If coronavirus containment measures continue to curtail movement of goods and people through Q2 this year, alongside an economic downturn, the market impact could trim Wood Mackenzie’s 2020 global energy storage deployments forecast by 19%.

This equates to a 3 GWh reduction over the year. Notably, this would still make 2020 a record-breaking year with 12.6 GWh deployed.

Wood Mackenzie’s early estimates indicated a 10% lithium-ion battery supply reduction, mainly due to China’s work restriction measures.

Le Xu, Wood Mackenzie Senior Research Analyst, said: “As this happened in China, Japanese and South Korean facilities ramped up to capitalise on the shortfall. As of March, restrictions have been lifted and production facilities in China are now at 60% to 70% of pre-virus levels.

“As such, the major risks to battery supply have been somewhat mitigated. A similar story has panned out for inverters where major supply risks have also, so far, been alleviated. However, mitigation efforts will likely see the battery supply chain accelerate. This will have far-reaching implications, not just for energy storage but for the global economy too.”

A recession for 2020 is looking imminent and outside of installation restrictions there will be additional downward pressure on demand as consumers spend less on luxury high-cost items, such as residential energy storage.

“For large scale projects, particularly in markets where energy storage is predominantly a merchant play, financiers’ appetite for this type of asset is already being reduced. Final project investment decisions will be pushed further out to when market conditions make the risk-return-ratio for this asset class more palatable.

“On the other hand, interest rates are being slashed to record low levels. This may be a silver lining for financially borderline projects, with lower costs of capital available to help to tip them into the investable category. This will be of particular interest to merchant projects currently seeking finance that typically rely on high-cost equity capital” said Rory McCarthy, Wood Mackenzie Principal Analyst.

The global energy storage market contracted for the first time last year, falling from 6.2 GWh in 2018 to 5.3 GWh in 2019. This contraction was primarily due to market declines in South Korea, China, the UK and Canada, according to Wood Mackenzie’s analysis.

Despite slowdowns in key markets and this year’s coronavirus crisis, the industry should return to growth in 2020.

“It did not take long before cracks appeared in South Korea’s unbelievable 2018 market growth. Since breaking the market record for most storage deployed in a single year, 28 fire incidents were reported, pulling this bull market into a 70% year-over-year decline. 2019 saw over 1 GWh in annual deployment reductions – enough to put a generally slow year into the red in growth terms.

Plans to build five large-scale battery energy storage systems (BESS) across the islands of Hawaii will come up for public input via web links and community TV channels, as utility Hawaiian Electric (HECO) takes the process into the ‘virtual’ space.

A clear leader among US states for solar PV installations per capita, Hawaii has also been installing increasing amounts of energy storage in the form of batteries (and some other technologies including flywheels) in order to integrate that renewable capacity. This includes multiple megawatt-scale dispatchable solar plants, built to provide energy at much lower cost than from the imported fossil fuels on which the island state has long relied.

This time last year, six large-scale projects were approved by state regulator Hawaii Public Utilities Commission comprising 240MW of solar and 988MWh of four-hour duration battery storage that HECO said would will help to protect customers from the “volatile prices of fossil fuels”. The state also has the goal of reaching 100% renewables by 2045 as well as a 2030 interim target of 40%.

Subsequently, in August 2019, Energy-Storage.news reported main utility Hawaiian Electric’s plan to tender for 900MW of solar PV, along with grid services. The plan announced then was to select winning projects by May of this year, for them to be completed and online between 2022 and 2025. Under the request for proposal (RFP) issued by HECO, PV plants can range from 4MW to 119MW capacity.

Hawaiian Electric proposed to “self-build” five energy storage projects that go along with that renewables procurement and has decided to push ahead with the necessary community meetings to seek public input on those proposals. The islands of Maui and Hawaii will see their community meetings hosted on a local tv channel, with HECO accepting emailed public input. Plans for Oahu will be hosted via Webex.

