A flexible power network hinges on energy storage. But does the technology match the hype? A roundtable of industry players discusses the challenges facing the storage sector and the steps needed to overcome them

Roundtable participants:

• Bernd von der Heide –

Managing Director, Mehldau & Steinfath Umwelttechnik GmbH

• Simon Hobday –

Partner, Osborne Clarke

• Mathias Meusburger –

Head of Excitation Department, Andritz Hydro GmbH

• Fabien Roques –

Senior Vice President, Compass Lexecon

Q:

What is needed to drive energy storage to the next stage?

A:

Fabien Roques: Firstly, we need to ask what we are talking about when we discuss energy storage because there are so many technologies, with so many differences in size and in terms of characteristics of the storage assets. And second, there are, I would say, many different applications in terms of business model. We don’t know today what the winning technologies are going to be and we don’t know what the winning business models will be.

I think we need to put in place a market and regulatory framework that will remunerate flexibility in a fair way, and put in place a level playing field between different assets. This is what is really going to enable batteries and storage to find their footing in Europe’s energy market.

Simon Hobday: I agree with Fabian that there’s no magic bullet, but the states with the most breakthrough so far have been Germany and California – both supported by generous subsidies. There is not an appetite for subsidies across Europe though, and so R&D and the commercialization of energy storage is going to be key.

The ultimate goal is to make alternative generation cheaper than fossil fuels, then the industry needs to begin investing in new technologies – in R&D – to do so. This might be in energy storage, or other new forms of technology.

Mathias Meusburger: Yes, and in addition to this, we will only get security from energy storage if the right market models are put into place. A big onus will also be on investors to support projects and drive them to the next stage.

Bernd von der Heide: People also need to know what timings they’re working towards – for instance, in Germany we’re looking for renewables to account for 60 to 80 per cent of energy supplies by 2030 as a result of energy storage.

And these targets should direct the industry towards developing the best possible technologies. At the moment we’ve come a long way, but lots of storage technologies remain commercially unviable. This can’t persist if we’re to continue on the path towards increased reliance on intermittent renewable generation.

Once the regulatory environment is in place, then we need to think about funding too. We need to provide support for R&D and in developing the ecosystem that will surround the eventual buyer.

Q:

What are the implications of energy storage on the European energy market?

A:

SH: Energy storage is potentially part of the solution that could help to safeguard the future of our energy systems. It is one of the tools that can alleviate the impact of intermittent generation on Europe’s power grids.

Secondly, it is one of the ways that individuals or communities can become self-sufficient. Thirdly, it is potentially a way of balancing the system, and supporting a more efficient European power system.

But energy storage is currently very expensive, and so for us to realize these benefits, the economics need to be in the right place.

MM: If energy storage is rolled out in an intelligent way then the supply costs could be greatly reduced.

Liquid air energy storage project in the UK

Credit: Highview Enterprises

FR: Well, if energy storage becomes a genuinely mass technology, the implications are massive for the electricity industry because, for a long time, we have had a power system built around different generation technology, with different viable systems. We’ve had baseload units running a lot. Big units just running a few hours. So if we’ve got massive deployment of storage in the future, potentially there is much less of the role for distributed units. At the same time, if we’ve got a lot more renewable generation then you may well have a perfect match between storage and renewable technologies. So it could really be a game changer for the economics of different power generation technologies in the future.

BvdH: Across Europe we’ve made a decision to reduce nuclear and coal generation. But even though capacity is falling, we don’t just want to do less with it. Instead, the aim is to be more efficient with what we do generate.

The problem is that renewable sources can’t be turned on or off at will – it depends on the weather. So sometimes we’ll be producing more than we can use and at other times we’ll run a little short. The purpose of storage is to smooth these peaks and troughs out.

And storage will also help the renewable industry in the eyes of the public. By doing more with less, we can potentially limit the number of wind turbines in fields – and that’s before we consider the jobs that a growing energy storage industry could offer.

Q:

What are the biggest challenges facing energy storage?

A:

SH: The three biggest challenges are existing technology, cost and the commercial place.

MM: Investment in energy storage projects is very costly at the moment compared with conventional production costs. Another key challenge will come from public opposition. Large-scale energy infrastructure projects are often met with a lack of public support, and this means it can be very difficult to get approval to build the necessary infrastructure.

