What Exactly is Energy Storage?
Types of Energy Storage, Batteries & Applications
Energy Storage Market Predictions & Basics
Growing public awareness of the environmental impacts of fossil fuels alongside rising electricity and utility infrastructure costs, declining battery prices, and concerns over the capacity and resilience of energy grids is fueling the growth of energy storage installations worldwide. With the rise of energy storage—often coupled with renewables such as wind and solar—a new system of energy generation and distribution is emerging.
“In the future, the grid looks less like broadcast [television] and more like the internet,” says Haresh Kamath of the Electric Power Research Institute.
Bloomberg New Energy Finance predicts 1,095 gigawatts of energy storage will be deployed worldwide by 2040. It will be deployed across the residential, commercial and industrial, and utility sectors. Woods McKenzie predicts similar expansive growth, reporting that a 12 gigawatt-hour market in 2018 will grow to a 158 gigawatt-hour market in 2024.
Energy storage is the glue that will hold our rapidly evolving energy ecosystem together as we move from central energy generation to a system of distributed generation.
What Exactly is Energy Storage
There are many ways to store energy: pumped hydroelectric storage, which stores water and later uses it to generate power; batteries that contain zinc or nickel; and molten-salt thermal storage, which generates heat, to name a few. Most often they contain Lithium-Ion batteries like the ones that power your smartphones or electric cars. They are often coupled with wind, solar, or even the grid itself to absorb power for later use.
Energy storage systems contain power electronics that are the smarts of the operation—safely and reliably transferring energy into thermally managed banks of batteries to store energy. The systems can absorb or release energy as needed and can be tied to a power grid or integrated into a standalone microgrid.
In addition to the batteries and power electronics—the hardware side of energy storage—major software components include:
- Systems Integration: low-level software that integrates and controls all components around the battery (e.g. power conversion and thermal management).
- Economic Dispatch: software that determines when to charge and discharge the system to gain maximum economic benefit from the stored energy. It enables the system to “value stack” across multiple revenue/savings streams for the owner to get maximum return on their investment.
- Fleet Aggregation: manages fleets of smaller distributed energy storage systems and can deploy as if it were a single larger system.
Lithium-Ion batteries are currently the dominant battery of choice for deployed energy storage systems worldwide. Lithium is a lightweight metal that an electric current can easily pass through. Lithium ions make a battery rechargeable because their chemical reactions are reversible, allowing them to absorb power and discharge it later. Lithium-ion batteries can store a lot of energy, and they hold a charge for longer than other kinds of batteries. The cost of lithium-ion batteries is dropping because more people are buying electric vehicles that depend on them.
While lithium-ion battery systems may have smaller storage capacity in comparison to other storage systems, they are growing in popularity because they can be installed nearly anywhere, have a small footprint, and are inexpensive and readily available—increasing their application by utilities. In fact, more than 10,000 of these systems have been installed throughout the country, according to “U.S. Energy Storage Monitor: Q3 2018” from GTM Research, and they accounted for 89% of all new energy storage capacity installed in 2015.
A megawatt-hour (MWh) is the unit used to describe the amount of energy a battery can store. Take, for instance, a 240 MWh lithium-ion battery with a maximum capacity of 60 MW. Now imagine the battery is a lake storing water that can be released to create electricity. A 60 MW system with 4 hours of storage could work in a number of ways:
You can get a lot of power in a short time or less power over a longer time. A 240 MWh battery could power 30 MW over 8 hours, but depending on its MW capacity, it may not be able to get 60 MW of power instantly. That is why a storage system is referred to by both the capacity and the storage time (e.g., a 60 MW battery with 4 hours of storage) or—less ideal—by the MWh size (e.g., 240 MWh).
From 2008 to 2017, the United States was the world leader in lithium-ion storage use, with about 1,000 MWh of storage, and 92% of it, or about 844 MWh, being deployed by utilities. The average duration of utility-scale lithium-ion battery storage systems is 1.7 hours, but it can reach 4 hours. Batteries account for the biggest share of a storage system’s cost right now—a storage system contains an inverter and wiring in addition to the battery.
When connected to the grid, energy storage is principally divided into two categories:
Front of the meter: energy storage that is interconnected on distribution or transmission networks or in connection with a generation asset. Applications are largely driven by ISO/RTO market products (e.g. electricity, ancillary services) or network load relief.
