Storage will enable renewable grids

Summary: According to an MIT study, an increased use of electricity and energy storage can make a decarbonised electricity system both affordable and reliable. Technologies that are already proven and available for use include Li Ion batteries, but also some thermal storage and pumped hydro.

Why this is important: One of the biggest barriers to the widespread adoption of low carbon electricity generation remains the requirement for economic forms of electricity/energy storage. Li Ion batteries look to be the preferred short and medium storage period technology of choice but coping with infrequent low wind/low solar days will need alternative duration solutions.

The big theme: 100% (or close to) renewable/low carbon electricity generation systems are looking more viable with each passing year. But for this to happen we need a different electricity grid, one with battery storage, for periods of lower renewable production; more interconnectors, bringing electricity from different geographies, better demand management, and a massive investment in making our electricity grids more resilient and flexible.

Summary of a study published in MIT Energy Initiative

In deeply decarbonised energy systems utilising high penetrations of variable renewable energy (VRE), energy storage is needed to keep the lights on and the electricity flowing when the sun isn’t shining and the wind isn’t blowing—when generation from these VRE resources is low or demand is high.

The report shows that energy storage makes deep decarbonization of reliable electric power systems affordable. MITEI Director Robert Armstrong, the Chevron Professor of Chemical Engineering and chair of the Future of Energy Storage study said “VRE resources such as wind and solar depend on daily and seasonal variations as well as weather fluctuations; they aren’t always available to be dispatched to follow electricity demand. Our study finds that energy storage can help VRE-dominated electricity systems balance electricity supply and demand while maintaining reliability in a cost-effective manner—that in turn can support the electrification of many end-use activities beyond the electricity sector.”

Why this is important

Regular readers will know that this is a topic we keep coming back to, and yes, we are doing it again. Why is this. Put simply, the biggest pushback we hear from investors when we discuss wind and solar (the main VRE sources) is that they are seen as just too unreliable to support our modern electricity system. The risks (and costs) of relying on them, when they get to high market shares, are just too great.

And this argument has a lot of emotional appeal. The weather, especially in Europe, can be very unpredictable. There are sometimes long periods of low wind and we all know it can rain a lot. So to borrow the latest industry catch phrase, security of supply looks like it will be a problem. But our emotions can lead us astray. This very detailed report shows that the pushback is simply not true.

This is a big topic, with lots of moving parts, so this week we set out the structure of the solution (or rather solutions), and in future blogs we will dig down into the individual topics. We think that part of the challenge with this theme is that people generally like simple solutions. In this case we have multiple solutions, and they kick in at different points in the low carbon electricity transition. Plus the transition is likely to take years or even decades. And it can get quite technical quite quickly. All of these factors make the discussion complex.

So first, the big picture. Yes, we can have electricity grids that operate reliably and in a cost efficient way, with high levels of wind and solar. It will not be simple, there will be costs and adaptions, plus new ways of thinking about how our grid needs to work. And yes, wind and solar are variable, sometimes very variable. But technical solutions already exist to overcome the challenges.

We think it's important to remember the time dimension to the debate. No-one is talking about switching off all fossil fuels now, and totally relying on wind and solar. The process will be gradual, taking at least one and probably two decades. Many of the challenges that get talked about now will not become real for most countries for many years.

What solutions do we have already, the ones that will get us though much of the current decade. The obvious one is Li Ion batteries. They traditionally get thought of as short term storage (1-2 hours), but the economic model is being pushed out to 4-8 hours (we explored this in earlier blogs). This technology looks it will hit the cost wall at about 8-12 hours of storage. So great for balancing within a day (the bulk of our current challenge), but problematic for longer periods.

For longer duration storage we already have redox flow and metal air batteries, plus pumped hydro storage. The higher upfront cost of these means the economics work best when we need 12 hours plus of storage. So, these are the tools we start to apply at scale when we get to higher market share for VRE, c. 30-50% wind and solar or around 50-70% for total low carbon generation (which includes hydro, bio and nuclear).

When is this most likely, Our best estimate is around 2030 for most countries, although some will get there quicker. In analysing how this mid term electricity grid might work, there are some interesting lessons from those countries that are most advanced (such as Denmark). More on this in a later blog.

The study team also looked at the application of energy storage for emerging market and developing economy (EMDE) countries, These countries are expected to see massive growth in electricity demand over the next 30 years, due to rapid overall economic expansion and to increasing adoption of electricity-consuming technologies such as air conditioning. The study highlights the pivotal role battery storage can play in decarbonising grids in EMDE countries that lack access to low-cost gas and currently rely on coal generation.

This section is already getting long, but before we leave the topic, we want to highlight that storage is not the only solution. Other tools include flexible system design, software, demand management and interconnectors. Plus a future role for hydrogen. Lots to think and talk about. And lots of really exciting opportunities for investors who have a longer term perspective.

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