The Near-Term Outlook for Energy Storage

By Richard Vesel, Business Development Manager for Plant Performance & Optimization, ABB

2017 WAS A BREAKOUT YEAR for battery-based energy storage in the US electric utility space. With 431MWHr of new capacity added during the year, it nearly doubled the total of existing prior amounts, with the total now exceeding 1GWHr of storage. 2018 should again double the total installation, with the total then to exceed 2GWhr. Both behind the meter and front-of-the-meter areas are growing, and by 2019, the US market for energy storage should exceed $1.2 billion, according to GTM and the Energy Storage Association.

Global markets were just as exciting. Outside of the US, another 1.9 GWHr of storage capacity was added, with Australia coming in second, just behind the US, at nearly 420MWHr of new capacity. Germany, China and Japan rounded out the top five installers, with 380, 330, and 280 MWHr respectively. This is substantial, especially considering the populations of Australia and Germany to be about 8 percent and 25 percent that of the US. There is now enough installed base to provide significant O&M information for the benefit of upcoming owners of such technology. By 2022, this will be a reasonably mature technology, with global deployment totals increasing tenfold between the beginning of 2018 and the end of 2022.

There are several mainstream utility system suppliers currently engaged in projects of 10MWhr and larger. Early in 2018, FERC directed the regional authorities, in the ISO/RTO category, to explicitly define tariffs (i.e. revenue opportunities) for the specific services that energy storage facilities can provide to the grid. These are sure to include fast-response regulation services for load and frequency, spinning reserve, black start, and energy arbitrage.

While battery energy storage systems (BESS) are in the high-growth spotlight, there are alternative technologies which can provide even better ROI for existing traditional plants. Thermal storage of media at both low and high temperatures create interesting opportunities. Storage of sufficient chilled media at just 40 deg-F (5 deg-C) improves the economics, efficiency and output capabilities for gas turbines, replacing simple inlet sprays or chilling systems with a more energy efficient alternative, using easily operated and maintained existing technologies. For the more conservative owners, there’s no need to worry about the risks of a “science experiment” here.

As grid operators prepare for even greater levels of bi-directional power flow, the fast regulation capabilities of storage will be needed to keep the grid stable and responsive. Flywheels added to BESS can amplify fast regulation down to millisecond response times. While not yet ready for primetime, flow battery systems promise greater lifetime and reduced physical footprint over the current technology of choice, lithium-ion batteries, so “stay tuned for further developments” here. Markets for BESS will be decades long, as renewables continue to penetrate, and older traditional coal-fired and nuclear generators age out of national fleets.

“While battery energy storage systems are in the high-growth spotlight, there are alternative technologies which can provide even better ROI for existing plants.”

Now is the time for existing utilities, IPP generation asset owners, and new facility investors to embrace the maturing of storage technologies, the decrease in prices for deployment, and a more promising regulatory environment. Simple paybacks for installations in the most prime areas will easily be less than one year and will typically be in the 1-3 year range. This should stimulate development for new storage elements at existing generation sites, as well as grid-critical substation nodes. Today’s generation asset owners will need to familiarize themselves with the upcoming tariff rates for storage-centric ancillary services, and the new financial opportunities unfolding, in what is expected to be a paradigm shift for “hybridized” sites — those with combinations of traditional generation plus storage. That shift will take place over the course of just the next few years. Those who enter early into these new ancillary services markets will reap the larger rewards by responding with storage installations at the best physical locations to support the grid, from the perspectives of their ISO/RTO.

As a close watcher of trends within the power generation industry over the past dozen years, I feel confident that the changes brought about by deployments of utility scale storage will be as profound as the penetrations of renewable sources and cheap natural gas, and at least as fast.

POWER-GEN International 2018

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