Energy storage |
The four kinds of ‘novel’ long
duration energy storage systems, according to the LDES Council. These are the technologies considered in the LDES
Council’s first report, just published
create flexibility in electricity supply and demand over different durations — intraday, multiday/ multiweek, and seasonal.
LDES is one of these solutions, since LDES technologies entail low marginal costs for storing electricity: they enable decoupling of the quantity of electricity stored and the speed with which it is taken in or released; they are widely deployable and scalable; and they have relatively low lead times compared to upgrading of transmission and distribution grids. As a result, there is increasing investment interest in these technologies, with more than 5 GW and 65 GWh of LDES announced or already operational. This is only a start: modelling suggests that LDES has the potential to deploy 1.5 to 2.5 TW power capacity—or 8 to 15 times the total storage capacity deployed today—globally by 2040. Likewise, it could deploy 85 to 140 TWh of energy capacity by 2040 and store up to 10 percent of all electricity consumed globally. This corresponds to a cumulative investment of USD 1.5 trillion to USD 3 trillion and to potential value creation of USD 1.3 trillion by 2040. The scale of these numbers reflects the multiple use cases for LDES technologies and the central role they can play in balancing the power system and making it more efficient. These include support for system stability, firming corporate power purchase agreements (PPAs) and optimisation of energy for industries with remote or unreliable grids. Similarly, there is a
lot of potential in using LDES in off-grid systems, which have a lower level of flexibility and currently rely heavily on fossil fuels. But by far the largest proportion of deployment is expected to be related to the central tasks of energy shifting, capacity provision, and T&D optimisation in bulk power systems.
In sum, LDES offers a lower-cost flexibility solution in many—but not all—situations. A diversified suite of solutions is likely to be deployed in order to achieve a cost-optimal decarbonisation of the grid by 2040. The prize of deploying LDES at scale, however, is great. It is estimated that by 2040, LDES deployment could result in the avoidance of 1.5 to 2.3 Gt CO2
eq per year, or around 10 to
15% of today’s power sector emissions. In the USA alone, LDES could reduce the overall cost of achieving a fully decarbonized power system by around USD 35 billion annually by 2040. Achieving this order of scale requires significant reductions in the cost of LDES technologies. But projections provided by LDES Council member companies show these are achievable and in line with learning curves experienced in other nascent energy technologies in the recent past, including solar photovoltaic and wind power. In turn, cost reductions will be dependent on advances in R&D, increased volumes, and scale efficiencies in manufacturing. Similarly, total LDES deployment is closely tied to the rate of decarbonisation of the power sector and the deployment of variable
renewable energy (RE) generation.
The modelling projects installation of 30 to 40 GW power capacity and 1 TWh energy capacity by 2025 under a fast decarbonisation scenario. A key milestone for LDES is reached when RE reaches 60 to 70% market share in bulk power systems, which countries with high climate ambitions aim to reach between 2025 and 2035. This catalyses widespread deployment of LDES as the lowest-cost flexibility solution. Before these targets are reached, however, government action will be required to help lower costs, mobilise the necessary investment and create market signals enabling investors to make an attractive return on LDES. An enabling governmental ecosystem would include the implementation of (i) long-term system planning, (ii) early compensation mechanisms that reduce uncertainty for investors while the market is still nascent, and (iii) supportive policies, regulations, and market designs.
Long-term system planning, including clear RE targets, is critical to creating investor confidence. Targeted support for early deployments and scale-up would help kick-start the market and trigger the learning curve on costs. Finally, supportive market designs such as capacity mechanisms and policies that capture the full value of LDES would enable investors to monetise their outlays. Together, these measures will ultimately help ensure that the energy transition is achieved at the lowest societal cost.
* Energy storage technologies represented by the LDES Council include: Mechanical: Energy Dome, Highview Power, Quidnet Energy. Electrochemical/chemical: Thermal: Azelio, Echogen Power Systems, Malta, Stiesdal.
Additional members include equipment manufacturers (Alfa Laval, Baker Hughes, Siemens Energy), low carbon energy system integrators & developers (BP, Greenko, NEOM), industrial customers (Rio Tinto) and capital providers (Breakthrough Energy Ventures).
28 | January/February 2022|
www.modernpowersystems.com
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