INTERNATIONAL: BECOMING A GLOBAL MARKET

“[T]he global energy storage will double six times between 2016 and 2030, rising to a total of 125 gigawatts/325 gigawatt hours. . . . Eight countries will lead the market, with 70 percent of the capacity to be installed in the US, China, Japan, India, Germany, UK, Australia and South Korea.” Bloomberg New Energy Finance¹

The energy storage market is a global work in progress. Early markets in many countries all face the same start-up issues as with any relatively new energy technology. This is a perfect time for advocates and others to work together across borders to address similar technical, market, and policy issues. Coordination and consensus around ways to support the emerging market could accelerate progress across the globe. At present, no such international or multi-national collaboration exists. It should be an important element of any future storage advocacy.

Issues

Battery storage is an international phenomenon. It is expected to grow to 40 GW by 2020 (2).

A McKinsey and Company report recently looked at storage developments globally and concluded that:

[S]torage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability…

Battery storage is entering a dynamic and uncertain period. There will be big winners and losers, and the sources of value will constantly evolve depending on four factors: how quickly storage costs fall; how utilities adapt by improving services, incorporating new distributed energy alternatives, and reducing grid-system cost; how nimble third parties are; and whether regulators can strike the right balance between encouraging a healthy market for storage (and solar) and ensuring sustainable economics for the utilities. All this will be treacherous territory to navigate, and there will no doubt be missteps along the way. But there is also no doubt that storage’s time is coming (3).

In addition to the U.S., these developments are occurring around the globe, from Europe, Australia, Asia, Africa and South America. While a lot of attention was focused on California, a state that has done more to nurture storage than any other region, there was plenty of action in Asia, Europe, and Australia.

Tesla focused most of its attention on Australia in the second half of the year; residential storage developers continue to see Germany as the market to watch; and China is emerging as a global electric-vehicle behemoth (4).

As an end of 2017 round in international energy business activity stated:

…when you look at the activity in 2017, a pattern emerges.

Over the past year, we’ve seen a number of major European energy companies — and some Japanese, American and Israeli ones as well—buy into the proposition that providing distributed energy technologies and services to their customers will be a significant part of their futures.

This pattern stands out most clearly in the big European energy giants’ shopping spree this year, starting with Enel’s purchase of Demand Energy in January 5 and closing with Centrica’s purchase of REstore in November (6).

In between, we’ve seen Total, E.ON, Engie, and Shell also make significant acquisitions ranging from demand response and electric-vehicle management to energy storage and the connected home (7).

Figure 12 shows the story of global development in storage.

And there seems to be heightened interest among the international environmental and energy community about the climate emissions benefits of increased storage and renewables development through 2050.

But oddly enough, how storage plays a role in the decarbonization discussion too often has been left to skeptics and contrarians, combining attacks on renewable energy transition scenarios with efforts to minimize the positive role of storage can play to solve energy problems. More thoughtful analysis and action are needed to help develop consensus around these long-term issues regarding the role of storage in the future energy system.

Opportunities and Challenges

Despite this market activity and environmental interest, there is little coordinated activity among energy advocates or foundations around this international opportunity for storage. This is the case even though there are markets outside of the U.S. struggling with many of the same energy storage market development issues that face domestic companies, policymakers, and advocates.

At best, discussions around policy and markets for storage globally occurs sporadically and episodically at technology conferences dominated by industry players with little participation by NGOs or policymakers. It also appears that storage is not a top priority of many international parties to the climate negotiations and related technology forums. A greater focus on storage in those forums might well advance related renewable energy and climate mitigation discussions in a more aggressive manner.

At present, there is no international network of energy storage experts to expand access to energy storage information and implement a framework that enables storage technologies to reach a broader market. As result, the environmental and NGO communities are missing an opportunity to shape international climate and technology discussions about how to create favorable policies, and have conversations about the role of storage in the global clean energy future.

Without dedicated market information-sharing opportunities across national boundaries among policymakers, with input from advocates and industry, the speed of change will be hampered by lack of data and a failure to adopt lessons learned and best practices.

It goes without saying that international exchange of information, policy directions, market intelligence, and basic know-how could go a long way towards moving these technologies to market. In this early stage of market development such international cooperation, combined with a national effort, could be one of the most effective ways to make a difference.

