Renewable power poised for a big leap with storage technologies

Renewable energy is growing at an exponential pace with solar, wind, and other green technologies now providing more than one-third of the world’s power, representing a record. Renewable energy serves at the core for almost three-quarters of new electricity generation capacity built in 2019, yet another record, according to new data compiled by the International Renewable Energy Agency (IRENA).

Traditional sources of power depend on fossil fuel supply that entails managing the vagaries of commodity price variations and cumbersome logistics, which, in turn, leads to an increase in carbon footprint. 

Historically, the cost has been a barrier to the deployment of renewable energy. However, drastic improvements in wind and PV over the last several years have seen the economic viability of renewable energy generation bettering coal, oil, or gas-fired power generation globally. As the technology improvements continue, this advantage will only get enhanced. 

While the growth of renewable energy heralds an optimistic future, the challenge of efficient storage of electrical energy is the single biggest obstacle in producing green power on an industrial scale. Affordable storage – the missing link between intermittent renewable power and 24/7 reliability – provides a meaningful solution to this challenge. 

The integration of renewable generation and energy storage offers a solution to diversify and strengthen the energy portfolio cost-effectively. The rapid growth of utility-scale PV deployment, along with the declining costs of energy storage technologies, has helped the efficacy of energy storage to provide dispatchable energy and reliable capacity. 

Solar + storage: The winning combination 

In 2019, renewable generation capacity increased by 176 GW globally with solar energy comprising a significant chunk of the new green power. Solar energy continued to lead the capacity expansion, with an increase of 98 GW followed by wind energy at 59 GW. In tandem with the mushrooming of utility-scale storage projects around the world, the share of customers opting for storage systems along with solar—referred to as the ‘attachment rate’— has also witnessed a commensurate upward trend.

The most significant factor, which has played a catalytic role, is the cost reduction of lithium-ion batteries (the most common type of storage). According to the ninth Battery Price Survey published by Bloomberg New Energy Finance in December 2018, the volume-weighted average battery pack price fell 85% from 2010-18, reaching an average of $176/kWh.

Solar plus storage is a symbiotic relationship with the potential to create business opportunities for each other. The long-term success of the solar industry and its ability to scale beyond about 20% of total power generation hinges on the cost-effective integration of storage. 

The solar storage system can act as a captive source for energy needs. It provides customers with resilience to withstand utility outages, and its increased deployment can reduce grid management concerns, such as the so-called ‘duck curve,’ which, in turn, can create additional opportunities for solar deployment. 

Energy storage offers an avenue for power generators to de-risk cost valuation and enables them to leverage the available power at an opportune time. This can vary from different timescales, from intra-day to inter-seasonal. Storage can also relieve congestion on transmission networks, especially in areas with high levels of renewable generation. 

Advantages galore 

Increased penetration of decentralized energy generation and storage reduces the need for new centralized generation capacities to be built. As a result, it maximizes the value of renewable energy and boosts its ability to compete for subsidy-free with fossil fuel generation. 

Decentralized generation and storage offer a viable alternative to meet the peak demand and manage the risks associated with the construction of large-scale energy assets. 

Energy storage can smoothen electricity prices through arbitrage, help manage evening energy ramps, mitigate the risk of curtailment, provide black start capability, backup power, and more. 

However, the biggest advantage is that storage offers viable means to prevent interruptions to a property’s power supply due to power cuts. This is particularly important for entities wherein the cost of disruption in the power supply is high, for example, data centers and hospitals. At present, the Covid-19 pandemic has triggered a surge in global internet traffic that has, in turn, accelerated the demand for data center services.

In the event of power network stability getting compromised, it can create operational challenges. Organizations can protect themselves against supply failures by using stored surplus power from on-site generation. Thus, becoming self-sufficient besides, of course, leveraging the advantage of the commercial viability of this power per se.  

An upward trend 

While the solar and storage pairing is still relatively new, the growth over the next five years will be significant globally. As against just 5% in 2019, by 2025 more than 25% of all behind-the-meter solar systems will be paired with storage.

The role played by utility-scale battery storage, and favourable regulatory norms can’t be understated in increasing the spread of renewable energy. Utility-scale battery storage will facilitate the next stage of the energy transition. Similarly, India’s resolve to reduce carbon footprint by nearly 33% by 2030 and achieve 175 GW renewables capacity by 2022 will help build a new energy security architecture in the country.