In this second part of the Editor’s Blog, PV Tech Storage discusses more observations from the Energy Storage Europe conference and exhibition in Düsseldorf last week, from conference sessions and conversations with experts and industry figures.
The unnecessary drama of the utility death spiral
Much has been made of the disruptive threat to utility revenues posed by energy storage in combination with renewables. The term “utility death spiral” has been coined to signify that the old order’s days could in theory be numbered by energy storage resources that can simultaneously act as generation, load management and dispatch. However, from conversations at Energy Storage Europe with a number of large-scale energy storage developers and experts, this is considered a dramatic oversimplification of reality.
Many storage companies, including those from a solar background, see themselves in cooperation with utilities and transmission network operators rather than direct competition. Much storage activity in the US is coming from utilities themselves. Chris Edgette, senior director of the California Energy Storage Alliance (CESA), told PV Tech in Düsseldorf that US utilities are starting to realise storage could be friend rather than foe.
“Some of the folks in the utilities were actually surprised, surprised the prices were so reasonable, at how much value there was and so now we’re seeing that utilities outside of California are taking a serious look at [storage] and finding out that it’s cost-effective in their area as well,” said Edgette.
Additionally, Edgette said, grid networks in the US are generally less robust than the German electrical grid, meaning grid protection and infrastructure investment deferral takes on a more important role than it does in Europe, for the most part.
Elsewhere, utility-scale electricity storage technologies are being deployed in pilot schemes by governments looking ahead to longer term, higher levels of renewable energy penetration. Alternatively, in instances where governments are yet to take a significant interest, network operators could pick up the slack. Belectric’s Tim Mueller, head of research and development for the company, said that the UK’s National Grid could not have been more helpful and receptive to ideas as Belectric prepares a large-scale storage project in Britain.
Other examples include specific cases where large-scale storage facilities are already economical to develop. Belectric recently inaugurated a large-scale storage system at a solar farm in Germany competing in the weekly auction for primary control reserve. Another example discussed in Düsseldorf was a project currently being developed in Chile by Valhalla Energy. The company proposes to build a 600MW PV plant combined with pumped hydro storage. Depending on time of use and market conditions, applications of the project will vary. The solar power could be used to replenish the pumped hydro, desalinate water or be sent to the grid, for example. Despite the ambitious scale of the project, electricity prices, high solar irradiance and the topography of Chile have apparently made this a more feasible proposal than many.
One storage industry insider said he thought utilities in Germany were already frightened by the threat of renewables-plus-storage. Image: E.On.
At residential and commercial scale, Logan Goldie-Scot, analyst with Bloomberg New Energy Finance (BNEF), thinks there could be some kind of financial settlement between stakeholders for fair use of the grid. In solar, there have long been disagreements on whether customers with rooftop solar pay fairly for using the network. In Germany some of these arguments have been resolved by levying a surcharge onto solar PV system owners and putting limitations on the amount of electricity that can be fed into the grid.
At a panel discussion on finance, Benjamin Schott, business development director for German storage maker Sonnenbatterie said there are “many stakeholders with different interests” involved. Schott said pragmatically that the EEG, the surcharge on self-consumed PV systems in Germany, is “ridiculous” but his company has no choice but to deal with it.
Having said all that, there is no doubt tension exists. One storage industry insider said off the record that German utilities like E.On and RWE are running scared from renewables and storage and making hasty moves into clean energy in a “fight for their lives”. Vested political and economic interests will also no doubt play their ugly part, as Eicke Weber, director of the Fraunhofer Institute for Solar Energy and founder and president of Germany’s energy storage association BVES, argued.
“The problem in Germany of course is you are entering the interest of the old stakeholders. They have really billions and billions to lose therefore they start to fight on different fronts. They don’t dare to go out openly and say ‘this is all nonsense’ but they make sure there are regulatory issues, legal issues, fine print- which suddenly makes certain solutions not possible.”
Resistance is futile and reconciliation preferable
So the world is finding that energy storage at residential scale can make sense, given the right market conditions. At larger scale, assuming the governments of the world make good on their promises – not something we can take for granted – and keep adding clean energy, storage will play an important role, but again conditions have to be made right.
Calls for changes to market mechanisms, allowing storage providers to be rewarded for services they could provide were heard loud and clear in Düsseldorf. One prominent example is the service area of US utility company PJM, where the ability of fast-responding storage resources are rewarded for providing frequency regulation services.
Reconfigured markets could combine a range of uses, from frequency response to solar load shifting and peak shaving. While this could provide better returns for investing in storage, it could also be a vital bargaining chip in encouraging governments and regulators to view storage as beneficial – with no subsidies in sight.
In the long term, this could even knock on into the residential sectors and provide a powerful driver, as Chris Edgette of CESA explains.
“What we’re trying to enable in California is that distributed systems can be aggregated together and sold as a large generating unit. Either in utility procurement or to the wholesale markets, and that is really the big shift, essentially many units acting in concert and they can provide services to the market either at the distribution level or the system level,” Edgette says.
“So they’re operating together for the benefit of the grid, then they can also provide things like battery backup to the customer. I really like that system and I know we will see significant progress on that. I think that’s where the whole electric power system is going to go.”
Edgette says that the capital cost of deploying a number of smaller systems and combining them would be much lower than building up the equivalent storage capacity and duration in a smaller number of large-scale systems.
While electricity storage can contribute to the environment and the economy and we must bear in mind that there are different stakeholders involved, the clock will not stop on climate change. Perhaps beginning with the most immediately achievable, measures to speed up the introduction of electricity storage as one of a range of methods to transition to cleaner energy systems can be prioritised without rocking the boat on the incumbent, centralised system model until it capsizes.
While conversations take place between competing interests of stakeholders, the clock keeps ticking on climate change. Image: wikimedia user: Phil Capper.
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