Behind the meter: energy storage that is interconnected behind a commercial, industrial or residential customer’s utility meter primarily providing bill savings (e.g. demand charge management).
Energy storage can benefit both utilities and energy consumers in a variety of ways. Energy storage can help address the intermittency of solar and wind power and it can also, in many cases, respond rapidly to large fluctuations in demand, making the grid more responsive and reducing the need to build backup fossil fuel-based power plants.
Energy storage can also help meet electricity demand during peak times, such as on hot summer days when air conditioners are blasting or at nightfall when households turn on their lights and electronics. Electricity becomes more expensive during peak times as power plants have to ramp up production in order to accommodate the increased energy usage.
Commercial and industrial facilities are charged demand charges by utilities that are typically 30 percent of their energy bill. NREL estimates that approximately 5 million commercial customers across the country may be able to achieve electricity cost savings by deploying battery storage to manage peak demand.
Energy storage allows greater grid flexibility as distributors can buy electricity during off-peak times when energy is cheap and sell it to the grid when it is in greater demand.
In 2018 the U.S. Federal Energy Regulatory Commission (FERC) issued a landmark order (Order 841) mandating that Regional Transmission Organizations (RTO’s) and Independent System Operators (ISO’s) adopt new participation models for energy storage that require storage be able to participate in all markets and services for which it is technically capable regardless of location. This important ruling and the ability to monetize energy storage systems by selling energy into markets is considered key to making many energy storage projects financially viable particularly at commercial and industrial facilities.
Back Up Power & Microgrids
Critical Back Up Power
As extreme weather exacerbated by climate change continues to devastate U.S. infrastructure—government officials, companies and utilities are becoming increasingly mindful of the importance of grid resilience and the role energy storage can play in hardening the electric grid against extreme weather events.
Energy storage with islanding capabilities—the ability to operate separate from the grid—can help provide resilience since it can serve as a backup energy supply when the electric grid is interrupted. That battery backup power can last for minutes or can extend for days or even indefinitely if coupled with renewable energy generation sources such as wind and solar. This alone has powerful benefits for businesses, government agencies and individuals.
Not always easily calculated, battery backup power can supply a tremendous value to businesses during times when the grid goes down. Facility-sited energy storage can provide energy for short or extended periods of time. This critical backup power can save businesses tens of thousands of dollars in lost production time and spoilage. Eight key U.S. market segments studied by energy consultant E Source forfeit about $27 billion per year due to power outages. Many of these loses could be avoided with the presence of a fast-acting energy storage system to ride through power outages.
Microgrids and Energy Storage
Energy Storage Enabled Microgrids
With the growing concerns on grid resiliency and the escalation of Distributed Energy Resources (DER), microgrids are becoming more attractive than the traditional centralized grid system both in countries that have invested tens of billions of dollars in electric grid infrastructure and for those without an existing power grid.
A number of developing countries without traditional electric power grids are installing singular and interconnected energy storage enabled microgids instead of costly traditional power generation plants and transmission and distribution lines.
In sub-Saharan Africa, more people have mobile phone subscriptions (700 million) than access to reliable electricity (about 450 million). That’s because wireless telecommunication allowed countries to skip over expensive 19th-century architecture in favor of 21st-century cellular towers and cheap handsets. Distributed power systems, or microgrids, can do the same for electricity.
Microgrids powered by solar photovoltaic and often batteries will be the lowest-cost option for 300 million people, or 75% of the new connections needed to deliver power to everyone in sub-Saharan Africa, estimates the International Energy Agency.
Microgrids provide users of electricity the ability to safely disconnect from the primary utility service connection (if one is available) when desired or when the grid goes down to independently serve on-site electric loads in a safe and reliable manner. This disconnected state is commonly referred to as “islanding,” because it’s effectively a small powered system that serves its own requirements, without transferring power in or out of the island. If the entirety of a site’s load can’t be served by on-site generation, priority needs to be placed on those loads that are deemed critical to a site’s operations.
Modern storage systems are unique in that they are very fast responding resources that can both generate and absorb power and, in some cases, regulate real and reactive power quality in an electric distribution system. These capabilities allow storage to serve a variety of roles within a microgrid for instances where customers have a need for uninterrupted islanding, have no on-site generation, or need to supplement the on-site generation that exists in their distribution system. Energy storage enabled microgrids that are not grid connected can also lower costs and provide a sustainable alternative to diesel generators.