Lithium-ion batteries offer high energy density in a small space. That makes them highly suitable for stationary electrical energy storage systems, which, in the wake of the energy transition, are being installed in more and more buildings and infrastructures. However, these positive characteristics have unique fire risks. This challenge can be addressed effectively by means of an application-specific fire protection concept for stationary lithium-ion battery energy storage systems, such as the one developed by Siemens through extensive testing. It is the first of its kind to receive VdS approval.

Each lithium-ion battery cell consists of two electrodes: a negative anode and a positive cathode. They are kept apart by a separator. Another essential component is the ion-conducting electrolyte.

However, this functional principle, while successful and generally safe, has designrelated risks. The battery cells are characterized by the presence of a large amount of chemical energy in a small space and a very small distance between the electrodes (separator layer typically ≈ 30 µm). At the same time, the electrolytes used are typically combustible or highly flammable.

For this reason, a battery management system (BMS) not only controls and monitors the state of charge at the cell and system level but also manages the temperature during charging and discharging. This ensures that the cells are kept within the operating range defined as safe.

Thermal runaway as a hazard scenario
Exceeding the safe temperature range can result in what is called “thermal runaway.” When this occurs, the energy stored in the battery is suddenly released, and within milliseconds the temperature rises to many hundred degrees. As a result, the electrolyte ignites or electrolytic gas explodes.

During a thermal runaway event, the electrolyte successively evaporates as the temperature climbs. This causes the pressure inside the cell to increase until the electrolyte vapors are released through a relief valve or a bursting cell wall. Without countermeasures, this results in an explosive gas-air mixture. All it then takes is an ignition source to cause an explosive combustion. In addition, a thermal runaway event in a battery system can spread from cell to cell, leading to a major fire.

One site, one interconnection, multiple megawatts of clean energy from solar and wind systems, smoothed out and rendered grid-friendly with the addition of a co-located energy storage system. Such is the promise of hybrid renewable energy systems, which, as outlined on the previous pages, are seemingly poised to become an exciting new frontier in the decarbonisation of the global energy system.

The current interest in hybrids is perhaps unsurprising. Wind and solar have traditionally been thought of as having limitations related to their inherent intermittence. But side by side, those negatives are largely cancelled out, and coupled with storage offer the promise of reliable, dispatchable power traditionally thought of as the preserve of fossil fuel generation.

“Wind is typically strongest at night, solar production during the day, so if you put the two of them together you have a higher capacity factor,” says Navigant senior analyst Alex Eller. “And if you add in storage, theoretically you could have round-the- clock output.”

More surprising, perhaps, than the apparent interest in hybrids is the question of why it’s taken this long for them to come to mainstream attention. Individually solar and wind have an enviable track record of rising deployment and falling costs, and the notion of putting them together to overcome their respective weaknesses is not a particularly new one.

Storage is certainly a newer kid on the block, but as we hear elsewhere in this edition of PV Tech Power, in certain markets such as the US and Canada, the large-scale solar-plus-storage nut appears well on the way to being truly cracked (‘See also ‘A developer’s eye view on North America’).

The reality, of course, is that what looks on paper like a seductively simple idea masks a number of interconnected complexities relating to cost, technology and market drivers that together make the hybridisation of the three technologies (and possibly others too) far from a simple prospect.

New York is well on its way to meeting the state’s goal of having 1,500 MW of energy storage by 2025 and 3,000 MW by the end of the decade, and the ‘value of distributed energy resources,’ or VDER, mechanism gets part of the credit, according to a report released by state utility regulators.

The state had deployed or contracted for 706 MW of storage by the end of last year, equaling about 47% of the 2025 target and 24% of the 2030 target, the New York Public Service Commission said in a report released April 2.

The New York Independent System Operator (NYISO) has about 9,780 MW of storage projects in its interconnection queue, the commission said, noting that not all projects will be built.

“Due to the technology’s declining costs and the ability to pair with solar photovoltaic (PV) and capture additional revenue streams, energy storage is increasingly being used to augment the existing pipeline of utility-connected solar PV projects being developed in the state,” the commission said in its first annual report documenting how New York is doing in reaching its storage goals.

