Battery Storage is Critical to the Energy Transition

Reduced costs mean that batteries will become more attractive as part of the power systems that will benefit our future.

The UK government is committed to an ambitious 2035 target of cutting emissions by 78% by 2035 compared with 1990 levels. Battery storage will be needed if this goal is to be met. Fortunately sharply-falling battery costs combined with the rapid growth in renewables like wind and solar power make this a sound investment option.

The issue is of course the intermittency of renewables, and the need to store some of the energy produced for use when it is needed. BloombergNEF expects that the 2020's will be the 'decade of energy storage'. In its Global Energy Storage Outlook, published in November 2021, the research consultants predict a 20-fold expansion in non-EV battery storage by 2030. The UK is likely to be one of the main markets for this technology, along with the USA, EU and China.

Batteries can provide a great deal of standby capacity. They will be needed for power plants and solar arrays, but also hot water tanks, industrial facilities that are running their own renewable power, and residential areas. Battery Energy Storage Systems (BESS) ideally should be co-located wherever electricity is generated. The main barrier used to be cost.

Now that battery costs have fallen dramatically, they are a viable option for many systems. Our World in Data published a report in 2021, stating, “The price of lithium ion batteries has declined by 97% since 1991.” A battery with a capacity of one kilowatt-hour that cost $7500 in 1991, was just $181 in 2018. Prices halved between 2014 and 2018. That's a dramatic reduction in unit costs. Hannah Ritchie, of Our World in Data says, “Prices fall by an average of 19% for every doubling of capacity. Even more promising is that this rate of reduction does not yet appear to be slowing down.” Technological advances mean that batteries are smaller and lighter. That potentiates many projects that would have been too expensive in the past.

BESS systems create various benefits:

• Cost Reduction: storage can avoid high peak-time energy charges

• Net zero targets: batteries can help companies achieve legal and regulatory goals

• Improved energy resilience in case of power interruptions

• More revenue available from battery optimization

• Virtual power plants (VPPs) to beneficially link DERs

In the UK, the National Grid plans to this year launch Dynamic Moderation and Dynamic Regulation frequency response services. This will facilitate new services for consumers and opportunities for utilities. The expectation is that more VPPs will mix generation and storage to create clean energy smart grids around locations which have multiple sources of energy input. For example, Centrica recently inked a deal to acquire a 30MW battery storage unit in the Scottish city of Aberdeen, adjacent to offshore wind farms. The facility will work with North Sea wind arrays to smooth out the supply and demand curve, storing electricity for when it is needed by users. More BESS systems will need appropriate grid infrastructure built or expanded in various places to make the best use of this flexible power delivery.

Over the next couple of decades, the UK will need around 40-50 GW of flexible capacity if it is to reach its targets. Battery storage will be part of that energy mix, and cheap, reliable battery systems will go a long way to ensuring that the government's 2035 target is a viable one, not a pipe dream.