Much of the discussion regarding renewables and energy storage takes place from the perspective of advanced economies that have strong, well developed, and highly reliable grid infrastructure providing power as needed.
What is missed often in these discussions is that while energy storage has an increasingly important role to play in the “strong grid” regions, it has a highly critical, almost essential, role to play in vast regions of the world that are more typically associated with high cost energy, such as islands, weak and/or intermittent grids (which exist on at least three continents), or even no grid at all, which applies to approximately 20% of the global population that is believed to have no access to electric power. From an energy sector perspective, these regions are often referred to as emerging markets.
Most of the early traction and deployment of energy storage has been driven by strong grid markets, primarily in applications characterised generally by short duration, including frequency regulation and demand charge management or low activity (resiliency) applications. Lithium ion technology, with a solid manufacturing base and volume experience gained from the transportation and consumer electronics industries, has been able to satisfy the needs of these applications with 30-minute to two-hour durations and <3-5K cycles in real field conditions, although major concerns regarding safety risks and short life requiring expensive replacements persist.
The needs of the emerging markets are quite different and perhaps even basic: that is, access to reliable, low cost, clean power. In the next 20 years, worldwide electricity demand is expected to increase by 60% (according to the International Energy Agency) - with over 80% of the incremental growth coming from just the Latin America, Africa, Middle East and “Chindia” areas. Fortunately, most of these markets are blessed with a source of almost unlimited energy in the form of solar radiance. To exploit this resource, one requires a low-cost energy storage solution that is long lasting, resilient across wide temperature swings, easy to maintain, and safe. Also, it quickly becomes evident that the economics of the solar PV plus storage micro-grid solutions get better with longer duration (four hours or more) energy storage systems that can cycle multiple times daily without degrading in capacity or performance.
Micro-grids in emerging markets
Newer storage technologies such as flow batteries, which admittedly have taken longer to develop and gain traction, are designed specifically for stationary power and are well positioned to meet the key requirements of the emerging markets. Some flow battery technologies - with attributes such as long life (10-30 years), high cycle count (10-100K), wide temperature tolerance and non-explosive/non-flammable chemistries - have successfully reached commercialisation stage, are being deployed in volume and have now reached cost points that enable solar PV-plus-storage micro grids to deliver energy at lower cost than diesel generators, when compared in terms of lifecycle levelised cost of energy (LCOE). The storage-centric micro grids also avoid highly problematic issues associated with reliance on diesel gensets, such as disruptions in fuel transportation, fuel theft, carbon pollution, equipment breakdown and high maintenance cost.
At the same time, innovative business/finance models are being developed to support micro-grid development in the emerging markets by addressing the low purchase power issue often encountered in these areas. In particular, international development agencies (ExIm Bank, OPIC, World Bank, EU, etc.) are devoting more capital to offset the upfront cost of energy technologies or support private capital by offering guarantees to mitigate technology adoption risks.
One innovation in financing leverages the nexus between wireless communications and energy sectors to solve the financing puzzle. Mobile phones have become cheap and affordable for the masses, leading to growing demand for wireless services. This in turn is driving telecom operators to install cell towers rapidly, even in remote areas, to reach as many people as possible. But the towers need a reliable source of power; that need creates a motivation for tower operators to serve as creditworthy, anchor off-takers for long-term power contracts, enabling financing of the power equipment. Increasingly, tower operators are opting for renewable power, that is, solar-plus-storage micro=-grids), instead of diesel gensets.
Once established, these micro-grids, besides supplying power to the towers, can provide incremental energy to a local community, resulting in spontaneous growth in the local ecosystem of services and revenues, a self-propagating, virtuous circle – achieved without waiting decades for the slow and expensive build-out of the distribution grid to reach the remote areas.
The convergence of these trends involving the declining cost of solar panels, commercialisation of energy storage technologies such as flow batteries and the availability of financing mechanisms is leading to a tipping point. A recent Bloomberg report indicates that the rate of renewables adoption in the emerging economies is nearly twice that of industrialised economies. To address the massive energy needs in the areas with high cost, weak grids or no grids at all, the potential for rapidly deploying solar-plus-storage micro-grids with continued technology improvements and cost decline is so vast that it defies estimation.
It would be a mistake to think that the applicability of long duration flow batteries is limited to the emerging markets. Even in strong grid regions, many situations such as high renewables penetration driven by carbon reduction policies such as Hawaii and Australia, peak capacity support or load reduction, such as California or New York, or long-term energy security (including military applications and storm-prone regions) are driving the deployment of long duration, durable and safe flow batteries that can withstand high cycle counts over the life of the project while avoiding the need for multiple battery replacements. Storage deployment in such applications should grow strongly in time as storage costs continue to fall.
Imergy has successfully demonstrated commercial use of its proprietary non-degradable vanadium-redox flow batteries in several micro-grid applications: remote telecom, rural electrification and military bases. Over three years of operational history with cycle count exceeding 11K in harsh outdoor environments (desert, Alps) - temperatures exceeding 50C or dropping below -10C - has been achieved. Imergy is currently in the midst of deploying storage projects for campus demand charge management, load reduction via DC grid efficiency, solar self-consumption for a data center, and utility-scale firm capacity.
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