A major disruption to the global economy is coming in the form of a seismic shift in energy markets. Largely driven by energy storage, this disruption will create exciting opportunities for the renewable energy market and will, in our view, drastically change the time of day electricity price curve (that is, the ‘duck curve’).

The increased availability and adoption of battery storage will enable solar energy generators to match for the first time the supply of electricity to the time of customer use, which has historically been the major impediment to the growth of direct renewable electricity supply. In time, the ability for renewable energy to supply generation as needed throughout a 24 hour window has the potential to widen and eventually flatten the electricity price curve, such that the head and the tail will almost be completely “cut off” the duck.

The Duck Curve
For those wondering if this is an article about the energy market or a recipe for Peking duck, the ‘duck curve’ refers to the graph of the price of electricity across a day, which peaks in the morning (the tail), slumps in the middle of the day (the belly) and peaks again in the early evening (the head). With a bit of creative licence this curve resembles a duck – see Figure 1 below.

The “Fat Duck” – How Solar Generation has Impacted Energy Market Supply to Date
Over the last decade the price of electricity has been falling significantly from mid-morning, bottoming out around 12 noon and then increasing in the early evening. Graphically, this has resulted in the day price energy curve resembling a “fatter” duck, as the duck’s belly has been hanging lower and lower – see Figure 2 below.

So what is causing this fattening? Mid-day reductions in electricity demand are being driven by the increase in behind the meter solar generation, particularly residential rooftop solar. Macro-economic trends are also reducing commercial and industrial electricity demand as the economy shifts more and more towards a service-based economy from a manufacturing and industrial base.

Meanwhile our lives have become more and more electrified, including through internet usage (data being directly correlated with electricity), the use of electricity for heating and cooling our homes, and the electrification of transportation through the increased adoption of electric vehicles. All of this results in a mismatch between when we need electricity and when it is created.

A low-cost, high-performance battery chemistry developed by University of Colorado Boulder researchers could one day lead to scalable grid-level storage for wind and solar energy that could help electrical utilities reduce their dependency on fossil fuels.

The new innovation, described today in the journal Joule, outlines two aqueous flow batteries, also known as redox flow batteries, which use chromium and organic binding agents to achieve exceptional voltage and high efficiencies. The components are abundant in nature, offering future promise for cost-effective manufacturing.

“We’re excited to report some of highest performing battery chemistries ever, beyond previous limits,” said Michael Marshak, senior author of the study and an assistant professor in CU Boulder’s Department of Chemistry. “The materials are low-cost, non-toxic and readily available.”

Renewable energy sources provide a growing share of U.S. electrical production, but currently lack a large-scale solution for storing harvested energy and re-deploying it to meet demand during periods when the sun isn’t shining and the wind isn’t blowing.

“There are mismatches between supply and demand on the energy grid during the day,” said Marshak, who is also a fellow in the Renewable and Sustainable Energy Institute (RASEI). “The sun might meet the grid’s needs in the morning, but demand tends to peak in the late afternoon and continue into the evening after the sun has set. Right now, utility companies have to fill that gap by quickly revving up their coal and natural gas production, just like you’d take a car from zero to sixty.”

Although lithium ion can provide power for smaller scale applications, you would need millions of batteries to backup even a small fossil fuel power plant for an hour, Marshak says. But while the lithium ion chemistry is effective, it’s ill-suited to meet the capacity of an entire wind turbine field or solar panel array.

“The basic problem with lithium ion batteries is that they don’t scale very well,” Marshak said. “The more solid material you add, the more resistance you add and then all of the other components need to increase in tandem. So in essence, if you want twice the energy, you need to build twice the batteries and that’s just not cost-effective when you’re talking about this many megawatt hours.”

Flow batteries have been identified as a more promising avenue. Aqueous batteries keep their active ingredients separated in liquid form in large tanks, allowing the system to distribute energy in a managed fashion, similar to the way a gas tank provides steady fuel combustion to a car’s engine when you push the pedal.

The safety of energy storage systems is under scrutiny after firefighters were injured in an Arizona battery plant explosion in April, and it emerged that at least 23 South Korean plants caught fire in a series of incidents dating back to August 2017.

