Interview Q&A for www.solarninovinky.cz
Q1: According to IDTechEX latest report the global market for stationary batteries (ESS) will top 300GWh by 2029. What are the main driving forces behind the current and future development of ESS in the world?
I see two key driving forces for the deployment of stationary energy storage technologies.
First, the transformation of our electricity system, namely the replacement of fossil-fuel based generators with variable renewable energy (VRE) generators. Power generation of wind and solar PV plants fluctuates on short (e.g., cloud), medium (e.g., day/night) and long timescales (e.g. winter/summer) and depends on the location (e.g., sunnier spots generate more electricity). These characteristics are different from traditional generators, which means our power system needs to be adjusted (IEA, 2014).
Electricity storage technologies, such as batteries, are part of the solution. Their use cases match the characteristics of VRE generators. For example, batteries can deal with short-term power fluctuation by regulating grid frequency and thereby improving power quality. They can deal with medium-term fluctuation by ensuring peak demand is met regardless of the time when it occurs and thereby ensure power reliability. And they can defer network infrastructure investments required due to the location constraint of renewables.
So, the flexibility that electricity storage technologies provide matches the changes required in the power system to accommodate more VRE generation. Therefore, the increasing deployment of VRE generators will drive the deployment of electricity storage technologies.
The second key driver is the rapid cost decline of stationary batteries, most prominently lithium-ion batteries (LIBs). The investment cost for utility-scale LIBs (> 1 MWh, 2 hours discharge; ex-works) will have halved from above 1,000 USD/kWhcapacity in 2015 to around 500 USD/kWhcapacity by 2020 (Nature Energy, 2017 & Figshare, 2018). At the 2020 price level, some of the above use cases like frequency regulation or network investment deferral can be economically competitive. Further cost reductions convert more use cases into actual business cases, driving the deployment of stationary batteries.
Q2: In your recent study related to ESS you predicted that Li-Ion BESS will become the cheapest option for storing electricity in the near future. Why are preferring Li-Ion BESS over other types of ESS in terms of pricing?
In this study (Joule, 2019) I am projecting that LIBs have the lowest levelised cost of storage in applications that require less than 6 hours discharge by 2030. This covers the vast majority of electricity storage applications.
In short, other electricity storage technologies cannot match the investment cost reductions observed for LIBs. At the same time, the performance parameters of LIBs like cycle life and efficiency are good enough for most applications.
There seems to be a similarity to crystalline silicon PV cells. Other PV technologies like thin-film or concentrator PV received a lot of interest because of better performance or potentially lower cost. However, they could never catch up with the manufacturing scale that is driving the cost reductions of crystalline silicon.
In more detail, the key advantage of LIBs, in addition to being a „lightweight, rechargeable and powerful battery“ (Nobel Price Committee, 2019), is their versatility. The technology is used in consumer electronics since the 1990s, a huge market that has driven technological learning and initial cost reductions. In the 2000s, these cost reductions made the technology a serious option for electric vehicle battery packs (EV packs), a market that is magnitudes larger than the one for stationary storage will ever be. The preparations for the manufacturing capacities required for EV packs, e.g., ‘gigafactories’, mining capacities, paved the way for more significant cost reductions and greatly improved the technological understanding of LIBs, so that by the 2010s LIBs started being considered for stationary applications as well. And, their competitiveness is set to further increase driven by the ongoing up-scaling and experience-gaining in manufacturing of EV packs.
It has to be noted though, that pumped hydro energy storage makes up 98% of globally installed stationary storage capacity and is still deployed at much higher rates than LIBs. The technology is cheaper today but doesn’t show the same cost reduction rates. It also can only be deployed in locations with suitable geographic conditions.
Q3: How about Hydrogen storage or flywheel technologies? Could these types of ESS have also briliant future in certain applications?
Hydrogen storage is well suited for very long-term storage applications like seasonal storage to match the long-term fluctuations of VRE. That’s because the components to store hydrogen are cheap or exist already, e.g., gas network. In my study in Joule, I find that hydrogen storage is the cheapest technology for all applications requiring more than 100 hours (~4 days) of continuous discharge. In addition, hydrogen can be used for chemicals, transportation and heating. So, the conversion of renewable electricity to hydrogen does not only make it storable, but also acts as enabler to make renewable electricity available for other sectors, a key contribution to decarbonising the entire energy system.
The future of stationary flywheels is more uncertain. In my study, they always loose out against LIBs. However, my assumptions are based on current performance parameters and the continuation of historic cost reduction trends. Flywheels are a highly-efficient and long-lasting technology. If further research leads to further improvements in performance or a step-change in investment cost, this technology could get an edge over LIBs in short-term, power-focussed applications.
