Power-to-Gas have been in deep focus between 2009 and 2014 and have been hyped as a viable alternative to the extension of existing transmission grids, economic and technical breakthroughs seem to be a long time coming.

Apart from these technologies, Electro-chemical storage seems to provide the most relevant part in the short-term for the current energy landscape. Batteries delivered at an economically competitive price are especially viable for small to mid-sized renewable energy power plants and for customers which are often subject to demand based charges. Especially in the industrial- and large scale commercial electricity customer segment, battery solutions coupled with intelligent software and predictive analysis tools working interactively with the power grid enable to avoid grid charges and will pave the way for mass adoption, thus smoothing the load behavior in the current grid infrastructure. Recent developments as for example the deployment of the TESLA Gigafactory can and will drive down investment costs for battery storage units from currently 200-500 USD/kWh to estimated 150 USD/kWh, paving the wave for mass deployment and thus changing the whole energy landscape.

While being definitely not far from market, energy storage is a very dynamic business field with a significant potential to solve issues, coming up with the change of our energy system. While future development steps are necessary for some types of technologies to integrate the storage concepts into the energy system in the optimum way, the current developments of technologies like the Lithium-Ion accumulators show that energy storage as further pillar of the energy industry cannot be stopped anymore. The overall target should be a profitable symbiosis between renewable energy sources and storage systems in order to replace in steps the most convenient energy storage: fossil fuels.