The Great Storage Challenge

How do we best store solar and wind energy for those times when the sun isn’t shining or the wind isn’t blowing? This is one of the biggest challenges we face as the competitiveness of renewable power generation continues to transform energy markets around the world. The issue was neatly summed up by the International Renewable Energy Agency (IRENA), in a white paper entitled Electricity Storage and Renewables: Costs and Markets to 2030. 

IRENA’s message was that storage, coupled with renewable power plants (including solar home systems and electric vehicles), is crucial to accelerate clean energy deployment worldwide. By providing flexible, reliable and stable grid services, it will increase the value of renewables within the overall system. In the longer term, as countries strive to reduce emissions from power generation, the importance of renewable energy storage will only grow.

This need for storage technologies that ensure a stable supply of sustainable electricity, and keep the power grid in balance, was illustrated in spectacular fashion during the total solar eclipse over northern Europe on 20 March, 2015. Germany, one of Europe’s primary users of solar power, was well prepared but hit hard when its sunlight was cut off for nearly three minutes. A total solar eclipse is a rare event, but it brought home the fact that nature doesn’t perform in line with our power demands. 

Pumped-storage hydroelectric plants are still the principle means of electricity storage today, but high installation costs, long lead times and site-specific topography rule them out for many regions of the world where sustainable energy is most urgently needed. Instead, Battery Energy Storage Systems (BESS) represent the missing link between intermittent renewable power and 24/7 reliability.

The lithium-ion revolution

Battery storage is a multifaceted and fast-developing field. Electric vehicles (EVs) and electrical mobile devices have largely driven the dramatic improvement in performance of lithium-ion batteries in recent years, and their falling cost. In fact, the unitary cost of this technology has fallen 80% in the past seven years, and future reductions will probably be higher than current forecasts.

Cost reduction potential by source of lithium iron phosphate battery energy storage systems, 2016 and 2030. Source: IRENA

These benefits have been absorbed into utility-scale applications, which have the advantage of scale due to the presence of fixed costs and continue to be an important part of the overall equipment. It is expected that storage will grow in the immediate future, both in terms of number of applications (utility scale, EVs, roof-top solar panels, etc.) and in different countries worldwide, also because of the limited impact expected on the LCOE of standard renewable power plants.

Past and forecasted impact of Energy Storage on Solar plant Levelised Cost of Electricity (LCOE). Source: Bloomberg New Energy Finance, and internal evaluations on a specific sized project.

Enel Green Power has been at the forefront of these developments. As far back as 2015, we integrated battery storage into our solar facility in Catania using high-temperature battery technology. We then followed up at our wind farm in Potenza Pietragalla with a lithium-ion storage system. These pilot projects allowed significant improvements in production forecasting and have proved invaluable in plotting the future direction of BESS coupled with renewable plants. 

We then built and operated a hybrid plant combining solar and wind generation, together with a Sodium Nickel Chloride storage plant, in Chile’s Atacama desert to support 24/7 electricity supply to local communities. And since January 2017, we have been operating a solar storage system supplying renewable energy to the construction site at Cerro Pabellon, the highest geothermal plant in the world. In this latter case, the storage system is a combination of lithium battery and hydrogen storage, a solution that may be adopted further to provide 100% renewable energy supply to remote areas.  

Earlier this year, Enel Green Power signed a joint project with the wind energy company ENERTRAG and the EPC contractor Leclanché to build our first multi-MW scale storage facility in Germany at Cremzow, which will optimise wind energy dispatching and support grid stabilisation. 

Based on this accumulated experience, Enel Green Power is drawing on its worldwide presence (~ 40 GW of operating assets) and global development plan to exploit the benefits of coupling storage with our power plants, leveraging both operating synergies and innovative business models. We have already issued specific tenders for such projects in Australia, the U.S. and India, for example, while other countries are recognising the increased value these projects bring to the power system by enhancing their regulatory frameworks to allow their full participation.

Innovative business models 

Besides providing a more reliable service when coupled with renewable plants, BESS can also increase the efficiency of power generation by temporarily re-absorbing energy that exceeds demand. In the longer term, it will usher in new business models that allow end-users to take more control of how they use electricity. Some customers, for example, pay a demand charge for using power during peak times; stored energy means they can lower their peak consumption and reduce the amount they pay in demand charges. 

A growing number of customers also own electric vehicles. EVs are basically energy on wheels and the largest battery, for example, can store enough electricity to power the average American home for up to three days. As costs fall and the digital transition to smart grids accelerates, this means EV owners could fill up on energy when the sun is shining and then discharge power back into the grid during peak demand. 

In anticipation of this trend and as part of our E-mobility strategy, in 2016 Enel assisted in setting up the first commercial Vehicle-to-Grid (V2G) hub in Copenhagen that is helping to stabilise the Danish electricity grid. 

Last year we also launched a plan for a national EV charging infrastructure that will see the installation of around 7,000 charging stations in Italy by 2020 and double that figure by 2022.

As more and more customers generate their own Behind-the-Meter (BTM) renewable energy through solar home systems, access to the grid for reliability becomes more valuable than the electrons it delivers. In fact, IRENA predicts that BTM storage could become the primary-use case for over 60% of total BESS energy capacity by 2030. Enel is addressing these changing market needs with business models that could also allow customers to exchange energy between themselves. 

Global operational electricity storage power capacity by technology, mid-2017. Source: IRENA.

BESS still represent only a small fraction of utility-scale electricity storage, but that capacity is set to grow rapidly as the cost of batteries continues to fall and their performance improves yet further. An open question is whether Li-ion will dominate the market, or be overtaken by other energy storage technologies, such as flow batteries, solid state batteries or hybrid systems that combine batteries and supercaps, flywheels or hydrogen. 

What is certain is that energy storage systems are a vital tool for enabling the efficient transition to a renewables-based economy, while driving rapid decarbonisation across all segments of energy use. And Enel Green Power is ahead of the experience.