Energy storage systems to pave the way for the next phase of the energy transition, says GlobalData

GlobalData Energy 14 August 2020 (Last Updated August 14th, 2020 10:03)

Energy storage systems to pave the way for the next phase of the energy transition, says GlobalData

In the electricity distribution sector, investment in energy storage systems (ESS) creates long-term reliability and resilience. ESS are used to store energy for later use. ESS serves as a crucial hub for the entire electricity grid, right from managing power during peak load periods, enabling energy management and boosting the quality and reliability of power to helping decrease environmental impact. Energy storage also smooths the integration of variable or intermittent renewable energy sources into the grid by matching supply with demand.

The key ESS technologies are pumped hydroelectric storage (PHS), compressed air energy storage (CAES), flywheels, batteries and capacitors. According to the International Renewable Energy Agency’s (IRENA) Renewable Energy Roadmap 2030, 475 gigawatts (GW) of ESS would be required to meet the target of 45% power from renewable energy sources in the energy mix by 2030. Recently, lithium-ion (Li-ion) has gained pre-eminence as the leading battery technology because of its higher efficiency compared to others. Promising battery technologies for the future include sodium-ion batteries (NIB) and redox flow batteries.

Recent report Thematic Research: Energy Storage Systems (ESS) released by GlobalData, a leading data and analytics company, highlights that the energy storage sector is witnessing a rapid growth globally. The potential applications of ESS have gained the attention of a number of stakeholders across the value chain, boosting its considerable growth and paving the way for the next phase of the energy transition. ESS installations linked to the electricity grid and ancillary services will witness growth in the coming years because of key drivers such as increased variable renewables integration, rising energy demand, asset retirements, along with smart digital technology innovation.

Below, we summarise the energy storage value chain. Energy storage offers benefits across the complete electricity supply chain starting generation, transmission and distribution (T&D) and consumption, and has been implemented for various purposes such as:

  • Generation: Emission reduction, reduced power plant maintenance, low fossil fuel burn, reduction of plant peaking, increased integration of renewables and time-shifting renewables
  • Transmission and Distribution: Fewer transmission upgrades or additions, reduced distribution station maintenance, voltage control and asset utilisation and deferral
  • Consumption: More secure system and voltage control

Energy storage is serving as a major enabler of a smarter grid. Battery Energy Storage Systems (BESS) provide a broad range of primary and ancillary services and functions for grid operators. The wide range of applications of energy storage, coupled with the falling cost of systems, would likely result in the rapid growth of battery energy storage solutions. Li-ion batteries are emerging as a frontrunner among the battery energy storage technologies. The increasing growth of electric vehicles (EVs) resulted in advancements in Li-ion technologies and a steady decline in the prices of lithium-based batteries.

As battery costs continue to fall, grid-scale energy storage will eventually displace existing natural gas peaker plants, which are used to provide power when extra capacity is needed or supply is interrupted when transmission lines are serviced or damaged. In the future, grid-scale storage will also play a key role in balancing networks. Renewable generation is notoriously intermittent. Energy supply must become more dynamic to accommodate this intermittency. Coal and nuclear cannot ramp up and down that fast. Only natural gas and batteries have the capability to provide back-up power.

Along with Li-ion batteries, sodium-ion and redox flow batteries are also promising technologies for the future. Solid-state batteries are also inching closer to commercialisation. They will reduce batteries’ flammability and liability to short circuit, and substantially increase the number of charging cycles a battery can handle over its life. While Li-ion batteries have gained more popularity than other battery energy storage technologies with wide-scale deployment in EVs and electricity grids, the introduction of graphene can help revolutionise the way batteries are used, which would enhance its market potential. Graphene is a carbon-based material, which is merely one-atom-thick and can be used to make batteries, which are lightweight, durable, applicable in high-capacity energy storage and charge rapidly.

The fall in battery prices is driven by increased demand for EV. Battery factories across the world have scaled up the production of batteries for electric vehicles. The fall in battery prices has accelerated the economic viability of battery energy storage and the deployment of energy storage projects globally. However, the Covid-19 pandemic has brought about supply constraint, which has had an impact on the global EV markets and energy storage projects, causing project delays or rise in cost.

