Energy storage systems are almost at the threshold for commercialization. This is the conclusion of a recent study from the Canadian Energy Research Institute (CERI), according to CEO, Allan Fogwill.
Mr. Fogwill was addressing nearly two dozen executives and other personnel with an interest in managing energy who had gathered in Burlington, Ontario to learn more about the CERI findings. He told the audience that the interest in energy storage solutions is being driven by, “… an increasing share of variable renewable sources in the electricity generation mix, large capital costs of electricity grid infrastructure required to ensure system reliability, and high costs associated with managing peak electricity demands”.
Large electricity consumers can use energy storage systems to improve power quality and for back-up power. Storage is increasingly seen as a solution to reduce utility bills or as a source of revenue when electricity prices spike. As Mr. Fogwill noted, storage is important for renewable solar and wind generators as well as utilities to firm up power output when the sun is not shining or the wind is not blowing. Storage can also ease grid and price volatility. Electric storage systems help renewables mimic the attributes of a traditional generating station. The CERI study assessed all these opportunities.
While most people are familiar with battery storage, they may not be aware that there are numerous electrochemical technologies being developed. CERI concluded that the greatest potential may be for “flow batteries”. These use liquids, somewhat like a fuel cell. Fluids interact by exchanging ions through a membrane to create a current. The density of power generated is significantly greater with flow batteries than other electrochemical options.
There are also mechanical means to store electricity. Utility scale flywheels, compressed air and pumped hydro were three reviewed in the study. There are geographic or geological constraints to their deployment, however For example, compressed air can only be located near large underground caverns.
Capital costs for energy storage technologies are generally dropping. The most significant reductions in costs in the next decade are expected to occur for lithium-ion and flow batteries.
What did the study conclude?
Allan Fogwill told the audience that CERI compared the business case for using energy storage systems in three applications in provinces across Canada. They were for utility cost containment; energy arbitrage; and renewable energy firming.
- Cost Containment
Recognizing that the electricity regulatory framework varies widely across the country, the three applications were tested for 5 jurisdictions – Alberta, British Columbia, Saskatchewan, Ontario and New Brunswick.
2. Bulk Energy Arbitrage
In Ontario, for example, the Industrial Conservation Initiative (ICI) has a significant Global Adjustment charge for large consumers that have high demand at peak times. Lithium-ion batteries are particularly well suited to help shave electricity usage from the grid and reduce Global Adjustment demand charges for electricity consumers. The payback for lithium-ion batteries is heavily dependent on successfully avoiding the peak with a risk of missing the peak as it changes in response to customer actions. The study concludes that by 2025, lithium-ion battery storage is expected to provide an attractive IRR as capital costs to install them will have dropped 50% from current levels.
Some developers and consumers are looking to use energy storage systems to charge when prices are low and then discharge the power when prices are high. Fogwill told the audience the CERI assessment concluded energy storage for bulk arbitrage will not be financially viable for any of the technologies studied except for flow batteries. At best however, flow batteries could possibly earn only an IRR of 5%.
3. Renewable Energy Firming
The value of renewable energy is that it has no greenhouse gas (GHG) emissions. However, employing energy storage systems to offset the variability of renewable energy is still not strong enough to justify widespread commercialization.
Finally, Allan Fogwill told the audience, at current capital costs, natural gas fired combined cycle power plants are a less expensive way to firm renewable energy. By the 2030-2040 time period, energy storage systems will be competitive against other zero GHG emissive, dispatchable technologies such as nuclear power, large hydro, and coal/NG fired units with carbon capture and storage.