For now, many experts continue to stand behind energy storage’s track record on safety in the context of the broader power market.

When testing energy storage technologies, safety is not viewed as part of a hierarchy of requirements, but is “a simple pass-fail,” said David Kane, technology development manager at the energy company Centrica in the U.K.

“If we cannot be satisfied that the system is safe, then we just can’t pass go,” he said. “That doesn’t just apply to the final product design. It applies to the installation, the service, the decommissioning [and] the various steps in the supply chain.”

Arizona Public Service (APS) still has not revealed the cause of a blast that the Associated Press last month claimed had “sent eight firefighters and a police officer to the hospital.”

However, as previously noted by GTM, the utility has one of the most aggressive energy storage adoption strategies in the U.S., with plans to install roughly a gigawatt of battery capacity by 2025.

Pressures associated with a hasty build-out of battery capacity appear to have been the cause of numerous lithium-ion facility fires in South Korea.

Last month, S&P Global reported that a five-month investigation into the blazes had put the blame on faulty installations and poor operating procedures rather than the batteries themselves.

How the industry responds is critical
Analysts at Wood Mackenzie predict enormous growth for the global storage industry in the years ahead, reaching 600 gigawatts of stationary storage by 2040, up from about 4 gigawatts today.

But the recent safety incidents are problematic for the lithium-ion battery industry, which even this month was being linked to a fire aboard a Virgin Atlantic flight.

Utility companies seeking to reduce CO2 emissions are increasingly relying on battery energy storage systems to meet peak-power demand as they retire their gas-fired plants. “Providing peaking capacity could be a significant U.S. market for energy storage,” according to a June report from the National Renewable Energy Laboratory. Rapidly falling battery costs make the transition attractive.

“In the next year or two, we’ll see an increasing number of locations where batteries are at the break-even point” of grid parity, says Paul Denholm, NREL principal analyst. “There’s still a tremendous market, on the order of tens of gigawatts of capacity that I think are suitable eventually for replacement by batteries.”

Battery energy storage systems (BESS) are often used to store excess solar and wind energy, and both BESS and renewable-energy generation have grown each year. In 2019, the cost of lithium-ion batteries has plunged while growth of BESS facilities has soared.

In March, BloombergNEF reported the benchmark levelized cost of electricity for Li-ion batteries has fallen 35% since the first half of 2018. And in Q1 2019, U.S. energy storage deployments totaled 148.8 MW, 232% greater than in Q1 2018, the Wood Mackenzie U.S. Energy Storage Monitor reported.

Perhaps more significantly, Q1 2019’s total topped Q4 2018 deployments by 6%, auguring a future of rapid growth. Q4 deployments typically are the highest of the year as developers rush to book completions before year’s end. Deployments in 2019 will total 647 MW, Wood Mackenzie estimates, but by 2024, U.S. energy storage deployments are forecast to reach over 4.5 GW annually.

AES Alamitos broke ground June 27 on a 100-MW/400-MWh battery-based storage system for AES Alamitos Energy Center in Long Beach, Calif., as part of a larger modernization and replacement project at the 2,025-MW gas-turbine AES Alamitos Generating Station. AES claims the new battery storage array will be more than twice the size of the largest such facility currently operating in the U.S. The Alamitos power plant was procured specifically to provide peaking power, company officials say, and its permit for 300-MW capacity allows for considerable growth.

Southern California Edison Co. has a 20-year power-purchase agreement with AES for the 100-MW capacity of the Alamitos Energy Storage project, which will be able to operate continuously for four hours, says Gus Flores, principal manager, origination, at SCE. It’s being built at the existing site of old gas plants. Many gas plants were built along the California coast using ocean water for cooling, but that is no longer allowed and they will be retired in the next five years.

In reporting second quarter 2019 financial results, Tesla’s solar installations reached a new record low, while its ‘Powerwall’ and ‘Powerpack’ energy storage products set a new deployment record.

Tesla’s retrofit solar installations plummeted to only 29MW in the second quarter of 2019, down from 47MW in the previous quarter, then a new low for the company.

The reason for the 40% quarter-on-quarter decline in solar installations remained unanswered in Tesla’s Update Letter, which provided the slimmest narrative on its Energy division, since acquiring SolarCity in late 2016.

