Energy Storage, time to think about the implications?
Marcus Mackay – Strategic Planning Director

For an awfully long time, energy storage was considered too expensive and too technically difficult to make any real difference. However, as is often the case, technology advances, what was once novel becomes normal, and prices fall.

In this short article I want to take a first look at some of the intriguing ways in which energy storage is manifesting itself.  It is still early days, so at this stage energy storage may for some, be no more than a curiosity.  For others on the cusp of making major long term investment decisions, this new ability to store and later release energy may fundamentally change the economics of some types of energy generation.

Early adoption of energy storage can be seen in two very different areas.  Firstly, there is the seemingly larger scale implementation of energy storage facilities by those managing national grids.  I will come on to why I say “seemingly larger scale” later on.  Here in the North of England in Cumbria, work is underway to build a 10MW(Megawatt) large-scale battery storage facility to help balance supply and demand on the electricity grid.  The need to balance supply and manage peaks in demand has long been a challenge and the millisecond response times of such energy storage devices gives those managing the grid much needed flexibility. However, let’s put this into perspective, while an instant boost of 10MW is useful, it needs to be set against the circa 70GW (gigawatt) supply requirement of the UK and the new 3.6GW new nuclear power plants planned for the region.

The second emergent area for energy storage is in the home with distributed energy storage, but yet again it is still early days.  Many people are aware that Elon Musk has created his Gigafactory to create batteries for his Tesla electric cars.  What is more interesting is the sister product produced in the Gigafactory, the Powerwall™, a device designed to fit in the home and capture renewable energy from wind and solar and release it when needed.  On its own, a Powerwall has a maximum output of 5KW (Kilowatt) and a storage capacity of 7KW/h.  Useful yes, but not a replacement for a nuclear power station where typical outputs are in the two to three gigawatt range, a million times larger.  So it’s true, a single Powerwall is a seemingly small scale device, but when used on mass its potential becomes significant.  What’s more, a Tesla car is basically a Powerwall on wheels offering the technical possibility to draw energy from the car to the home when it is connected.  Medium term, the production target for the Gigafactory is to produce 50GW/h of batteries per year, which equates to approximately 3.8 million power walls each year by 2020.  Similarly, competitors including LG and Mercedes Benz are bringing their own similar small scale, but highly numerous and innovative energy storage devices to market.  This points to a broad adoption of this technology in the next 5 years.

While these energy storage examples are very different, one industrial, one domestic, both are technically complementary to traditional and renewable sources of energy. Whatever your energy source, energy storage allows you to use that energy more flexibly. However, from a commercial perspective, energy storage has the potential to be quite disruptive as it has the potential to change the economic viability of different energy generation options.

The general consensus is that with any innovation it takes 10 years for it reach maturity and for its true impact to be felt and understood.  Now the question with energy storage is where are we on that journey to maturity… year two or three perhaps? One thing is for sure, we are now at the point where adoption of energy storage technology is accelerating.  In the words of Elon Musk “this year energy storage is really gonna go ballistic”. So, if you are in the energy industry, now may be the time to take a fresh look at the precepts you hold dear and cast a very critical eye on the commercial viability of investment cases for energy generation. No doubt shadows will be cast over the commercial viability of some investment plans, but more excitingly, as with any innovation, opportunities will be there to be taken by those with a forward looking mind-set.

Menu