Utilities are also embracing “non-wire alternatives” to traditional transmission and distribution infrastructure. Historically, grid operators built new lines well ahead of expected power needs (an expensive and sometimes unnecessary approach since growth forecasts are often inaccurate). A more efficient approach combines microgrids with energy efficiency, demand response, and batteries to expand the grid for peak load, and avoid replacing components as they age. Utility commissions are working on new ways to finance, and incentivize, grid operators to do this.
Types of Microgrids can include:
- Grid-connected Microgrids: These are connected to a traditional utility, but can operate in island mode and can be energized with renewable energy, as needed.
- Standalone Microgrids: These types of microgrids are independent of the electric grid and are commonly located in remote areas. They are often powered by renewable energy such as wind and solar and can be augmented by generators to ensure continuous energy.
For microgrids utilizing renewable energy collection methods such as solar and wind, those energy sources can be weather dependent. Cloud cover can impede the sun’s rays or low wind conditions may reduce the power collected from wind generators. Energy storage compensates for these situations, making renewables a more consistent and reliable source of energy within a microgrid setting.
The Impact of Energy Storage on Renewable Energy
Energy storage can also assist in slowing climate change by helping to integrate more clean renewable energy into the electric grid. The International Energy Association (IEA) estimates that, in order to keep global warming below 2 degrees Celsius, the world needs 266 GW of energy storage by 2030, up from 176.5 GW in 2017.
Solar power is one of the fastest growing forms of renewable energy collection and is intricately linked with the growth of energy storage. Total installed U.S. PV capacity is expected to more than double over the next five years; by 2024, more than 15 GW of PV capacity will be installed annually. Wood Mackenzie Power & Renewables estimates total wind capacity to more than double between now and 2027, with the global additions averaging 65 gigawatts per year.
Renewables combined with energy storage can smooth electricity prices through arbitrage, manage evening energy ramps, mitigate the risk of curtailment, provide black start capability, provide backup power and more. Renewables—particularly solar—and storage are like peanut butter and jelly. They are much better together than on their own.
For distributed projects, storage can address issues, help customers manage the move toward time-of-use (TOU) pricing and later TOU periods, and give system owners access to the power from their solar panels for more hours of the day.
NREL’s analysis suggests that increasing solar penetration in California creates a market for 7,000 MWh of 4-hour storage. Texas and New England are beginning to experience the same kinds of conditions that create these opportunities. GTM reports that storage can compete for as much as 82% of projected new combustion turbine capacity projected over the next decade.
Increased storage deployment can reduce grid management concerns such as the so-called “duck curve,” creating additional opportunities for solar deployment. While there are many strategies for approaching the integration of solar at the levels of penetration seen in states like Hawaii and California (increased flexibility of other generators, demand response, etc.), storage puts the power to facilitate integration directly into the hands of solar developers.
High solar (and wind) adoption creates a challenge for utilities to balance supply and demand on the grid. This is due to the increased need for electricity generators to quickly ramp up energy production when the sun sets and the contribution from PV falls. Another challenge with high solar adoption is the potential for PV to produce more energy than can be used at one time, called over-generation. This leads system operators to curtail PV generation, reducing its economic and environmental benefits. While curtailment does not have a major impact on the benefits of PV when it occurs occasionally throughout the year, it could have a potentially significant impact at greater PV penetration levels.
Renewables coupled with storage technologies could alleviate, and possibly eliminate, the risk of over-generation. Curtailment isn’t necessary when excess energy can be stored for use during peak electricity demand.
Many solar developers and utilities view storage as a business growth opportunity particularly in large scale applications. Storage-plus PPAs (power purchase agreements) are already less expensive than the levelized cost of energy (LCOE) for combined cycle natural gas in the United States, according to a recent report from Navigant Research. In making the determination that solar plus storage is more cost effective than building new fossil fueled power plants, many utilities are canceling plans to build new traditional power plants, closing existing ones early and replacing them with solar plus storage installations.
While there is certainly plenty of room for growth of stand-alone solar in most states, the long-term success of the solar industry and its ability to scale beyond about 20% of total electricity generation depends on the cost-effective integration of storage, according to SEIA.
