The big attraction of batteries for grid support services is their superior ability to rapidly inject bursts of electricity into the grid just when it is needed. But demand for battery storage in power systems is limited and is not proving to be greater in countries furthest ahead with transitioning their electricity supply to variable sources of renewable energy

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Today’s 169 GW of pumped hydro electricity storage, well tried and tested, makes up 96% of the global capacity for storing electricity in grid networks and will continue to be the dominant means of grid storage for years to come, says the US Department of Energy (DOE). Of the remaining 5 GW of grid storage capacity, 1.8 GW is provided by various types of battery. That small proportion of the global grid storage capacity, however, is destined for massive growth, if the predictions of a swathe of energy market analysts hold true.

Among the analysts, consulting company McKinsey predicts an increase in total grid storage capacity to 1000 GW over the next 20 years and Morgan Stanley, a bank, believes that utility scale batteries will absorb most of an annual demand for storage capacity of $2-4 billion by 2020, up from $300 million today. Navigant Research, another consultancy, predicts a market for power system batteries of $3.6 billion already by 2025.

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Batteries can be located anywhere in a power system and can be easily scaled to the capacity required. In contrast, pumped storage has a major disadvantage. It is geographically limited. Only hilly and mountainous areas provide the necessary topography for water to be pumped uphill into a reservoir for later release, through turbines, to a lower reservoir.

Pumped storage, however, remains the only way to affordably absorb and discharge enough electricity to make up for deficiencies of renewable energy over periods of many hours or days. At a cost range for energy delivered of $152/MWh to $198/MWh, according to a 2016 report by Lazard, a financial consultancy, it is the cheapest means of electricity storage available.

Lazard’s cost for energy delivered from lithium-ion battery storage technology, is $285/MWh to $581/MWh. Tesla’s Elon Musk has since tweeted he can provide a giant battery for $250 per kWh of storage capacity, indicating a cost of energy of at least $100/MWh once the needed inverter, shipping, infrastructure and installation costs are included and assuming it is charged with electricity bought at a low $50/MWh, the battery has a long 20 year life and the capital was provided at a weighted average cost of just 6%. If the price of batteries drop sufficiently, they could technically be used for longer periods of bulk power supply, but very large quantities of stacked batteries would be needed, requiring huge areas of land.

…. Vivid imagination Despite all the colourful talk about batteries they cannot store and discharge energy for long enough and in sufficient quantities to be either a practical or affordable technology for making up shortfalls in bulk power supplied by generators over grid networks….

SLOW BUT STEADY

Forecasts of major growth for the energy storage market are based on the assumption that displacement of fossil fuel and nuclear generation by renewable energy will trigger more need to store electricity for later use. Evidence of rising demand for storage devices, however, is in short supply. The use of batteries in power systems has increased by no more than 5-7% in recent years, steady but slow compared with the growth of renewables.

Countries and regions furthest ahead with transitioning their electricity supplies to renewable energy are largely balancing supply and demand without incurring the cost of additional storage.

The more likely use for batteries in electricity systems is not filling gaps in bulk supply, but in providing short bursts of power to support a range of grid support services, among them, frequency response reserve and voltage control. The falling price of batteries, their increasing capacity and their ability to automatically respond to deviations in frequency within a second, or less, makes them a potentially attractive option in the sub-market for supply of ancillary services to grid operators. The value of that limited market is not likely to grow with greater uptake of renewables, depending on the supply mix and system configuration.

..

Rather than matching the growth
of renewables, the use of batteries in power
systems has increased by no more than
5-7% in recent years

..

Advances in the ability of batteries to charge and discharge bigger volumes of electricity for longer periods at lower cost have been driven by the electrical equipment and electric mobility industries. Prices have dropped to a level where the power supply industry sees potential in greater application of stationary batteries for supplying a range of grid services, where low weight and high density are the vital parameters for reducing cost.

Lead acid, nickel cadmium and sodium-sulfur batteries for use in power systems are still on the market, but the longer life, greater energy density and falling cost of lithium-ion batteries has given them a dominant position. Japan’s NGK achieved a degree of success with its sodium-sulfur molten salt battery for grid scale electricity storage, but the high operating temperature at 300°C makes it difficult for the device to compete with li-ion technology.

Japanese and South Korean companies like Panasonic, LG Chem and Samsung have dominated the market for li-ion batteries, which are primarily produced in the Far East. New players have arrived, not least in China where the government is providing solid support to new battery technologies. Chinese producers, CATL and BYD among them, are continuously expanding their manufacturing facilities.

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PLUNGING PRICES

“By going from MWh scale to GWh scale, manufacturers have managed to drive down the cost of battery cells significantly from over $1000/kWh in 2009 to under $150/kWh today. It is these low cost producers with large facilities which are likely to be the future of the industry,” says Caspar Rawles, a battery raw material analyst with Benchmark Mineral Intelligence.

“As we move forward we will see fewer, larger battery manufacturers. We are already starting to see this with the growth of the lithium-ion mega factories — these are battery cell production facilities with a capacity of greater than one gigawatt hour a year. Three years ago there were only three of these mega factories at the planning stage. Today there are 17 due to be in production by 2021, the latest being Northvolt’s 32 GWh facility to be located in Sweden,” adds Rawles.

Production of li-ion batteries is predicted to double and double again in the coming three to four years, mainly driven by the electric vehicle industry. The greater demand should drive further price cuts. Tesla’s Elon Musk says two thirds of the batteries produced at the company’s new factory in Nevada are destined for electric transport, with the remaining third intended for power storage, both at grid scale and for application by customers “behind the metre” to reduce their purchases of electricity from the grid. Tesla is building the factory together with Panasonic. It is scaled to produce batteries for provision of 35 GWh of battery storage capacity each year. •

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TEXT Henrik Bendix ILLUSTRATIONHvass & Hannibal