Further performance or step-change cost improvements are possible for all electricity storage technologies. You can test their impact on the levelised cost of storage and whether it is sufficient to beat LIBs in the free online tool www.EnergyStorage.ninja.
Q4: As an expert in the field of ESS do you see any perspective seasonal type of ESS for renewables coming on the market in next 5 years?
There is a range of technologies technically suitable for seasonal storage like hydrogen, pumped hydro, compressed air or giant redox-flow batteries. For these technologies energy (kWh) and power capacity (kW) can be designed fully independently and the cost of additional energy storage capacity (kWh) is relatively low.
My doubt whether these technologies will come to market in five years is based on the economics. A seasonal storage device, by definition, discharges only a few times per year, leading to very high levelised cost (>3,000 USD/MWhenergy), because the investment cost for the large storage capacity is written off over a small number of cycles, i.e., discharged energy, only. Compare this to storage systems for solar integration, which charge and discharge at least 250 times per year, writing off the purchased amount of energy storage capacity over many cycles. This leads to much lower levelised cost (100-400 USD/MWhenergy by 2030), approaching power wholesale prices (Joule, 2019).
Q5: According to the latest study by analyst of Bank of America the prices of Li-Ion BESS could go down by 50% in next 5 year-time-period. Do you think such prediction is realistic based on your findings?
A 50% reduction would mean that EV pack prices fall from ~180 USD/kWhcapacity (BNEF, 2018) to just below 100 USD/kWhcapacity and stationary LIB systems from ~500 to ~250 USD/kWhcapacity. While ambitious, I think it is possible given the huge research efforts and the manufacturing scale being applied to this technology. In my own models, I project 40-45% reduction (Figshare, 2018).
A possible obstacle to future cost reductions could be raw material bottlenecks as already briefly observed for Cobalt in 2018. However, it is important to note that LIBs are a family of technologies with different material options for the cathode, some of which do not require Cobalt, for example. Moreover, raw material prices are around 40-60 USD/kWhcapacity (Storage Lab, 2019). They still make up only a minority share of total cost. In addition, the wide range of materials used in LIBs means that an increase in raw material price for one has a limited impact on total cost (BNEF, 2019).
Q6: There is a big demand in Germany after residential ESS without subsidies. Does it mean that Germany and perhaps other contries in Europe have achieved so-called Battery-Parity? [if !supportLineBreakNewLine]
The increasing demand for residential storage is not a sign that solar-plus-storage is cheaper than grid electricity, i.e., ‚Battery-Parity‘. In Germany, the deployment so far was driven by a large early adopter segment, which we call the ‚dentists‘ or ‚retired engineers‘ (Apricum, 2018). These customers are not motivated by pure economics, but are interested in the technology and in using their own solar energy.
Nevertheless, I believe that residential storage in Germany and other markets like Italy, the US, Australia and Japan will grow further and eventually become a real mass market. That’s because of four reasons:
First, the reducing cost of LIBs continuously improve the business case for residential storage.
Second, feed-in-tariffs (FiT) will end for many PV owners around the globe, 500,000 in Japan in 2019 alone (Energy Storage News, 2019). That means self-generated PV power may be reimbursed at wholesale power prices, a fraction of retail prices, or grid feed-in may be restricted altogether. Both scenarios result in a large incentive to self-consume own low-cost electricity and avoid paying for grid electricity.
Third, the introduction of time-of-use tariffs with differences of up to 40 US-cents/kWh between peak and off-peak periods (PG&E, 2019) incentivises managing when to buy grid electricity, for example with a battery system.
Fourth, an increasing number of business models use home batteries to stabilise the power network and reimburse owners accordingly. This adds a revenue stream and improves the business case for residential storage (Apricum, 2018).
On subsidies, it is true that less than half of the roughly 130,000 home battery systems that were installed in Germany by the end of 2018 made use of the federal support scheme (KfW 275, 2018). This subsidy scheme was very bureaucratric and restricted grid feed-in to 50% of installed PV capacity, limiting feed-in tariff returns. However, there are various state-level subsidy schemes that home battery owners in Germany may have used instead (Energy Storage News, 2019).
It is important to highlight that there continues to be a range of subsidy schemes for residential storage, such as the SGIP in California (SGIP, 2019) or the Home Battery Scheme in South Australia (Government of South Australia, 2019). In Italy 260,000 PV owners in the Conto Energia IV and V schemes receive a premium on self-consumed PV electricity, on top of avoiding to pay for electricity from the grid (GSE, 2018). These subsidy schemes will also continue to drive the uptake of home batteries.
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