The UK electricity system is undergoing significant and rapid change. It has the world’s largest installed capacity of offshore wind, has effectively stopped generating electricity from coal, and has recorded a 20% drop in demand since the start of the COVID-19 pandemic.

However, this transition from traditional, reliable coal to weather-dependent wind and solar generation brings with it increasing challenges to match electrical supply and demand at every instant. This is where large grid-scale energy storage systems could help regulate and buffer supply and demand, and improve grid control.

The UK government recently announced the removal of planning barriers to building energy storage projects over 50MW in England and 350MW in Wales. This, the government feels, will enable the creation of significant new energy storage capacity. The UK currently has 1GW of operational battery storage units and an additional 13.5GW of battery projects under development at the planning stage.

This intervention by the government creates a planning environment that could enable the UK to reach its target of net zero carbon emissions by 2050. This could happen with either a high proportion of large-scale, centralised renewable generation, or with more of a priority on smaller community schemes such as locally owned wind turbines and solar panels. Batteries will, in particular, contribute significantly to the grid regulation of a further 30GW of offshore wind by 2030 (to achieve the UK target of 40GW of offshore wind by that year).

But pursuing ever larger, stationary battery systems may not be the optimal solution for the UK to have a renewable energy future. Instead, the answer could lie in the country’s garages and car parks.

As the UK has moved from fossil fuel to renewable energy electricity generation, CO₂ emissions from the energy supply sector have fallen from over 40% of the UK total in 1990 to 25% in 2019. This means the transport sector is now the largest emitter, producing a third of all UK CO₂ emissions.

For electric utilities like Consolidated Edison Inc.’s subsidiary Orange and Rockland Utilities Inc., battery energy storage is a key component of providing reliable power, but challenges remain for storage technologies as they develop across the United States.

In March 2019, the utility announced it had selected Key Capture Energy LLC (KCE) to plan, design, install and operate a 3-MW battery storage project adjacent to its Ladentown substation in Pomona, New York, U.S., that would enable the utility to delay building costly new infrastructure to accommodate energy use at its peak, which occurs only a few times a year.

MD Sakib, section manager for utility of the future with Orange & Rockland (O&R), said the battery storage project stemmed from the utility’s need for additional infrastructure to provide safe and reliable power alongside rapid load growth in the area. “Rather than building a brand-new substation, by leveraging these distributed energy resource technologies, what we’re doing is we’re deferring the build of brand-new substations for about 10 years or so,” he said.

Battery storage technology like that in O&R’s Pomona project is gaining traction in the industry. Dramatic and recent decreases in pricing, advances in technology and more attention to improving resilience are all factors contributing to the exponential growth in energy storage markets. However, challenges remain for storage technology as it develops across the U.S., including not having enough in-field operational data, getting buy-in at the local level, a lack of sophisticated modeling tools, difficulty in determining the value of storage and the need for wholesale market rules to continue changing to account for the total value that energy storage provides to the grid.

The Biggest Challenge

According to the Energy Storage Association’s (ESA) website: “Energy storage is an enabling technology.”

The website explains that storage augments such resources as wind, solar, hydro, nuclear and fossil fuels as well as demand-side resources and system efficiency assets. It is flexible as it can act as a generation, transmission or distribution asset — or even combine all of these in a single asset.

Energy storage, or the use of batteries to absorb electricity from the grid when it is plentiful and discharge it when it is scarce, is ready for the big leagues.

That was the implication of a ruling on Friday from the U.S. Court of Appeals for the D.C. Circuit that has been celebrated by renewable energy enthusiasts. A three-judge panel upheld a rule by the Federal Energy Regulatory Commission (FERC) that requires energy storage and distributed energy sources to be able to fully participate in the nation’s major electricity markets, freeing them from rules by state regulators and utility companies that energy storage advocates say limited the technology’s potential revenue.

It wasn’t the only sign in recent days that energy storage is maturing as a power source. Yesterday California regulators announced they had connected to the grid a battery storage system of 62.5 megawatts — enough to power more than 10,000 homes and the largest such device in the country. And earlier today the U.K. government said it would allow battery storage projects to bypass a lengthy planning rules at the national level, easing the way for more development.

Analysts believe that the D.C. Circuit Court ruling could clear the way for the development of up to 50 gigawatts of energy storage, which would equal a third of the country’s current total wind and solar capacity. FERC’s chairman, Neil Chatterjee, hailed the ruling and said that the rule change FERC first published in February 2018 — known as Order 841 — “will be seen as the single most important act we could take to ensure a smooth transition to a new clean energy future.”

Any electrical grid that wants to run on 100% renewable energy — as many, including California’s and Germany’s, plausibly could do in the not-too-distant future — will need to have lots of energy storage on hand to ensure that wind- and solar-generated electricity is still available even when the wind isn’t blowing or the sun isn’t out.

Yet as these super-sized batteries grow stronger and cheaper, regulators around the world are struggling to craft rules to ease them onto the grid. In the US, energy storage units have long been prevented from fully accessing the lucrative wholesale electricity markets where power plants sell electricity and utility companies buy it. Many state regulators view energy storage skeptically despite continued technological advances.

