How will battery storage impact the energy industry and production over the course of the upcoming years

To provide additional resources, I also suggest

https://www.ucsusa.org/resources/energy-storage-faq

1. What is the difference between customer-, community-, and utility-scale storage?

2. Can battery storage help keep the power on during blackouts?

3. Does battery storage need to be physically located in a community to benefit the community?

4. What options are possible for energy storage ownership?

5. What kinds of jobs are created and supported by energy storage projects?

6. Do lithium-ion battery storage facilities generate local air pollution?

7. Are lithium-ion batteries a fire or chemical hazard?

8. Where do critical materials for lithium-ion batteries come from?

9. Can lithium-ion storage batteries be recycled?

10. Which stakeholders need to be involved when considering battery storage projects in a community?

Hi Thomas:

I will provide a short answer, and a couple of resources here on Energy Central.

Battery Energy Storage Systems are the great correctors. They can fix:

• Renewable variability
• Transmission constraints
• Grid outages
• Generation (resource) inadequacy
• High electricity pricing

And a few other things. As the number and size of the projects continue to increase, they will play a larger role in grid operation. Some of these projects are built under long-term power purchase agreements for a fixed-function, but most are not. All the latter developers want to know is how to find the lowest electricity price to charge their BESS and the highest price for electricity they sell. Buy low and sell high is always good for return on investment.

The first resource below is for a three part series I posted last month. The link is to part three, which contains links to the other two parts.

https://energycentral.com/c/cp/photovoltaic-storage-fall-2021-part-3-states-megafactory

The second resource will let you zoom way out to look at the future. It too is a three part series from about six months ago. Like above, I'm sending you to Part 3, which has links to the other two.

https://energycentral.com/c/gr/future-electric-power-united-states-%E2%80%93-part-3

-John

You have received pretty good set of informed answers here, Thomas. From my perspective, the role of central utility in providing the bulk of the generation and transmission services will actually increase rather than decrease in the coming decades. This due to the increasing risks we see happening to the power supply due to weather, variable renewables, sometimes lack of adequate investment from the private sector in the generation resources (due to a myriad of market factors, rate of return, risk in being able to sell the energy in a competitive market, etc.). Regarding role of batteries, they are part of a broad spectrum that we call energy storage systems (ESS). For short duration discharge services, e.g., moving solar during the day to the peak evening hours, or providing capacity support when wind slows down for a short while, battery energy storage system BESS is great, particularly with their fast injection of power capability that supports the frequency regulation for low level load and generation changes. When it comes to multi-day storage services such as lulls in wind energy in summer months it is a different ball game. We will not be lookin at BESS as they will be very expensive in their levelized cost of electricity ($/MWh supplied) due to high energy capacity requirements. Hydrogen-supplied gas turbines, liquid air storage systems, pumped hydro, etc will be large energy capacity ESS providers with more reasonable costs. Central utilities will be having enlarged roles, as I mentioned earlier, in the climate change mitigation regimes to come. They have to have the financial resources, sometimes with public funding and other than rate payers payments, to accommodate to new sources of supply reliably. For example, small modular nuclear reactors, known as necessary to back up wind and solar in some systems will likely have to be run by central utilities given the strict regulatory regimes on them. Reliability-related investments such BESS and other ESS to allow renewables to be invested by private developers and connected to the grid more likely will happen in large scale in the central utility systems, to avoid blackouts and rotational load cuts that we have seen quite often recently (as a matter of public policy). So, not disruptive, but supportive to the utility business.

I think the previous replies all covered a significant amount of data and issues related to batteries. Coming from an operations perspective and looking at utility scale battery installations can have significant value. Currently there is one 20MW battery installation in Maine, it participates in the regulation market. By that I mean it will sit there and help maintain 60Hz receiving AGC dispatch signals from ISO-NE every 4 seconds. I think when one looks across the industry, batteries performing roles such as regulation or providing contingency reserves (they can come on line instantly in response to major contingencies) is where they have made some inroads. The issue of large-scale storage is trickier. New England alone has almost 12,000MW of offshore wind in the queue. When one looks at the off-peak periods if the wind is blowing at a reasonable clip and one includes onshore wind and BTM solar, it is going to be near impossible to operate the system without significant storage and therein lies the problem. Personally, I do not believe batteries can provide the significant amount of storage needed, it is going to require large scale hydro pump storage facilities similar to current Northfield and Bear Swamp facilities. I tend to believe it's going to have to be a combination of pumped storage and batteries managed through centralized operation at ISO-NE to meet the needs of the system as the renewable push continues.

