by Prasanna Srinivasan, Manager, Business Development & Marketing at LORD Corporation
It’s no secret that the U.S. electrical grid system is overtaxed and outdated, and integrating methods to decrease dependence on it is critical. Modernizing the system will help position the country to meet future projected energy needs and reduce the electric load. By some estimates, the U.S. will need somewhere between 4 and 5 terawatt-hours of electricity annually by 2050.
There have been tremendous breakthroughs and continued growth in the energy storage market, which can play a significant role in expanding the grid to handle an increased load and improve operating capabilities.
Energy storage systems (ESS) can also support emergency preparedness efforts, reduce the need for major new transmission grid construction upgrades and augment the performance of existing transmission and distribution assets.
The U.S. Department of Energy (DOE) recognizes that by reducing peak loading (and overloading) of transmission and distribution lines, storage can extend the life of existing infrastructure.
Despite all these factors in favor of energy storage, several challenges remain, including:
Multiple technologies: There are multiple energy storage technologies – chemical and non-chemical categories of storage – and a lack of convergence with lithium-ion (Li-ion), flow batteries and non-battery solutions such as mechanical or thermal storage.
System costs: Overall system costs also must be considered because a single solution may not be applicable across the board. Instead, a different approach may be needed for various regions and system architectures to make energy storage economically feasible. Energy storage system technologies need to be cost competitive, but they are still in the early stages. Costs will come down as companies begin optimizing these ESS technologies. This includes the price for Li-on batteries, which currently dominate the market. This elevated demand is driving production and affecting the price.
However, costs are coming down, particularly in light of the progress that has been made in terms of electric vehicles. As large-scale batteries reach economies of scale, the cost reduction will also translate to energy storage.
Safety concerns: Various safety concerns, such as how batteries of different chemistries and technologies react in a fire, exposure to toxic fumes, how responders handle a damaged battery that still contains energy and hazards associated with energy storage systems, among other safety issues, present their own set of challenges.
Regulatory barriers: Institutional and policy barriers pose challenges with energy storage. What rules and regulations will be put in place? How storage systems in various markets will be regulated and what cost-based and market-based, cost-recovery for owned or contracted energy storage assets need to be determined. California may lead the way. In mid-February, the California Senate introduced a bill that would require the state to make 100 percent of its energy from renewable sources by 2045.
Currently, guidelines are being drafted in Australia that may ban lithium-ion battery storage devices from being installed inside homes and garages, allowing them only in in free-standing “bunkers.”
This would not only affect everyday consumers, one of whom is Australia’s prime minister, but it also could also affect large-scale installations. If the ban is implemented, it could pose issues for people who have electric vehicles, which are powered by Li-on batteries.
However, Elon Musk, Tesla Motors CEO and chairman and founder/CEO of SpaceX has been in the news for boldly suggesting to the Australian government that he could solve a looming energy crisis in South Australia – which has experienced blackouts the past few months – through ESS. Musk said that he could install a battery system within 100 days or it would be free.
Strategy in approach: Strategic issues challenge energy storage. How do you develop a systemic or a holistic approach to senergy torage that addresses and bridges technical regulatory and market and political aspects? Determining a strategy incorporating these various silos is important. Developing a pricing model around vehicle-to-grid (V2G) – using batteries in electric cars as grid storage devices – and other related challenges must also be strategically addressed, especially because V2G storage requires such an extensive infrastructure.
Consumer acceptance: The idea of energy storage may be attractive and exciting, but here are some unknowns. For true acceptance and adoption of ESS, consumers need to understand the how and why of energy storage and be able to validate the safety, reliability, and performance of these systems.
Even with these limitations and challenges, the energy storage market is ultimately situated to grow very rapidly. Learn about it and plan for it, but expect the automotive market to actively take the lead in resolving many of the issues and challenges with energy system storage technology.
Let LORD know how you are planning for the rise in energy storage and your thoughts on the market.
Click here for “Energy Storage, Part One: Are energy storage systems the next big thing?”
Energy Storage at a Glance
To get a picture of how energy is being consumed through the United States and more about the energy storage market, check out the interactive U.S. Energy Mapping System and the 2017 Energy Outlook from the U.S. Energy Information Administration (EIA).