Energy Storage Will Likely Follow
Renewable Energy’s Rapid Growth Path
As can be gleaned from recent reports in the popular and trade press, activity is swirling around energy storage systems, highlighted by Tesla’s April 30 announcement of its “Powerwall” residential energy backup system.
“The development of economic, reliable energy storage systems is the missing link in the deployment of renewable energy, and in particular solar photovoltaics (PV),” said Dr. Ralph Romero, Director, Black & Veatch’s management consulting business. Storage systems can address capacity constraints, improve power quality and reliability, and allow utilities to effectively increase the percentage of renewables on the grid.
“Given that energy storage is now where solar was five to 10 years ago, there are lots of new start-ups and technologies. However, there is also little standardization, lots of buzz and a lack of information as to what is out there and what the technology actually represents,” Romero said. These factors make it challenging for developers and engineers to accurately size and specify storage systems.
He and Mark Manley, Manager, Black &Veatch’s management consulting business, made their comments as part of a presentation on the bankability of renewable energy and related energy storage systems to financial services industry executives.
Mandating Energy Storage
California’s three investor-owned utilities were handed a mandate by the Public Utilities Commission to install 1,325 megawatts of energy storage by 2020. In at least one case, the requirements are already oversubscribed – that shows the level of interest and the robustness of the new market, Manley said.
“It’s great that California put the storage mandate in place,” Manley noted. “That’s what happened with solar and wind in Germany, Japan and California – mandates were put in place to help drive the market, which is exactly what happened. It created enough volume to get costs to come down significantly. We’re now at a point where the cost of producing solar electricity is close to parity with the grid in many cases.”
Part of the variability characteristic of renewable energy is that power may not be available when needed, or too much power may be available when it’s not needed. Energy storage can smooth out that cycle.
Reducing Bills with Energy Storage
A viable energy storage system can also help commercial power users reduce their bills, regardless of whether they have solar PV, Manley said. Commercial electric utility customers typically are assessed a demand charge based on the monthly maximum power draw, and these charges can be significant. Manley noted the example of a California convenience store chain that is installing charging stations for electric cars.
“So, let’s say someone pulls up to the convenience store and plugs in his electric car at a peak time during the day. If the car charger is attached to a battery storage system, then that system could offset peak power demand on the utility grid and prevent the shop from hitting the maximum draw on its demand charges as assessed by the utility,” he said. The storage battery would then be recharged from the utility service more gradually or during periods of low demand, such as late at night.
Tesla Paving the Way
Tesla’s residential battery is an impressive step, Manley said. The company says shipments will begin in the summer of 2015. Black & Veatch recently announced the expansion of its relationship with Tesla. Black & Veatch provides design, engineering and construction services for large-scale commercial, industrial and municipal facilities using Tesla Energy Storage Products.
The other issue facing first adopters of storage is the uncertainty of the technology. What is the lifespan of a storage system, for instance? Manley said that better data is becoming available with the increasing sales of electric vehicles, and the industry is getting better at battery longevity.
“They have improved the algorithm for charging and discharging well enough that a major electronics manufacturer can offer a 10-year warranty on a commercial energy storage battery,” Manley said. And that warranty helps storage projects become bankable, a critical factor for third-party financing.
Solar PV Blazing the Pathway
Solar PV technology use is growing at lightning speed, providing fruitful ground for energy storage development. U.S. solar PV capacity is expected to hit 19 gigawatts (GW) in 2015, with 12 GW coming on line this year in new installations, Romero said. Five GW are expected to be utility scale, which are generally installations of 10 MW capacity or greater. The growing capacity is driven by policy incentives and reduced costs.
“In 2000 there were 100,000 solar rooftop systems, and some observers estimate that in 2015 there will be 6 million. There is tremendous growth potential, therefore, for the energy storage market, as well as solar PV,” he said.
Improving Technologies Boosting Solar PV Market
Many technologies are vying for a position in the market. Bankability studies can help financial and other stakeholders identify the characteristics of these technologies and receive assessments of their reliability, quality, costs, the adequacy of designs, and the strength of the companies that stand behind them, Romero said.
In their bankability presentation to the financial executives, Romero and Manley pointed to these rapid developments in solar PV technology:
System voltages are increasing, an equally important development, because higher voltages reduce cost and increase efficiencies. As of 2012, system voltages were around 600 volts, but today they are 1,000 volts, and there is movement to push that bar higher.
The level of sophistication of module electronics is increasing with an expected positive impact on system reliability and costs.
The balance of the site equipment and materials have declined in cost.
Solar PV is a popular, easily installed and distributed source of energy. As it continues to mature, the energy storage sector will increasingly grow and mature right alongside.
Story by Samuel Glasser, Black & Veatch