“We are in the process of improving many aspects of this business to increase deployments,” read Tesla’s Update Letter for the reporting period.

In stark contrast, Tesla reported that it’s Powerwall and Powerpack deployments increase by 81% in the second quarter of 2019, achieving a record 415MWh. This comes after being capacity constrained at Gigafactory 1 through 2018 and a complete stop in production allocation of energy storage products to meet EV Model 3 demand.

Tesla noted that its Powerwall product, primarily for residential applications had cumulative installs that had surpassed 50,000 site locations in the reporting quarter.

During Tesla’s earnings call with financial analysts, Tesla’s management noted that battery cell production volume had continued to ramp in-line with the production ramp rate, reducing capacity constraints that enabled the surge in energy storage installs. This was all said to be due to a new storage system module line, designed by Tesla Grohmann that entered production.

Due to the significant upswing in energy storage deployments, offset by the heavy decline in solar installations, the Energy division revenue reached US$368.2 million, up 13%, quarter-on-quarter but down 2% from the prior year period.

Venture capital investments in battery storage companies and projects rose significantly year-over-year through the first six months of 2019, according to a report from Mercom Capital Group. That level of activity is consistent with the growth in energy storage noted by speakers on July 24 at the Storage Week Plus conference in San Francisco, California.

“We will be 100% renewable by 2045, that is our goal,” said Carlos Fandino, city administrator for the City of Vernon, a Los Angeles suburb. Fandino was part of a panel that discussed the procurement of storage by utilities, municipalities, and electric cooperatives. “The way we will get there is through battery storage and other technologies,” he said.

Mercom, a global clean energy communications and consulting firm, on July 22 released its report on funding and mergers and acquisitions activity for global battery storage, energy efficiency, and smart grid sectors. The data covers the first quarter of this year, along with the April–June period.

Mercom said funding for battery storage companies jumped 139% year-over-year in the first half of 2019 compared to the first half of 2018. Mercom tracked 17 deals worth $1.4 billion in 2019, compared to $543 million for 30 deals in the first six months of 2018. Battery storage technology continues to evolve, with developers of storage systems increasingly focused on reliability.

Northvolt, a Swedish company, received $1 billion of that 1H2019 funding to complete what is considered Europe’s largest lithium-ion battery plant. The company in mid-June announced that automakers Volkswagen and BMW were among the investors in the facility. “Today is not only a great milestone for Northvolt, it also marks a key moment for Europe that clearly shows that we are ready to compete in the coming wave of electrification,” Northvolt CEO and former Tesla executive Peter Carlsson said at a June 12 news conference announcing the deal.

Municipalities Look at Costs
Mercom said 41 venture capital investors participated in funding battery storage in the first half of this year. Along with the Northvolt deal, other top funding went to Sila Nanotechnologies ($170 million); Romeo Power ($88.6 million), Zenobe Energy ($32.3 million); and LivGuard Energy Technologies (about $32 million).

The cost of storage is key for project development, according to Fandino and the other panelists. “We look at capital costs and infrastructure costs,” Fandino said. Vernon is home to many industrial sites, and Fandino said their needs are important for decisions the city makes about energy.

EDISON, N.J.–(BUSINESS WIRE)–Today, Eos Energy Storage (Eos) introduced new management to industrialize and scale its aqueous zinc battery solution. Joe Mastrangelo joins Eos as Chief Executive Officer, Kevin Walsh as Senior Commercial Advisor, and Mack Treece as Chief Financial Officer. Addition of veteran leadership will support Eos’ growth as the company deploys product on 4 continents and builds out manufacturing capability in the U.S.

Joe Mastrangelo stepped in as CEO of Eos after serving as Board Advisor for the company since August 2018. Joe brings decades of energy industry experience leading diverse teams to develop and deploy commercial scale projects around the world. Before coming to Eos, Joe was President and CEO of Gas Power Systems for GE Power, a global business of more than 15,000 employees in 60+ countries working to power the world by combining the most advanced gas-fired technologies with digital innovation. Joe also served as CEO of GE’s Power Conversion business, applying power conversion solutions to increase the efficiency of the world’s energy infrastructure.