Solar coupled with storage can:
- Allow for safer solar power integration to the local electric grid
- Provide more resiliency for facilities
- Turn larger utility-scale solar power systems into assets
- Provide safe and affordable storage
- Qualify companies for tax credits
Value Streams for Energy Storage
Stacking Value Streams
In addition to environmental benefits, energy storage also provides tremendous value to private owners and utilities. Value streams can be monetized, and storage can be used to mitigate energy or infrastructure expenses such as transmission and distribution upgrades for utilities. By stacking these values, energy storage systems can have significant benefits for consumers and utilities alike, including the lowering of electricity costs for end users.
For instance, Green Mountain Power uses its Stafford Hill Solar Plus Storage facility in Rutland, Vermont to lower costs for utility ratepayers. By predicting the highest energy price point for the power they purchase from the regional grid and switching over to stored battery power during these peak hours, they are able to save ratepayers tens of thousands of dollars each year. Additionally, they use the same energy storage system to sell energy services to the regional grid—further deepening the economic benefit of the system.
Currently, areas with the highest penetration of energy storage in the United States follow state incentives that when coupled with federal incentives make storage attractive to financiers and developers.
California, Massachusetts and New York have all created energy storage installation targets and incentives to spur the installation of energy storage. California AB-2514 (1.3 GW), Massachusetts (200 MWh), New York (proposed 1.5 GW) Incentive Programs include: California Self Generation Incentive Program (SGIP), Solar Massachusetts Renewable Target (SMART). New York has committed $280 million in funding to incentivize state energy storage deployment.
The Federal Investment Tax Credit for Storage (ITC) lowers the cost of storage when coupled with renewable energy as well. Bills in Congress would further extend the ITC to standalone energy storage installations that are not connected to renewable energy resources.
What to Consider When Buying a New Energy Storage System:
- Project Lifetime: Lifetime of the project compared to usable lifetime of battery technology.
- Duty Cycles: The number of annual full charges/discharges, which can impact degradation.
- Depth of Discharge: Depth the battery is discharged, which affects usable capacity and degradation.
- Average Rest State of Charge: Average charge of the system while not in use, which affects availability and degradation.
- Safety: Fire, toxicity, environmental or other risk factors.
- Technology Maturity: With so battery innovation occurring, is the technology mature enough for deployment at scale?
Having deployed over 550MW of energy storage worldwide, Dynapower works with each of its customer partners to pick the right energy storage system for the end users’ application.
Dynapower Energy Storage Systems
Dynapower provides energy storage systems for both front-of-the-meter and behind-the-meter storage applications as well as standalone microgrids. Dynapower energy storage systems typically use Lithium-ion batteries to store power but have also been deployed with a variety of storage technologies including lead-acid and flow batteries, and even flywheels. We utilize some of the most advanced controls in the industry, giving end users flexibility in how they use and monetize their stored energy.
Dynapower energy storage systems can be used to store electricity from multiple distributed energy sources. In doing so, facilities can reduce electricity costs and establish reliable backup power. Utilities take advantage of energy storage to replace fossil fuel plants, as well as deter or remove transmission line and distribution infrastructure investments, and balance power on the grid.
The power sources—which can be integrated into Dynapower energy storage systems—include wind, solar, diesel generators and the electric grid itself. These systems are scalable and multiple energy storage systems can be connected in parallel to scale to the various system sizes and requirements.
Dynapower energy storage systems are equipped with energy storage inverters or DC-converters depending on whether the system is AC or DC-coupled. The inverters and converters in Dynapower energy storage systems are certified to UL 1741 SA and meet all necessary safety certifications. To keep these storage systems safe from damage caused by excessive heat and energy surges, there are safety features in place, such as:
- Battery enclosures with full air conditioning and temperature control
- Control systems
- Fire detection and suppression systems
Dynapower’s key technology components for energy storage systems and inverters include:
- Black Start: This propriety method helps restore power to a system after a complete outage. Even when the transformer magnetizing currents outstrip the inverters’ power rating, these power restorers can kick-start distribution networks.
- E Comp and F Comp Functions: These components provide immediate support for voltage and frequency, respectively, to small- and large-scale grids.
- Dynamic Transfer: Dynapower’s Dynamic Transfer is a proprietary and patented algorithm that can detect disturbances in the grid system and switch seamlessly between being grid-tied and islanded. This provides a facility with the ability to seamlessly decouple from the grid and energize critical loads when the grid goes down. Dynapower’s algorithm can also organize transitions that support 100% phase imbalance in the UF mode.