Partly, the strong energy storage development is being spurred by the state’s VDER payment mechanism, which makes it easier to obtain project financing, the commission said.

VDER preferred by solar developers
The VDER mechanism pays distributed resources based on how they benefit the grid and reduce customer costs. The value stack is based on a utility’s avoided costs plus other benefits a distributed resource may bring like demand reduction and environmental values. The commission approved the methodology in 2017 and updated it a year ago.

VDER is the most common payment mechanism chosen by storage developers, and coupling energy storage with renewable generation allows developers to maximize their payments in many cases, according to the commission

Increasingly, developers of larger solar projects have been splitting them into smaller parts to qualify for VDER compensation, which is capped at 5 MW, instead of interconnecting to the grid at the bulk system level and receiving payments in NYISO’s wholesale markets, the commission said.

Energy storage installed costs remain relatively high, but are falling, according to the report.

In the early months of the coronavirus outbreak, the energy storage industry saw production delays in China and South Korea, but as manufacturing restarts there, social distancing and work restrictions in the United States have prompted delays of their own. And industry officials and experts warn that if those disruptions persist over the next few months, storage project deployment and climate change efforts could take a hit in the coming years.

According to internal industry polling from the U.S. Energy Storage Association, 2 in 3 major energy storage companies have experienced delays in project deployment as a result of the coronavirus pandemic. These delays range from pauses of under one month to indefinite suspensions.

The survey of 173 ESA members and nonmembers was conducted March 11-20, as social distancing measures began to take full force in the United States.

Andy Klump, chief executive officer of the China-based and North American-owned Clean Energy Associates, said present supply chain dynamics are “quite a stark contrast to where utilization stood in late January or early February, when factories were shut down post-Chinese New Year.”

“Now we see factories back up and running and fully utilized within China, but then we’re also seeing certain end markets like Germany or the U.S., which are being impacted by the spread of the virus,” Klump said.

According to Kelly Speakes-Backman, CEO of ESA, the spread of the virus has caused evolving disruptions for the industry.

At first, project delays were due to disruptions in the manufacturing of batteries and other infrastructure in China and South Korea. But now, as China revives its production facilities, Speakes-Backman said concern has “shifted to the domestic impacts of social distancing and work restrictions on the permitting, installation and commissioning of facilities here in the U.S., which has had an immediate impact on projects currently under construction or planned to commence construction soon.”

Rarely has such a crucial enterprise for the future of human civilization led to such little commercial success.

Long-duration energy storage holds great potential for a world in which wind and solar power dominate new power plant additions and gradually overtake other sources of electricity. Wind and solar only produce at certain times, so they need a complementary technology to help fill the gaps. And the lithium-ion batteries that supply 99 percent of new storage capacity today get very expensive if you try to stretch them out over many hours.

The problem is, no clear winner has emerged to play that long-duration role. Here at Greentech Media, we’ve spent years covering the contenders, which range from quixotic defiers of the laws of physics to understated, scientifically minded strivers. The makeup of this roster has fluctuated to the rhythm of bankruptcies and new investments.

Plenty of options technically “work.” The question is, do they work with an acceptable price point and development cycle, and can the businesses providing them stay afloat long enough to actually prove that? That last step has been hard for companies to fulfill, insofar as in previous years there were practically no places to actually sell this stuff.

That’s finally starting to change, thanks to two connected trends. First, wind and solar are now competing very effectively for capacity additions in the U.S. and other developed countries. The proliferation of these resources creates its own push for long-duration storage in places with high concentrations of wind and solar farms. A particularly appealing early market is in remote or island grids, where renewables-plus-storage already outcompete imported diesel fuel on price.

Second, spurred by this success, many utility companies, states and nations are upping their targets for clean energy. Once a jurisdiction officially commits to 100 percent carbon-free power, it has to start thinking in earnest about how to replace the gas plants that currently provide the flexible counterpart to renewables’ ups and downs. These policies typically give prime billing to the clean energy sources, but they just as well could be considered market-creation tools for the long-duration storage asset class.