“It is clear to me that storage is the key to scaling clean energy faster. Eos has established a solid foundation of learning and has optimized a lithium alternative solution that is ready to scale and meet the world’s rapidly growing demand for energy storage. I’m proud to lead this team at an exciting and crucial moment for the company.” said Mastrangelo.

Eos also added industry leader Kevin Walsh as Senior Commercial Advisor to help guide the company’s strategy and commercial operations. Mr. Walsh was most recently Managing Director and Head of US Renewable Energy at GE Energy Financial Services (GE-EFS) where he led the investment by GE-EFS of $16 billion in renewable energy projects. Walsh held various leadership roles in Power, International, Capital Markets and Asset Management during his tenure at GE EFS. Kevin is also Senior Operating Partner at Stonepeak Infrastructure Partners, member of the Board of the Connecticut Greenbank, and Board Member Emeritus for the American Council on Renewable Energy (ACORE).

“For renewables to scale faster, we need storage that is cost competitive and as reliable as existing energy solutions. The new Eos Aurora solution is uniquely positioned to compete and disrupt the sector worldwide. It is a solution the world urgently needs.” said Walsh.

To plan and manage the financial strategies for Eos at this important inflection point, Eos has added Mack Treece as its CFO. Prior to Eos, Mack was the CEO of Viridity Energy Solutions, Inc. where he grew the company and orchestrated its sale to Ormat Technologies. As COO and CFO of Viridity, he was responsible for all day-to-day operations including sales, marketing, operations and finance. Treece has over 20 years’ experience in senior management positions, with a specific focus on successfully scaling young companies into dominant market positions. Mack has a MBA from Widener University, a BS in Commerce from the University of Virginia, McIntire School of Commerce and he attended Insead’s International Executive program.

Australian authorities have rallied behind what is arguably the largest solar-plus-storage project to be conceived in the world’s history.

Over the weekend, Northern Territory first minister Michael Gunner confirmed his government has granted major project status to a scheme mixing 10GW of solar with 20-30GWh of energy storage.

Designed with costs of AU$20 billion (US$14 billion) in mind, the project is slated for construction in Tennant Creek, a town in central Northern Australia.

The scheme is the brainchild of Singapore’s SunCable, which wants to use it to shore up the Asian state-city’s power system and limit its over-reliance on natural gas imports.

The developer intends to set up a 3,800 km high-voltage direct current submarine cable to transfer most of the installation’s output to Singapore, where it could cover 20% of power needs, while various reports also link it to the potential ASEAN grid. The plan, however, is to also link the mega-installation to Australia’s own electricity grid so that it can supply Northern Territory capital Darwin and others.

Speaking to local media, first minister Gunner said talks will soon begin with SunCable on a project development agreement, which will set the scene for environmental assessments and others.

Northeastern states have enacted a dizzying array of policies to promote energy storage development alongside the growth of renewables over the past few years.

Where the challenge used to be a lack of profitable storage opportunities, now the trick is keeping up with new programs, incentives and market rules.

“The Northeast is a region that, from a storage perspective, is starting to come into its own,” said Brett Simon, energy storage analyst at Wood Mackenzie Power & Renewables. “In New York and Massachusetts especially, we are on the cusp of seeing pretty substantial growth on both sides of the meter.”

This region is united in its muscular state policy stances on combating climate change with a pivot to cleaner electricity. Aggressive clean energy policy alone benefits from greater capacity to store intermittent production, but the Northeast also has a geographic interest in resilience in the face of hurricanes, nor’easters, ice storms and blizzards.

This corner of the U.S. generally subscribes to competitive wholesale markets. That means that, besides attracting state incentives, solar-plus-storage developers can augment their income with wholesale market participation in PJM, New York ISO or ISO New England.

Meanwhile, the region’s distribution utilities have adopted a “bring-your-own-device” mentality, letting customers earn money through timely use of their own energy devices.

To make sense of the opportunities ahead of a regional forum on the topic later this month, GTM is rounding up the top-line developments for solar and storage in Northeastern states. The geographically gifted will notice the absence of Connecticut, Maine and Rhode Island; once they generate more storage policy and activity, they can join their neighbors on the list. Maine’s storage study, due in December, will suggest appropriate legislation and procurement targets, proving that storage advancement in the region is far from over.