ROLE OF STORAGE
- Energy storage provides valuable services to all stakeholders across the value chain;
- Energy storage is key for unlocking intermittency of renewables and enabling the grand transition;
- Energy storage needs to be considered as part of energy flexibility in general and planned as part of distributed energy resources (DER). Even if energy storage will always be the more expensive option, it is important to consider energy storage holistically alongside energy flexibility options in general;
- Flexibility: With an increasing thrust towards renewable integration across the globe, energy storage has the potential to manage demand and supply dynamics;
- Efficiency: Pairing energy storage with the right assets can significantly reduce delivery losses. For instance, combined heat and power (CHP) systems can increase system efficiency by nearly 50% by including energy storage and allowing the system to run at optimal capacity to charge the battery;
- Resilience: Energy storage applications like black start facilities enable the maintenance of critical functions leading to quick recovery.
IMPORTANT MARKET TRENDS
- Energy storage is growing rapidly globally. Falling costs and new deployment incentives are fuelling record investments in energy storage. Depending on the application, there is a 74% decline in costs since 2013 and these are projected to continue to decline at a steady 8% per year through the mid-2020s (Ken Silverstein, 2019);
- Energy storage ownership is an important option for electric companies. The adoption of short-term energy storage technologies is mainly increasing in developed countries.
MARKET ENABLERS
- Costs and multiple applications/capabilities – High costs of electricity, decreasing costs of storage systems and multiple possible uses of cases and applications;
- Regulatory frameworks and incentives are key to stimulating and enabling storage to manifest – especially when looking to unlock potential in multiple markets;
- Learning by doing – deployment of storage creates opportunity for learning and helps in providing diverse solutions;
- Objectivity – an objective analysis and study of the value and benefits of energy storage application is imperative to cut through barriers;
- Stakeholder value – creating goals for all stakeholders across the value chains;
- Energy management – awareness of new technology and aligning procurement accordingly.
CHALLENGES AND BARRIERS
Prominent barriers to storage deployment can be traced to the speed in which the market for storage technologies and their applications are evolving and to the multiplicity and flexibility of storage. Some of the key challenges that need to be addressed are:
- Perception on performance and safety: Grid operators have to be confident that energy storage systems will perform as intended within the larger network. Advanced modelling and simulation tools can facilitate acceptance — particularly if they are compatible with utility software;
- Cost-Effectiveness: Actual energy storage technology contributes around 30%- 40% to the total system cost; the remainder is attributed to auxiliary technologies, engineering, integration, and other services;
- Regulatory and market guidelines: It is critical to remove the rules that are distorting the market and/or crippling investment. Energy storage systems provide different functions to their owners and the grid at large, often leading to uncertainty as to the applicable regulations for a given project. Regulatory uncertainty poses an investment risk and dissuades adoption;
- Co-operation from multiple stakeholders: Energy storage investments require broad cooperation among electric utilities, facility and technology owners, investors, project developers, and insurers. Each stakeholder offers a different perspective with distinct concerns.