Hi Thomas,

This is a deep and complex issue.  I only have detailed knowledge of how the New England markets work, but it should suffice to illustrate the unexpected feedback loops that can occur.  New England has utilized large scale pump storage for decades and the economic savings it can provide are a function of an economically optimized central dispatch by the ISO. As battery storage proliferates, it introduces intriguing questions as to who determines when the batteries will operate and for what purpose they will operate.  One must also consider whether the output of the batteries will be recognized and monetized in the ISO-NE markets or will be behind-the-meter (“BTM”) and kept out of the markets. If the output is not reported to the markets, it's value may only be indirectly recognized by a lessening of the energy and capacity requirements of the ISO and may not be necessarily passed on to those bearing the costs.

For example, if a battery’s output is part of the capacity market, its output will never shave the peak load because the ISO uses the reported output from the battery in determining the peak load (the peak load is the sum of the reported generation and tie lines).  However, if the battery’s output is BTM and running at the time of ISO’s peak, the ISO’s peak is less by that amount but there is no payment to the battery for its contribution.  The value is socialized over all of New England via complex cost allocations of the Open Access Transmission Tariff (OATT).  And it gets worse. A utility in the power pool can shift regional costs onto neighboring utilities if it installs more BTM generation than its neighbors by lowering their cost allocator.  FERC Order 2222 may or may not ameliorate these effects but that’s another deep dive as referenced in one of the other comments.

Now, layer in who operates the batteries?  Remember batteries are not 100% efficient and incur losses when both charging and discharging. If there is no co-ordination of operation between potentially hundreds of installations, there is a high probably that at any instance in time, some batteries will be charging, and some will be discharging. When that happens, all that has been accomplished is introducing more losses onto the grid which are supplied by brown energy as natural gas generation is typically the marginal resource.  Each customer with BTM storage will be incentivized to lower their own costs by reshaping their own load profile which may not coincide with other’s reshaped load profiles. Economies of central dispatch are lost, and unnecessary losses are introduced.

Grid scale storage is not feasible under deregulation because most utilities in New England do not serve load and thus have no use for any generation, let alone storage.  Load is served by competitive electric suppliers who settle financially with the ISO and is common in many RTO’s.  Also remember the grid was originally designed to radiate the power from large generators out to smaller circuits.  If you start installing storage units out on these circuits, the conductors may not be able to handle the increased load.  Remember a battery acts both as a load and a generator.  Not only must the grid be able to deliver power to the incumbent load prior to the storage unit, but it now may need to be upgraded to be able to supply both the incumbent load and the charge load.

So let’s tie this back into your question regarding whether distributed battery storage is disruptive to the energy industry.  There’s a saying that I heard years ago that I’ve modified to sum it up:  Clean, Reliable or Affordable: choose any two.  The term “disruptive innovation” seems to imply that society might be better off if it can break away from the iconic, monolithic utility structure.  Yet it is that very structure that public policy makers rely upon to be healthily functioning for a myriad of reasons, not the least of which is the only way developers can build and finance these prohibitively expensive new technologies is for the state to impose uneconomic forced purchases upon the utility’s captive customers, which customers then complain to these same policy makers that electric rates are too high.  Also consider that systems go through cycles of centralization and decentralization.  People are fickle over time.  “Let’s centralize. It will be cheaper” is soon followed by “It’s too big. Let’s decentralize.”  I’ve seen it many times.  So people are welcome to debate whether disruptive innovation is a good thing or a bad thing.  Just do it with eyes wide open and be careful what you wish for.

P.S. For a different perspective from an industry expert of the CESA report cited in another response, please go to this link: https://wattsupwiththat.com/2021/08/09/energy-storage-best-practices-from-new-england/

I think the answers already posted have hit on the clearest impacts.  I think an interesting issue is how regulators and legislative bodies will respond to the increasing availability of battery storage.  Will they set policies based on what's possible or what is economically efficient?  It will be tempting to set policies based on the theoretical potential for batteries to enable comprehensive renewable production while ignoring the economic realities of cost and limited resources.

The vast majority of future battery storage will be in electric vehicles - far larger than home and utility batteries combined.

There are 287 million cars in the USA. Assuming an equivalent EV fleet with average battery size of 40 kWh, this amounts to about 10 Terawatt-hours (TWh) of storage. This is enough to support a 100% solar/wind electricity grid.

The first step is to strongly encourage recharging during daylight hours when there is lots of solar electricity available and discourage recharging during the morning and evening peak periods.

The second step is to allow vehicle-to-grid during occasional stress periods.

The other really large storage technology is off-river pumped hydro. The working fluid is water instead of electrochemiclas. The USA has 35,000 good potential sites outside national parks with combined storage of 1,400 TWh. Pumped hydro is much cheaper than batteries for overnight storage.

Batteries, pumped hydro and demand management work well together. For example, Australia's national electricity grid is physically isolated (can't draw energy from neighbours) and has a renewable fraction (mostly solar/wind) of 36% (which is rising rapidly). During the daylight hours, the renewable penetration is 45-60%. Balancing is achieved using pumped hydro, hydro, utility batteries and legacy fossil fuel plant cycling up and down. Gas is at 5% of generation and falling.