FR: I think there are technological challenges. We need to bring the cost down, we need to demonstrate that it is safe to operate, that it’s not a niche technology. There are also business model challenges because, at the moment, the value you can get for the storage is really diverse on several markets: the energy market, the flexibility market and, potentially, the capacity market. So we need business models that can put the pieces of the puzzle together to modify the value of storage. Finally, as I’ve already mentioned at length, we need the regulatory framework and the market framework to be there.

Smarter Network Storage facility

Credit: UK Power Networks

BvdH: Money makes the world go round, as they say. So I agree that finance is a key issue. We need finance to develop new technologies – and then of course to help roll them out.

But that’s not all. Safety is also key. Any energy project requires an element of safety risk management, and of course that’s without considering the unique challenges of working with hydrogen, for instance.

And of course public opinion always has an impact. If storage is to succeed, people need to support it. People need to feel comfortable with the changes storage will bring – and we need to minimize the potential for job losses to keep them on board.

Q:

What could the industry be doing to overcome the challenges facing energy storage?

A:

SH: One of the areas is how the existing industry documents work together. How do the various industry connection agreements, the distribution codes, the licences, the transmission network codes treat how batteries and storage technologies interact? Should they be treated the same way as a grid stabilization product at the call and behest of the network? Should it be viewed as a generation product? Or something else? Work will be needed to update the documents and codes to reflect what is, in effect, a different type of technology, because you would be trying to make it work in a world that was written and existed before large-scale storage was commercialized – or even conceptualized! It doesn’t mean that it can’t happen, but work needs to go into getting everything ready.

‘The sky’s the limit’ on storage

Credit: AES

MM: Yes. One thing I’d like to see is a drive towards existing facilities. For example, an automotive plant where you can use existing storage plants and building pumps to also use as storage.

FR: The industry needs to demonstrate through large-scale pilot projects that storage is not just a niche, small-scale application, but that it has a possible role at a much larger scale. Either you talk about the battery that everybody has got in their homes or in their car in the future, or you talk about very large-scale projects. I think what the industry needs to do is to progress on those fronts. We need to identify at what point you start to drive down the cost in order to demonstrate the impact of these models and to identify the industrial applications.

BvdH: I believe in technology. As long as we keep developing new technologies, we’ll be able to deal with any challenges we face along the way. By advancing technology we can continue to improve its offer and to reduce the cost. That’s how you get people on board and build momentum. Take the electric car, for example. The target is to have one million electric cars on German roads by 2020. Not long ago that would have been unthinkable!

Q:

Where do you expect the industry to be on energy storage in 10 years’ time?

A:

FR: There are three different scenarios that may occur. The first is one in which the cost of storage continues to go down very quickly and devalues with the regulatory framework, and the market framework evolves quickly to put some more money towards flexibility. In 10 years this could mean a massive change, with storage becoming a key element of our power system. But that’s a scenario in which all of the positive forces would align. In another, the value of flexibility is not really well-regulated within the market framework, and so the value chain would remain shattered and fragmented, and the cost of storage won’t play a role in continuing to increase flexibility. In such a scenario, storage would play a bigger role than today but would not be a game changer – at least within the next 10 years. And probably the reality is that it will be somewhere between the two extreme scenarios, as usual, and it will largely depend on whether the different legislations and regulations in each country are ready for storage to play a major role.

SH: Along with other changes in the industry, I would expect storage to be part of the mix. But I’m not thinking now of just batteries. It’s the wider energy storage, where it’s conversion of energy stored in one form to another, whether that’s electrical power in a battery, heat stored in a thermal capacitor or whether that’s storage heating in a home, or whether that’s a form of, let’s say, pump storage water or flywheels. There are all sorts of ways of conserving energy and using it later. It’s something that’s being explored in a wider space than just lithium-ion batteries. The time for that will be driven by data usage as well.

MM: I think there will be an increased capacity for energy storage across Europe, but for the moment I don’t see a big change. It also depends heavily on political decisions. If, in the coming years, you have big problems with supply and demand, then this could certainly be one of the solutions, but if it’s running smoothly, then I don’t see that there will be a very high need to progress in energy storage in the next 10 years.

BvdH: The future’s bright for energy storage. Ten years might be too soon but I can easily imagine it as ubiquitous by 2036. Mobile phones are a classic case in point – once a truly innovative technology starts to show its value it can really take off. The sky’s the limit.