Based in the United Arab Emirates (UAE), Dr Imran Syed is head of industrial power for Enerwhere, designing and implementing hybrid systems that use energy storage. Dr Syed spoke to Andy Colthorpe about some recent project case studies.

Targeting customers with commercial and industrial (C&I) off-grid systems and using battery storage to greatly increase the share of solar they can use onsite, Dr Syed also talked about what challenges lie ahead both technically and business-wise, while also taking us through some of the big picture issues behind the dynamics of deploying energy storage in the Middle East.

“We play the ‘middle game’ – we’re not in the residential space and we’re not in the large grid-connected systems in the hundreds of megawatts,” Syed says of how his Enerwhere business unit is positioned.

“Let’s say anywhere between 500kW up to about 20MW – 30MW and maybe up to 50MW. The core of what we offer is off-grid systems: we go and find systems that are running on diesel generators that are off the grid and we replace those with hybrid systems.

“Historically it’s always been solar-diesel mostly – and there’s a limitation always to how much solar you can throw [in] when there’s a diesel generator because there’s nowhere for that solar to go and because the cost of solar has always been quite competitive when compared to the cost of producing power with diesel.

“That’s getting slightly worse considering the diesel prices right now, but it’s always been in general in a country that’s not subsidised or if you have taxes on diesel then solar against it always makes sense in terms of prices.”

While throwing in as much solar as possible is a good start, without storage, the upper limit of that possibility is constrained to around 20%-30% over a year of energy consumption at an off-grid site. Storage can store any excess solar, while also helping to stabilise the system and run it properly, minimising the use of the diesel generator if not yet eliminating the diesel altogether. A couple of years ago, Syed says, after exploring the possibilities around batteries, Enerwhere “stuck our necks out and bought a Tesla Powerpack system”.

Energy storage can provide immediate, tangible savings to ratepayers, and drive significant benefits to the electricity system and the economy as we recover from the COVID-19 crisis. But action needs to be taken now to realize these benefits.

Our recently released report, Unlocking Potential: An Economic Valuation of Energy Storage in Ontario, found that the introduction of just 1,000 megawatts of energy storage in the province could lead to net savings of more than $2B over the next decade. For residential electricity customers, that translates to between $4.50 and $11.50 in savings per year. Simply put, energy storage helps the power grid operate more efficiently, and helps electricity consumers shift how they use electricity – by storing low-cost, often surplus electricity (including from renewable wind and solar resources) during off-peak times to using it during times when electricity is in high demand, more expensive, and sometimes more carbon-intensive.

However, there’s currently an inability to fully integrate energy storage within Ontario’s electricity market. In order to unlock the system-wide value of energy storage now, Energy Storage Canada recommends for the Independent Electricity System Operator (IESO) in consultation with utilities and the Ontario Energy Board, to immediately procure energy storage resources to begin to realize savings identified in the report and to develop an enduring new market mechanism for energy storage in the medium and long term.

Fully enabling energy storage would not only provide the ratepayers savings identified in the report but as well as adding to Ontario’s GDP and creating jobs to the province and helping reduce GHG emissions. The jobs contribution of energy storage is significant and unique to this resource in part because of the diversity of assets that storage represents, ranging from commercially-facing jobs across the province for behind-the-meter assets to large-scale infrastructure projects that result in long-term job growth.

But in order to realize these benefits from fully enabling energy storage action needs to be taken now otherwise Ontario risks falling behind other jurisdictions who are taking concrete steps to unlock the potential of energy storage.

The prospects for a green COVID-19 recovery are getting better with every passing day in the EU, and it seems that the UK is not about to be left behind in the dust. Last week the UK government announced one simple rule change that will speed the construction of large scale energy storage facilities for wind and solar power in England and Wales. It’s just one rule, but the difference is significant because it expands the field of battery technologies to include liquid air and other bulk systems.

If all goes according to plan, the rule change will enable the UK to build more than 100 bulk, long duration energy storage systems in short order, tripling the number currently operating in England and Wales.

High capacity and long duration are essential for the sparkling green grid of the future, and that means new technologies must be shepherded on through. Today’s lithium-ion batteries perform well enough, but they only discharge for a few hours. Meanwhile, grid planners are asking for a full day, or even multiple days, in order to introduce more wind and solar.

Long duration battery technology already exists, but speeding up construction is the key factor considering the urgent need for swift action on climate change and the need to get people back to work on the heels of the COVID-19 outbreak.

In order to get that done, the UK government is lifting restrictions on large-scale batteries of more than 50 megawatts in England and 350 megawatts in Wales.

It wasn’t actually all that simple. The planning process involved months of stakeholder meetings and input beginning last October in addition to procedures in Parliament earlier this month, which amended the Planning Act of 2008 and the Electricity Act of 1989.

The end result is that local planning authorities will get to decide on bulk energy storage projects, instead of having blanket restrictions imposed under rules for Nationally Significant Infrastructure Projects in England and Wales.