China, a battery manufacturing powerhouse, is now dealing with a slowdown with the coronavirus outbreak. China’s major Li-ion manufacturing players, CATL and BYD, are faced with a high probability of additional production delays. China’s attempt to fight the coronavirus outbreak has led to delayed production across a number of battery production facilities located in key coronavirus-hit provinces. Even Tesla’s gigafactory in Shanghai is hinting of possible of supply shortages for the US, UK and Australia. The limitations on the labour movement have affected battery production facilities located in the coronavirus-hit provinces, which are expected to contribute to battery-cell production this year. The coronavirus outbreak is expected to cost Chinese battery manufacturers approximately 26GWh of output in 2020.

When it comes to battery energy storage, China’s BYD has been a key supplier for the UK energy storage markets, and hence, the company’s production losses in Q1 2020 could damage British developers. Also, in Australia, BYD has been involved in a number of energy storage projects, which are in the pipeline, affecting the country.

A recent survey by the US Energy Storage Association (US ESA) unveiled immediate and certainly harmful consequences to the energy storage sector. The first survey, carried out in mid-March, indicated that a considerable slowdown in the energy storage sector has already set in, majorly because of cancellation of shipments of project components; travel limitations on personnel, which obstructed project site visits; halting direct customer contact; shutdown of government-permitting agencies and decreased demand from end-users. According to the survey, the majority of respondents expect delays in project development. A few energy storage companies are worried that the considerable economy-wide disruptions in the country will decrease demand from behind-the-meter (BTM) customers to a large extent. These businesses and consumers are deploying energy storage to decrease energy costs, provide support to on-site renewable power generation, enhance power quality and ensure resilience to wildfires and storm conditions.

The results suggest prompt and considerable risks of job losses, as well as the economic crisis. The project delays are altering grid reliability and resilience measures in the country. The second survey, carried out in early April, indicated that a huge portion of the respondents anticipated lower than initially estimated revenues with manufacturers expecting to be affected the most.

There are five major energy storage technologies mentioned in this theme report, which include mechanical (pumped hydro, flywheel), electromechanical (batteries), thermal (molten salt), electrical (supercapacitors) and chemical (hydrogen fuel cell). Out of these, mechanical, electromechanical and thermal energy storage technologies are the key focus areas of the report.

In the theme report, we have considered three mechanical energy storage technologies, pumped hydro, flywheels and compressed air storage. The major industrial leaders of pumped hydro storage projects are Voith Hydro Holding GmbH & Co KG, GE Renewable Energy, Toshiba Energy, Systems & Solutions Corp, DEC Dongfang Electric Machinery Co Ltd, B Fouress Pvt Ltd and Harbin Electric Co Ltd. Other companies such as Hitachi Mitsubishi Hydro Corp, Tianjin Alstom Hydro Co Ltd and Andritz Hydro GmbH are set to lose out. Flywheel energy storage projects are dominated by players such as Beacon Power, Temporal Power, Stornetic GmbH and Vycon. ABB Ltd and Calnetix Technologies LLC are among the challengers. The compressed air storage market is led by players such as Siemens AG, General Electric Co and General Compression, Inc.

The expansion in battery manufacturing capacity and falling costs, resulting from the electric vehicle industry, are driving growth in energy storage services and new markets. The fall in battery prices has benefitted the battery energy storage market and has accelerated the deployment of energy storage projects globally.

The lead-acid battery market is dominated by equipment manufacturers such as Narada Power Source Co Ltd, Shin Kobe Electric Machinery Co Ltd, Systems Sunlight SA, GNB Industrial Power, C&D Technologies Inc and Hitachi Ltd.

The Li-ion battery market is dominated by equipment manufacturers such as Tesla, Inc., Samsung SDI, LG Chem, CATL, BYD and Panasonic. Their position will expand in the coming years but with a tilt towards Chinese suppliers led by BYD and CATL. Other companies such as Switzerland-headquartered Leclanché SA and US-based NEC Energy Solutions are also leading players in the Li-ion battery market.

The NAS battery market is led by major players such as Fiamm, NGK Insulator, General Electric Co and Aquion Energy Inc.

Companies such as Sumitomo Electric Industries Ltd, VRB Energy, UniEnergy Technologies and General Electric have the upper hand in the flow battery market.

Abengoa Solar SA is a key industrial leader in molten salt thermal storage technology. SolarReserve, which is one of the last CSP developers in the US, has halted all its operations in early 2020 and is no longer an active player in molten salt thermal storage technology. These technology providers’ molten salt thermal storage enables solar to function as a baseload generation and dispatch electricity when required the most at a fraction of the cost involved with batteries and other energy storage technologies. SENER Grupo de Ingenieria SA and Orano SA are the technology providers and the challengers.