Storage is predicted to become a vital player as the renewable energy market grows in capacity and impact. In this article, we cover 3 ways battery storage can contribute to a greener energy market with better utilization of renewables – and what reservations you should be aware of within battery energy storage systems.
The renewable energy sector is developing at an accelerating speed. In 2021, the US reached 265 GW of total electricity generated from renewable sources. Of all new power capacity additions, renewables accounted for 83%, with especially large solar and wind plants contributing to the energy mix.
The strong growth in renewables is paramount for the US to reach its goal of 720 GW of renewable electricity in 2050. However, with the continuous increase in fluctuating energy sources connected to the grid, many new challenges occur, as well as many new opportunities to revolutionize the way electricity is utilized and reserved.
Here, energy storage – and notably battery storage when we look at the North American energy market – has been said to become one of the most crucial pieces in the puzzle.
Why are fluctuating energy sources challenging?
The main challenge with fluctuating energy sources like solar and wind is that it threatens the balance of the grid. This is because the power output from renewables cannot be planned or predicted as the production happens according to nature.
Storing the energy in reserves can level the fluctuations and, in that way, reestablish the power balance, meaning that the intermittency can be reduced or even avoided.
And for this reason, storage is a main topic looking in the future of renewables. But energy storage also brings other benefits to the energy market. Below, you find three ways battery storage can change the energy market and give renewable plant owners and power providers new opportunities.
What is a battery energy storage system (BESS)?
Battery storage is a technology that enables power plant owners, power system operators, and utilities to store energy for later use. A battery energy storage system (BESS) is an electrochemical device that collects energy from power plants (e.g., renewables) or directly from the grid. Like your batteries at home, the batteries are charged and then discharged when power is needed. Several battery chemistries are used for grid-scale applications, including lithium-ion, which is the most common.
1 Battery storage can reduce energy costs
Today, wind and solar PV power are among the cheapest sources of energy. The plants are relatively low-priced to run and operate, which means that wind and solar PV plant owners can sell their power at a low cost on the energy exchange. Renewable plant owners actually bid at almost zero price to be sure to sell whatever they produce because they cannot store the energy.
When you add energy storage into the equation, plant owners now have the ability to store energy when energy prices are low – for example, at windy or sunny periods with low demand – and sell the stored energy when prices are high – for example, during peak hours. This process is called energy arbitrage.
Storage is thus a way to enhance renewable plant owners’ competitiveness.
Secondly, storage also enables plant owners to better utilize the power produced.
During periods of high production, the alternative to storing the energy produced is to stop or curtail the wind turbines or solar PV plants in order not to exceed the power level set at the grid.
This means that the plant owners miss out on some earnings from the surplus energy.
To avoid this scenario, batteries can be installed to ensure better utilization of the renewable assets and maximize the value of the energy sold to the market. Wind or solar PV parks can thus operate at full capacity no matter what set-points are given by the utilities or grid operators.
For the energy consumers, storing energy from renewables also induces good conditions for lower energy costs.
Conventional energy sources like coal and gas are more expensive to run compared to renewable energy plants. But, with battery storage connected to the renewable plants, a limited amount of conventional energy plants is needed to meet demand, meaning that the overall costs of energy decrease.
Over the past three decades, the price of batteries has also declined 97%. Battery storage can thus be a profitable investment for renewable plant owners.
2 Battery storage can enhance grid stability
A balanced grid is necessary to avoid system failures and blackouts. The balance between power generation and load must be maintained at all times, and since you cannot control electricity demand, the power production has to be regulated according to consumer demand.
With renewables, this becomes a challenge, as you cannot control the weather.
However, with an energy reserve like a battery, renewable plants can act as baseload plants that can be relied upon to meet demand during peak hours, regardless of the weather. This means that battery storage systems can be enforced to enhance grid stability, improving the role of renewable plants.
Some battery storage systems are used primarily for what is called ancillary services that grid operators purchase from, e.g., plant owners in order to maintain a stable grid.
As battery storage can charge or discharge in a fraction of a second – faster than conventional thermal plans – they are also suitable for frequency control.
Just like the electricity, the frequency needs to always be leveled at 60 Hertz (50 Hertz in Europe) to ensure grid stability. The frequency level also depends on the balance between generation and demand.
Due to the flexibility of the battery, you can charge it when generation exceeds demand and discharge it when demand exceeds generation, creating reliable conditions for a steady frequency.
3 Battery storage can increase the utilization of renewable energy
Renewables play a decisive role in the goals of decarbonization and will play an even bigger role in the years to come. 2021 was a record-breaking year with almost 290 GW of new renewable power plants installed.
With the many new installations, renewable power production will, at one point, exceed the total demand. This creates new ways of utilizing the produced power.
The stored electricity can thus be used as fuel for electric cars, industry and production, and data centers. It can also be converted into green fuel – often referred to as Power-2-X – or used for electric heating in residential homes.
With battery storage and other energy-storing systems beginning to emerge, we can expect that the energy system as we know it today will be revolutionized. The growing share of renewables calls for increasing flexibility, hybridization, and correlation between the different power sources in order to maintain a stable and future-proofed grid.
And here, energy storage could be the ultimate game-changer.
What are the disadvantages of battery energy storage systems (BESS)?
While battery storage poses many opportunities to empower the movement towards a greener energy system, there are also some limitations worth mentioning when discussing their potential.
First, batteries have an inherent lifecycle, where their efficiency drops as the years go by. As soon as the charging is removed, the batteries start losing charge. This is due to non-current producing chemical reactions within the battery that occurs even when no load is applied.
From an environmental point of view, the energy system of the future should naturally seek out sustainable opportunities that are long-lasting and future-proofed.
Secondly, in that, many have also raised the concern that the acquisition and recycling of the natural resources used in batteries pose social and environmental challenges that need to be addressed as the market for battery storage energy systems evolves.
Lastly, no standardization of the diverse technical requirements has been enforced within the sector. The lack of standards, default processes, and policies can block further deployments of battery energy storage systems and also create problems for the disposal and recycling of the batteries. Suppose the lithium batteries don’t come in standardized shapes and sizes. In that case, the recycling process becomes a significant challenge, as “different chemistries will have slightly different processes for dismantling and preparing the battery systems for recycling.”
As the market for battery energy storage systems matures, these underlying challenges need to be considered. Here, it is expected that policymakers and pricing will play a big part in shaping the market in the years to come.