What is missing so far is any international approach to accelerate movement of the energy storage market. This gap suggests the need for a coordinated global network of interested parties that would have both a public and private market focus. With no effective network of NGOs, state energy leaders, and industry working together to learn from these early markets and adopt strategies, both public and private purposes with these emerging technologies will not be served.

With the demise of effective U.S. action on climate, it is more important than ever that non-federal actors engage in clean energy technology partnerships. Energy storage technology is among the most important to accelerate clean energy uptake and to reduce climate impacts.

Actions

International exchange opportunities for energy storage policymakers would benefit the market. Frequently, countries take different policy approaches to clean energy (for example, feed-in tariffs are popular in Europe but not used as much in the U.S.). An international policy exchange would allow for policymakers to share ideas and experience across national borders. It would also help decision makers to stay current on major tax incentives, rebates, and market supports. With coordinated policy exchange opportunities, a compilation of policies and model legislation as well as an ongoing dialogue on policy proposals to support energy storage markets could be a reality.

As the first international study on emissions using updated storage economics shows, there is a great deal to learn about how storage with renewables can reduce global greenhouse gas emissions reductions (9). As far as we know, the study cited here is the first emissions scenario done anywhere with sound storage economic data from current cost curves in real markets. A global effort to develop better analysis and strategies using current storage market economics would go a long way to resolving the contentious debate over whether renewables alone can address climate change, with or without other technologies such as carbon capture and storage or nuclear (10).

An open-source database on energy storage market trends would help consumers and policymakers make informed decisions. This effort would keep participants abreast of market evolution in various countries and regions, as it affects distributed and utility scale energy storage. This would include electricity pricing, ancillary services markets, installed system costs, and related market developments.

A global effort for standardization and consensus on performance standards is needed. As the distributed storage field becomes more populated, there will be an increased need for agreed-upon performance and safety standards, and testing protocols. We should seize the opportunity to create an international effort early, before markets become fragmented.

The creation of a database on international energy storage programs would assist policymakers and stakeholders. This database would track distributed storage programs and deployment progress around the globe.

Works Cited

(1) “Global Storage Market to Double Six Times by 2030,” Bloomberg New Energy Finance, November 20, 2017, https://about.bnef.com/blog/global-storage-market-double-six-times-2030.

(2) Energy Storage Association, “Facts and Figures.” Energy Storage, Accessed March 23, 2018, http://energystorage.org/energystorage/facts-figures.

(3) Frankel, David and Amy Wagner, “Battery Storage: The Next Disruptive Technology in the Power Sector,” McKinsey & Company, June 2017, www.mckinsey.com/business-functions/sustainabilityand-resource-productivity/our-insights/battery-storage-the-nextdisruptive-technology-in-the-power-sector.

(4) Deign, Jason, “Stories That Defined the Global Energy Market in 2017,” Greentech Media, December 15, 2017, www.greentechmedia.com/articles/read/stories-that-defined-global-energystorage-in-2017.

(5) Spector, Julian, “Italian Utility Enel Acquires Energy Storage Specialist Demand Energy,” Greentech Media, January 11, 2017, www.greentechmedia.com/articles/read/italian-utility-enel-acquiresenergy-storage-specialist-demand-energy#gs.JtwCJjg.

(6) St. John, Jeff, “European Grid Edge M&A Alert: Centrica Buys REstore for $81M,” Greentech Media, November 3, 2017, www.greentechmedia.com/articles/read/european-grid-edge-ma-alertcentrica-buys-restore-for-81m#gs.aeN5nK0.

(7) St. John, Jeff, “Was 2017 the Year Global Energy Giants Went All-In on the Distributed Energy Revolution?” Greentech Media, December 28, 2017, www.greentechmedia.com/articles/read/the-year-incleantech-energy-storage-and-grid-edge-ma.

(8) Chediak, Mark, “World’s Deploying More Batteries Than Ever – But Slower,” Bloomberg Technology, February 13, 2018, www.bloomberg.com/news/articles/2018-02-14/world-s-still-deploying-more-batteriesthan-ever-but-slower.