Tesla’s energy storage business picked up steam in the second quarter and even played a minor role in the company’s fourth consecutive quarter of profitability, according to earnings reported Wednesday.

Commercial and residential energy storage sales as well as solar are still mere slices of Tesla’s overall business, which is largely dominated by automotive. However, second-quarter results show some promise for energy storage, particularly Megapack, the utility-scale energy storage product that launched in 2019 and is modeled after the giant battery system it deployed in South Australia.

While Tesla does provide separate deployment stats for solar and energy storage, it combines the two when reporting revenue, making it impossible to fully measure the success of Megapack. However, Tesla made a point in its earnings statement to flag Megapack as a winner in the second quarter, and noted that it turned a profit for the first time.

“There’s a lot of demand for the product and we’re growing the production rates as fast as we can,” Drew Baglino, senior vice president of powertrain and energy engineering, said during Wednesday’s earnings call.

For the past four years or so Tesla has been asking investors to view it as an energy company instead of just an automaker. Some analysts think that the real value in Tesla’s business will be when it actually achieves some level of parity between the two sides of the shop — a goal that Musk is also shooting for.

But energy storage and solar has remained in Tesla’s automotive shadow, despite assurances that these business products will eventually be equals. For now, energy storage remains a small, but growing, fraction of Tesla’s revenue.

Global consulting firm Mercom Capital Group has released its report on funding, mergers and acquisitions within the battery storage, smart grid, and energy efficiency sector during the first half of 2020.

Total corporate funding (including venture capital funding, public market, and debt financing) for battery storage, smart grid, and energy efficiency companies in 1H 2020 was down 38% year-over-year (YoY) with $1.5 billion compared to $2.4 billion raised in 1H 2019.

Global venture capital funding (venture capital, private equity, and corporate venture capital) for battery storage, smart grid, and efficiency companies in 1H 2020 was 51% lower with $858 million compared to over $1.8 billion in 1H 2019.

In Q2 2020, VC funding for battery storage, smart grid, and efficiency companies increased with $605 million in 26 deals compared to $252 million in 16 deals in Q1 2020. Funding amounts were 61% lower YoY compared to the $1.5 billion raised in 21 deals in Q2 2019. The decrease in funding activity was primarily due to a billion-dollar deal in the Battery Storage sector in Q2 2019.

Battery storage

VC funding in battery storage companies in 1H 2020 was down by 61%, with $536 million in 14 deals compared to $1.4 billion in 17 deals in 1H 2019, according to the new Mercom Capital report.

A total of 26 VC investors participated in Battery Storage funding in 1H 2020.

Announced debt and public market financing activity in the first half of 2020 ($180 million in five deals) was 67% lower compared to the first half of 2019 when $547 million was raised in five deals.

There were five announced battery storage project funding deals in 1H 2020, bringing in a combined $26 million compared to $499 million in four deals in 1H 2019.

In 1H 2020 there were a total of eight (all undisclosed) battery storage M&A transactions compared to six transactions (one disclosed) in 1H 2019.

Technology group Wärtsilä has been awarded a contract to build a hybrid liquid petroleum gas (LPG) and light fuel oil (LFO)-fuelled power plant with an energy storage system to support grid stability in the US Virgin Islands.

The plant will deliver a total output of 36MW, while the energy storage system will add further 9MW for up to two hours.

The project, which was ordered by the US Virgin Islands Water and Power Authority (USVI WAPA), aims to improve the existing grid stability on the island and drive the energy transition towards low carbon systems.

Lawrence Kupfer, CEO of USVI WAPA, said: “The Wärtsilä plant will provide much needed additional baseload capacity to the island’s electricity supply.

“It will improve the system’s reliability, while at the same time giving us additional fuel and operational flexibility that will increase fuel efficiency and lower overall operating costs. It will also reduce the dependence and environmental impact of diesel oil.”

Tesla’s energy storage business picked up steam in the second quarter and even played a minor role in the company’s fourth consecutive quarter of profitability, according to earnings reported Wednesday.

Commercial and residential energy storage sales as well as solar are still mere slices of Tesla’s overall business, which is largely dominated by automotive. However, second-quarter results show some promise for energy storage, particularly Megapack, the utility-scale energy storage product that launched in 2019 and is modeled after the giant battery system it deployed in South Australia.

While Tesla does provide separate deployment stats for solar and energy storage, it combines the two when reporting revenue, making it impossible to fully measure the success of Megapack. However, Tesla made a point in its earnings statement to flag Megapack as a winner in the second quarter and noted that it turned a profit for the first time.

“There’s a lot of demand for the product and we’re growing the production rates as fast as we can,” Drew Baglino, senior vice president of powertrain and energy engineering, said during Wednesday’s earnings call.

For the past four years or so Tesla has been asking investors to view it as an energy company instead of just an automaker. Some analysts think that the real value in Tesla’s business will be when it actually achieves some level of parity between the two sides of the shop — a goal that Musk is also shooting for.

But energy storage and solar has remained in Tesla’s automotive shadow, despite assurances that these business products will eventually be equals. For now, energy storage remains a small, but growing, fraction of Tesla’s revenue.