Intersolar North America, including ees™, its new dedicated program
on energy storage, concluded this week at Moscone Center West in San
Francisco. NAATBatt, as part of its growing partnership with the
Intersolar family of international renewable energy conferences,
participated heavily in the ees program and produced two workshops, one
on storage safety, one on solar-storage policy, as part of the larger
Intersolar program.
Overall the ees™ program was interesting on a
number of levels. It is clear that the subject of storage has arrived
in the consciousness of the solar industry. The ees sessions were
packed with solar developers and integrators wanting to learn more about
storage technology. The NAATBatt booth on the trade show floor, as
well as the booths of the other NAATBatt members I spoke with, enjoyed
foot traffic beyond expectation. The keynote speech by JB Straubel of
Tesla Motors and several of the ees™ program sessions were standing room
only.
Still, I was a bit concerned by the number of projections
about the storage market that included hockey sticks. The storage
market is still small, with less than 0.1% of solar PV projects
including a storage component today (according to GTM Research). Yet
the projects of almost every prognosticator at the conference showed
expected market growth for storage and solar-storage of exponential
dimension over the next few decades. I do not necessarily disagree
with hockey stick projections about the storage market. But it would
be helpful and ultimately make the industry more credible if the
assumptions that underlie those optimistic projections were stated more
explicitly.
Energy storage is a technology that can perform a
remarkable number of important functions on the grid. But almost
without exception, storage’s ability to perform those functions is not
unique. A number of other technologies and practices can provide
back-up power, load shifting, frequency regulation, ramp support and the
like to the same extent, more or less, as can storage. Storage is in
competition with each of those other technologies in the electricity
marketplace. For storage to achieve the hockey stick projections touted
by some, it must win that competition.
Two fundamental factors
determine the competitiveness of storage. The first is the cost of
storage technology itself. The good news is that the cost of storage is
falling, in some cases rapidly. JB Straubel put it well during his
keynote address when he noted that recent declines in the performance of
lithium-ion battery cells were the result, not of great breakthroughs,
but of hundreds of small, individual improvements in the structure,
chemistry and manufacturing of cells. Those improvements are likely to
continue. But the falling price of storage, without more, is unlikely
to stimulate the explosive market growth predicted at ees™. That kind
of growth requires assistance from a second factor.
The second
factor that determines the competitiveness of storage is the cost of
electricity itself. Storage benefits from high electricity prices.
High electricity prices magnify the cost savings that can be achieved by
the kind of efficiency, load shifting and smoothing that storage
provides. It is no coincidence that the domestic U.S. markets seeing
the largest deployments of storage projects are those that have some of
the highest electricity prices.
A general rise in the cost of
electricity is an unstated assumption in many of the more aggressive
projections of the storage market presented at ees™. But rising
electricity prices are not a certainty. As Brian Warshay of Bloomberg
New Energy Finance noted in the opening session of the ees™ program,
electricity prices have remained more or less stable over the last four
decades.
But the case that we are at an inflection point in
electricity prices in the United States is a strong one. Over the next
few years it is estimated that up to 59 GW of generation capacity
provided by coal fired power plants will need to come off line. The
aging fleet of nuclear power plants is also facing growing retirement
pressure. This retiring generation capacity must be replaced, and will
be replaced, by renewables in part. But in much larger part it will be
replaced by currently low cost natural gas power plants. And in this
growing reliance on currently low cost natural gas power plants lies the
real case for the energy storage hockey stick.
There is no
shortage of estimates about what the price of natural gas will do over
the next few decades. Many of those estimates differ wildly. But a
strong case can be made that, over a two or three decade period, a
substantial rise in natural gas prices is likely, very possibly
including sudden and dramatic price spikes. As the U.S. electricity
grid moves to unprecedented reliance on natural gas as a source of
electricity generation, a rise in natural gas prices will have a
profound effect on the cost of electricity.
So the case for the
dramatic growth of energy storage on the grid is really a case against a
long term stable price for natural gas. Hockey stick projections for
the storage market fundamentally depend on the assumption that gas
prices will rise and/or that grid operators will hedge against that
possibility. That is a pretty good bet to make.
http://www.theenergycollective.com/jim-greenberger/2250618/dramatic-growth-energy-storage-depends-natural-gas-prices
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