The market for hybrid energy and storage

pv magazine: The hybrid and energy storage market is gaining traction globally. What projects has Sterling and Wilson carried out in emerging markets?

Deepak Thakur: The hybrid and energy storage (HES) business of Sterling and Wilson Pvt Ltd (SWPL) provides EPC [engineering, procurement and construction] solutions for hybrid power plants and energy storage worldwide. These hybridized energy and battery storage solutions can be applied across various verticals—from large, centralized fossil and renewable power plants to data centers, the commercial and industrial (C&I) segment, and remote settings such as islands. 

We have executed a solar-diesel-battery hybrid project in Nigeria under the Rural Electrification Agency’s Energizing Education Programme for three sites. The project comprises a 37 MWh battery energy storage system (BESS, one of the largest in the region), 5.7 MWp [of] solar, and [a] 4.4 MVA DG set, providing 24/7 power to universities in West Africa.  

We have recently signed a contract in [a] consortium partnership with French EPC company Vergnet and SNS Niger, to construct a solar-diesel-storage power plant in Agadez city [in the] West African country, Niger. This project comprises 18.9 MWp [of] solar, [a] 11.55 MWh/3.0 MVA battery energy storage system, [a] 6.54 MVA (2.18×3 MVA) diesel generator, and [a] 20 kV substation.

What’s the size of the global market for hybrid energy and storage? 

The future of renewable energy by all projections is optimistic. A recent report projects the global hybrid energy market, including storage, to be about $40 billion by 2025. 

Efficient and economically viable storage and optimal hybridization are crucial for ensuring the expansion of green power generation both at the grid and micro-grid scale. 

The challenge of mitigating [the] intermittency associated with wind or solar power plants has always been there and it is now even more pronounced as their proliferation grows exponentially. Hybrid power and battery storage have gained tremendous traction in recent years due to the inherent benefits of facilitating power predictability, serving 24/7 energy needs with [an] optimization of [the] fossil fuel-green energy mix—thereby reducing the carbon footprint.

How does the installation trend vary across developed and developing economies?

The combination of renewable generation and energy storage is seeing accelerated proliferation across developed and emerging economies as it provides a credible value proposition. 

Developed economies are adopting standalone stationary storage, as their intelligent grids and mature power tariff management systems facilitate the techno-commercial viability of the solution.

On the other hand, developing economies are deploying hybrid power solutions for the electrification of rural and remote locations due to their lower costs and quicker installation than building extensive transmission lines from central generating plants. 

What are the optimal combinations for remote areas? 

Both solar-plus-battery storage and solar-diesel-battery storage solutions have pertinent propositions for different applications. If there is curtailment due to grid issues, adding storage will help the solar asset schedule the dispatch according to demand and improve the overall return on capital employed. 

If there is cost arbitrage with diesel, a solar-plus-storage solution will help improve the proportion of green energy and help make the return-on-investment (ROI) on solar and storage more attractive. This scenario is most likely with islands and difficult-to-access locations where the total cost of fuel delivered to the site, and logistics challenges, are very high.

Solar-battery-diesel power plant configuration is suitable in regions where grid power is either unavailable or highly unreliable. In that case, solar compensates for daytime power and battery stores the excess solar power generated, thereby leading to a substantial reduction in diesel consumption. This combination provides the lowest cost of electricity generation to off-grid regions or regions with unreliable grid electricity.

Do hybrid power plants make a strong case for islands to reduce their diesel consumption? What are the other emerging trends?

The revenue stacks possible with energy storage are vast and varied, as per local conditions and regulatory framework[s]. Many regions around the world have started to use energy storage as a primary and secondary frequency-response mechanism. There are utilities that are planning for virtual power plants using energy storage, and then there are applications being planned to help with greening the grid and generating assets. 

The likelihood of energy storage following renewable energy (RE) deployment growth in geographies is being seen in a more pronounced manner now, and this trend will only accelerate further. With round-the-clock (RTC) RE power becoming the norm, we will see more front-of-the-meter deployment of energy storage solutions.

Globally, for off-grid hybrid projects (solar-wind-diesel/gas-battery) or any combinations of multiple generation sources, the regions showing potential are Africa, South East Asia, island nations like the Maldives and across Oceania, [and] also Western Australia. Even the Caribbean islands and locations in South America are emerging as potential areas for hybrid solutions. 

In comparison, India has a well-developed grid network. Power availability has also been reliable, relatively. The grid here is much more stable than in many of the aforementioned countries where the grid is non-existent or, if available, very unstable. 

Batteries seem to dominate as the preferred energy storage option today. How would you compare battery storage with pumped storage for utility scale PV installations? 

Pumped storage is the most convenient and most competitive source for storage. However, the challenge is building them where required, the long duration of completion, and the environmental considerations associated with building such assets. The affected population’s re-settlement and associated socio-political issues, take much time for a resolution, which involves dealing with various stakeholders at the local, state, and central levels. 

Compared to pumped hydro, battery energy storage is modular, cheap and scalable. 

As India pursues ambitious renewable energy targets, the nation has not seen large scale storage deployment. What are the costs versus the benefits?

India has done well in building renewable energy capacity, and maybe it is the only country globally ahead of its Paris commitment for green energy build-up. It’s now imperative that, as a next step, RE emerges as a baseload generation resource by ensuring that all RE installations generate power to their full capacity and dispatch to customers (discoms [power distribution companies] and private/captive consumers). 

Energy storage deployment in India is still not an attractive option as the tariffs are not competitive for a standalone integration of storage solutions into the grid. The various value stacks that create income streams for storage are still not seen in the Indian context. Until such [a] time, large scale deployments of storage will not happen. 

RTC tenders must ensure that load curves are met to supply firm power, which is possible only with the integration of energy storage. The challenge is that such combinations do not meet pricing benchmarks, which are established in the market for RE. 

Unless structural changes are brought, we will see a slower deployment of energy storage. However, it is relevant to mention that the concerned authorities have started considering various dimensions, including RTC and hybrid-solutions-based projects. 

Hopefully, soon we will see more traction and larger deployments bringing in economies of scale. 

Unfortunately, in India there is very little flexibility for the consumer and producer to get creative around modeling dispatches. The focus is more on the competitiveness of the hybrid power, vis-a-vis conventional power. 

Pure-play solar or wind power generation is [very] competitive but combining it with battery technology, which is still evolving, impacts the delivered cost of energy. The comparatively higher price of RE-plus-storage solutions impedes their wider acceptance despite the other tangible benefits such a combination brings.