The rise in renewable energy has created unprecedented challenges for the planning and operation of an electricity grid that was built on the assumption of power being provided predominantly by large, centralized generation sources and consumed as soon as it is produced. As a means of addressing these challenges, batterystorage technologies are therefore attracting great interest, and this article looks at their future role and the drivers and barriers to their greater adoption in major markets.

Abstract

The deployment of renewable energy over the last decade has created unprecedented challenges for the planning and operation of power systems. Consequently battery-storage technologies have attracted great interest, as they allow utilities and network operators to adopt a flexible and adaptable approach to managing the electricity grid, balancing supply and demand. In this article we particularly examine the potential future role that batteries might play in grid management, and explore the drivers and barriers to greater battery storage use in major markets. We also highlight how this represents new opportunities for industrial companies and investors.

Introduction

The electricity grid is in a state of flux. Low-cost renewables and the increased use of distributed energy generation represent profound challenges to the operation of a grid built on the assumption of power being provided predominantly by large, centralized generation sources, and consumed as soon as it is produced. In particular, the old model of stable baseload power being supplemented by gas and hydro for peaks in demand is giving way to a world where renewables predominate, supported by other, flexible generation assets for when the sun isn’t shining or the wind not blowing. The severe pressures on power utilities in Europe and elsewhere (and their share prices) reflects the magnitude of this transition.
To confront the challenge of maintaining a reliable and affordable electricity supply while also providing acceptable returns to shareholders, utilities and network operators must adapt their business models, technology portfolios, and approaches. In particular, they must become more agile, being both flexible and adaptive in how they develop, deploy and manage grid assets.
Energy storage is seen as one key tool for improving the flexibility and adaptability of the grid, for example, by smoothing the output from renewable sources and storing energy in times of high generation for later release, when demand is strong. When it comes to storage, battery technologies have attracted particular interest due to their scalability, efficiency and rapid response. Additionally, there are strong synergies between battery use for energy storage and in other applications such as electric vehicles and consumer devices. However, there are barriers to the implementation of battery storage, such as regulatory uncertainty, commercial arrangements, technology maturity and associated costs.
In this article we examine the potential future role that batteries might play in the management of the grid in different geographies, based on a recently published2 , multi-client ADL study. We explore the drivers and barriers to battery storage, trends in major markets, lessons for market players and potential business case for batteries for industrials and investors.