(9) Ram, Manish et al, “Global Energy System Based on 100% Renewable Energy—Power Sector,” Energy Watch Group, November 2017, http://energywatchgroup.org/wp-content/uploads/2017/11/FullStudy-100-Renewable-Energy-Worldwide-Power-Sector.pdf. It is important to note that the deployment of energy storage alone may not ultimately result in a reduction in emissions. In fact, if proper policies and market signals are not put into place, storage can even increase emissions in some scenarios. For example, a 2017 study (See, Goteti, Naga Srujana, “How Much Wind and Solar are Needed to Realize Emissions Benefits from Storage?” Energy Systems, p. 1–23, December 11, 2017, https://link.springer.com/article/10.1007/s12667-017-0266-4) found that deploying storage on a coal-heavy grid could increase emissions. For this reason, we stress the pairing of renewables and energy storage to achieve emissions reductions. It is that combined policy regime that is needed to move the market.

(10) There is an ongoing debate on this topic among environmental colleagues. David Roberts has summarized the literature on this topic reasonably well. (See, Roberts, David, “Is 100% Renewables Realistic? Here’s What We Know,” Vox, April 17, 2017, www.vox.com/energy-and-environment/2017/4/7/15159034/100-renewableenergy-studies.) Much of this debate is a one among climate colleagues who are modelling various scenarios to get to a fossil fuel-free future, so it’s important to take their efforts seriously. Some have concluded that a renewables-only future is not a reasonably cost-effective solution, and they argue for a broader suite of alternative low carbon technologies, including nuclear and carbon capture and storage (CCS). They may well have an argument, that delivering reliable power through a 100% renewables future alone may not be economically feasible, but the studies underlying these scenarios, when it comes to energy storage often: (1) rely on the wrong technology, such as pumped hydro rather than batteries technologies, to project future costs that turn out to be too high to be meaningful, or (2) rely on the wrong costs for battery storage either by ignoring current cost reduction pathways, or by failing to acknowledge the many cost saving and revenue generating opportunities for batteries in electricity markets. In either case, these studies often result in conclusions that inflate the future costs of storage as a cost-effective option with renewables to reduce emissions, thus making the non-renewables alternatives look more cost-effective by comparison. What’s more, the studies often fail to distinguish between situations where battery storage could support major renewables integration with shorter-term duration storage technologies, as compared to much longer-term duration, seasonal storage needs not feasible with today’s battery technologies.

However, a recent relevant study by Nathan Lewis at Caltech (with Matthew R. Shaner et al) is an important advance toward more sensible projections in this field, especially about the role of energy storage in future renewable integration scenarios. (See: Shaner, Matthew r, et al, “Geophysical Constraints on the reliability of Solar and Wind Power in the United States,” Energy Environ. Sci., 2018, The Royal Society of Chemistry, February 27, 2018, DOi:10.1039/c7ee03029k, http://pubs.rsc.org/en/content/articlelanding/2018/ee/c7ee03029k#!divAbstract). The study concludes that renewables systems with batteries that can store solar electricity for 12-hour durations could reliably meet up to 80% of the electric power system demands by 2050; that alone is an extraordinary finding – achieving an 80% renewable energy system with existing lithium-ion storage technologies. Battery projects now being bid into market are committed to delivering up to 10-hour durations; getting to 12-hour durations is a reasonably achievable, incremental economic improvement. The study concludes that to go further and reach a 100% renewables scenario, more longer-term, seasonal storage is needed, and that is not now economically feasible. (See the “Emerging issues” section on “Power to Gas” for a discussion on this long-term storage technology issue.)

The debate over the findings from these types of studies is a critical one about whether renewables and energy storage could reliably replace fossil-fuel baseload plants in the future and bring about a decarbonized energy sector. Regardless of the conclusions the studies reach, recent finding all appear to confirm one critical point: getting the energy storage solution right is a key linchpin to answer the question whether a future energy system can be powered by renewables at significant levels. Unlike the approach of some studies, the solution is not likely to be an either/or answer, but a continuum of time durations where existing and future combinations of storage technologies can provide support to various future levels of renewables integration. As noted elsewhere, this paper is not written to grapple with this complete fossil-fuel replacement problem in any detail. Instead, it has been written to point out that, if storage is so critical to these long-term, future solutions, more work must be done now to reliably study and analyze current trends in cost and performance of battery technology to support a more robust and honest debate about storage’s role in enabling renewables integration in future climate emissions scenarios.

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