Thomas-

Battery storage can deliver different types of values to the asset owners, but it depends on the region of the country and the time of day. The real hidden power of battery storage comes from "value stacking." Value stacking allows you to tap into multiple streams of value, i.e. energy arbitrage, ancillary services, peak shaving, capacity, or even avoiding the need to build expensive transmission that will only be needed on very infrequent peak events during a year.

That all said, battery storage is definitely not a panacea for all that ails the grid and our current energy policy. Or lack thereof. There is not enough lithium ion on the planet.

Battery storage will definitely help reduce duck curves and the integration of electric vehicles as another source of battery storage interacting with the grid also represents enormous possibilities.

I can not emphasize this point enough. Each region of the country, and thus each RTO, will tap into the value of battery storage in different manners. And there will always be tension between battery technology and market adoption because the speed of technology will always be quicker than the time that market participants can agree upon rules and then the market designers can implement the necessary software changes. It will be a constant tension.

Or as my old boss once said to me, a "healthy and necessary tension."

Thomas, to the excellent points Charles makes, I will add that studies show storage is no panacea for reducing emissions - that more often than not it increases overall system carbon emissions.
Since the 1970s there has been a movement in California to improve energy efficiency of buildings, with hundreds of $millions dedicated to weatherproofing and efforts at public education. That we might sacrifice much of those gains by dramatically reducing system efficiency with grid batteries makes no sense to me. Providing electricity to consumers always has been, and always will be, most efficient when it's generated to meet demand in real time. That solar and wind are seldom available to meet demand in real time is a problem, and always will be, too. Instead of attempting to devise workarounds for their deficiencies, we should be investigating other sources that are dispatchable - that can produce clean energy when needed.

Thomas,

I think you will see that energy storage will cause increased use of renewables in states that employ time-of-use rates.  Storage will allow solar/wind/hydro generators to arbitrage the time they sell power to the grid when rates are higher, thereby increasing revenue. 

You may also see and increase in renewables from storage in states that are not meeting their RPS requirements or are raising these RPS requirements.

This all depends on the cost of storage continuing to drop.

Thomas, conventional power generation such as coal, nuclear, and natural gas don't require energy storage, but renewables such as wind and solar do. Solar, especially, requires energy storage to increase the value it provides to the grid. The problem is that energy storage at the system level is expensive. Even if the cost of battery cells were reduced to zero, the "balance of plant", which includes real estate, power electronics, structures, and grid interconnect, remains a cost difficult to reduce. For a disruptive approach, you might try an economics-based look at system value that compares conventional power generation to renewables that require energy storage (wind and solar). Extra points for looking at capacity factor differences for the different types of renewables to determine the degree of energy storage needed to integrate with the grid.

Thomas, good topic.  I view battery storage (or storage technology in general) as complimentary to renewable applications that are taking hold for generation.  If you move a fleet of generation facilities from coal/natural gas to sustainable sources like wind and solar, you need a method to harness and store that energy for use when interruptions happen to your primary source (cloud cover or night for solar, low wind periods etc).  A secondary use for these storage systems is to help smooth out energy needs during peak demand cycles.  Dispatching the stored energy back onto the grid to alleviate the handful of times during the year when generation is at max capacity helps to offset the need to build new power plants and can help justify the cost of the battery.  As battery technology continues to advance and the costs of installing the units drop, I think we will continue to see more placement.  One interesting area for you to look at would be the different strategies between large scale centrally located storage, and more distributed smaller scale storage.  Both have advantages.  Best of luck in your research.

Your question is a bit broad for me. But, I will try.

If you want to research, there is plenty of material on web.

Here is a website for a starting point - https://www.eia.gov/electricity/workshop/batterystorage/

Since you are in NH, this report might be of interest to you - https://www.cesa.org/resource-library/resource

/energy-storage-policy-best-practices-from-new-england/

Here is another link for a MA study report, https://www.mass.gov/service-details/energy-storage-study

Welcome to the industry!  I myself minored in "Environmental Studies," before the discipline came to be known as "Sustainability." 

This may be too nuanced of an answer but, while I agree with the hypothesis that battery storage is transformative, I think of storage as more of an enabling technology than a "disruptor."  The industry disruption is the rise of distributed, customer-driven (i.e. not centrally planned) generation, and the impact of this new DER paradigm on existing Retail/Regulated utility business models.  From this perspective, energy storage helps rather than disrupts; DER's are much more difficult to balance without storage.  Research on this topic should be easy to find; if you want to drill into the industry discussion of this challenge, the best source material will be found in the background documents in the relevant FERC Orders and dockets (i.e. 2222 for Wholesale DER and 841 for Storage; full warning - this material is dense).