The rapid rise in wind and solar energy comes with a well-known problem: it doesn’t work all the time. Energy storage is a solution that investors should pursue in 2021, even if it is not yet suitable for stockpiling.
Governments around the world have raised their decarbonisation ambitions a lot this year. There is great uncertainty about how their promises will be fulfilled, but almost all scenarios involve the massive construction of solar and wind farms. As their share of energy production increases, it will become crucial to put the points where the wind does not blow and the sun does not shine.
Building wind and solar together can reduce the gaps, while gas-fired power plants can provide a non-renewable reserve. Demand response agreements are also useful – when large energy consumers promise to reduce consumption during setpoints in exchange for lower prices.
Even with all these methods, however, it will be necessary to store excess electricity for use in poor times.
Lithium-ion batteries similar to those powered by an electric vehicle are expected to provide most of the new storage capacity. Residential batteries can store energy from solar panels on the roof, but they are the so-called stationary scale utility solutions for wind and solar farms, which are really needed. These are often custom turnkey installations that provide between 1 and 4 hours of backup power. Battery packs cost almost 90% less than in 2010 and will continue to be cheaper, according to researchers at BloombergNEF.
Chemistry shared with the automotive industry is a mixed blessing. Large-scale production will help reduce costs, but it can also create a supply crisis. Some Korean manufacturers have recently given priority to vehicle batteries over stationary ones, pushing buyers to new suppliers in China. Expensive battery racks and construction site costs also put utility-scale stationary solutions on a different trajectory than car batteries.
In addition to short-term storage, longer-term solutions are needed to cover days or even months. Pumped hydropower – if the excess energy is used to pump water up into a tank, from where it can be released into a hydropower plant on demand – is a cost-effective and clean option. It currently offers the highest storage capacity at the global utility level, but finding new sites is a challenge.
Green hydrogen is another solution, involving the “storage” of renewable energy by using it to run electrolyzers that divide water into hydrogen and oxygen. It is less efficient than other methods, but produces transportable and versatile gas.
Safety issues have arisen with regard to batteries and hydrogen, but it is unlikely to prevent them: fossil fuels and nuclear are not without risks. Other storage options include heating volcanic rock or molten salt, pressurizing air into containers, storing energy in flywheels, and moving weights in the air or in old mine shafts. Pilot projects have proven effective, but most are not yet commercialized.
One issue with investors is that, for now, it remains a secondary business for large battery companies such as LG Chem and Panasonic..
The same goes for General Electric electrical equipment manufacturers,
ABB and Siemens,
which make energy conversion systems for storage facilities. Smaller companies with pure games with promising technology are facing great uncertainty about how the market will develop.
However, storage could soon become a more dominant feature of the green energy landscape and the profits of some companies. The renewable energy boom has withstood the pandemic and even grown. It may not be long before a technology crucial to their effective use takes off.
Write to Rochelle Toplensky at [email protected]
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