Get creative: Mastering metrics
First published in the 1LoD Global Benchmarking Survey & Annual Report 2019
Australia has seen a recent surge in utility-scale storage development, driven by the rapidly falling costs of batteries, high wholesale gas prices and recent blackouts in South Australia. This has led many developers, governments and utilities to view battery storage, combined with wind and/or solar, as cheaper than alternative forms of generation.
A raft of state-run tenders have been launched in the past months. The state governments of Victoria and South Australia have outlined plans to build two large-scale energy storage projects, with a combined capacity of 200 MW and the state of Queensland has announced a 400 MW renewable energy auction with 100MW ring-fenced for energy storage (see further below).
Given the country’s rich solar resource, hybrid-solar photovoltaic (PV) + storage projects are a natural progression. The Lakeland Solar and Storage project, which will also be the first utility-scale grid connected battery to come online in Australia, is due to commission during June 2017 and will be an important precedent project for the market (see further below). More developments are in the pipeline with the Lyon Group, backed by Magnetar Capital, planning to build 1 GW of solar power and 500 MWh of storage in Australia by 2020.
A necessary by-product of growth is waste. Both the Commonwealth and the States are alert to the significant increase in the waste streams that will arise from battery storage facilities in 10-15 years’ time. Respondents to the recent State government storage tenders were asked to provide lengthy end-of life plans for each of the waste streams that will arise from the imported batteries and related components of the systems. And increasingly, the State approval body is requiring details of the actual proposed technology, footprint and amenity and as well as detailed hazardous materials management plans to apply during operation of the facility and for the end-of-life of the asset. The Commonwealth has also notified batteries and solar PV systems as a whole for consideration for inclusion within a product stewardship regime under the Product Stewardship Act 2011 and has procured a number of detailed studies into the most appropriate regulatory responses. Developers should therefore prepare for increased regulatory scrutiny of waste management plans.
On 9 June 2017 the expert panel chaired by Australia's chief scientist released the Finkel Report - "Independent Review of Future Security of the National Electricity Market - Blueprint for the Future". One of key recommendations is that new generators must meet energy security requirements. This may be implemented by requiring wind and solar projects to install batteries or other forms of storage. We believe that an alternative approach is to incentivise generators to contract with third party providers who offer "firming" services to intermittent generators. Battery providers and owners will also be encouraged by the report's support for the development of a gas frequency response market.
According to IHS Markit, utility-side-of-meter energy storage has doubled over the last year to 3.4 gigawatts. The majority derives from announcements of projects in Asia and Australia, demonstrating the growing importance of these regions in the energy space. The pipeline in EMEA slowed in comparison to Q4 2016 to 30 MW of growth.
The consortium, featuring Alfen and Peeks, will assess community battery systems and the economic and social practicalities. This includes examining the features of a successful community energy storage business, and developing an overall framework for implementing community storage on a wider scale.
Africa Energy Forum (AEF): Storage must happen in Africa
At a panel event hosted by the International Finance Corporation (IFC) at the AEF conference, Yasser Charafi and Soumya Banerjee, Principal Investment Officers at the IFC, highlighted the imperative of deploying storage on the African continent. Storage may improve issues of power quality, assist renewable energy integration into weaker grids, enable off grid solutions and allow Africa to build on the progress in the USA and Europe but starting from a clean slate. If you would like further insights into the AEF conference, please get in touch.
Sami Khoreibi, CEO of Enviromena, speaking on the transforming energy panel at the World Economic Forum on the Middle East and North Africa in Jordan, considers the value proposition of storage and renewables in the Middle East and Africa.
Reductions in electric vehicle subsidies have caused manufacturers to reduce their margins on lithium-ion batteries sold in China. These reductions have severely impacted electric vehicle sales. Global battery markets are unlikely to be affected however.
Lyon, backed by Magnetar Capital, is planning to construct a 330 MW solar farm and 100 MW of storage capacity in Riverland, South Australia. The USD 761.6 million deal will be equity financed, with construction due to commence in June 2017 and completion occurring at the end of 2017. This forms part of an overall plan to build 1 GW of solar power and 500 MWh of storage in Australia by 2020.
The Lakeland Solar and Storage project consisting of the installation of 10.8 MWac of solar PV incorporating a 1.4 MW / 5.3 MWh battery is due to commission during June 2017. As the first utility-scale grid connected battery to come online in Australia, the project is expected to provide valuable data to the industry regarding the value of batteries combined with PV. The knowledge will further assist utility scale PV to become more commercially competitive and will lead to a significant increase in deployment.
Mitsubishi and Eneco are producing a battery to compete with gas and coal plants on the primary reserve market in Germany. The joint-venture aims to create Europe’s largest battery plant, with 48 MW and 50 MWh of capacity near the Danish border. According to Eneco, NEC have offered a 15-year warranty period for the lithium-ion battery system.
The European Commission has provided a EUR 90 million grant for a 330 MW energy storage scheme in Larne, Northern Ireland. Once implemented the project will store excess renewable energy in the form of compressed air in geological caverns. This forms part of the EU’s wider investment of EUR 444 million in various other energy infrastructure projects in the electricity, gas and smart grid sectors under the Connecting Europe Facility.
ABB has commissioned the first urban lithium-ion based battery energy storage system in Denmark to assist with improving the predictability and utilisation of solar and wind energy, in addition to developing future energy systems. The storage system is part of the “EnergyLab Nordhavn” project implemented in the Nordhavn district of Copenhagen.
Northvolt is hoping to secure further investment in order to build a USD 4 billion battery plant capable of manufacturing 32 GWh of batteries by 2023. The company has already secured funds from Vattenfall and the Swedish government, enabling it to open a small office and recruit production experts and engineers. They will select a location shortly and will seek to raise USD 60 million to fund a small-scale pilot line in the coming months.
VLC, a joint-venture between Low Carbon and Vitol Group subsidiary VPI Immingham, are to build two energy storage plants in England. VLC has won contracts for the two plants in the National Grid’s Enhanced Frequency Response (EFR) tender and the Capacity Market Auction to supply power in 2020. VLC plans to connect to the UK electricity grid by the end of 2017 and claims it will save GBP 200 million for National Grid (across all EFR contracts) by minimising wasted energy.
Vattenfall has partnered with BMW Group to add battery storage capabilities at its largest onshore wind farm in Wales. The agreement will see the Pen y Cymoedd wind farm, which reached its full generation capacity in May 2017, equipped with up to 1,000 lithium-ion batteries each with a capacity of 33 kWh and using the same battery technology as that used within the BMW i3 car. The combined capacity of 33 MWh will be managed using a BMW-designed control system, and work is expected to commence in July.
Enel will pay approximately GBP 17 million for the purchase a 25MW / 12.5 MWh battery storage project from Element Power. In the 2016 EFR tender, the Tynemouth project was awarded a GBP 11.49/MW of EFR/h contract. Construction completion is expected in February 2018. According to Enel, the project proved attractive due to short construction times and fast routes to market.
Morgan Stanley have stated that battery storage growth remains “underappreciated” by members of the electricity market. In a recent report, they predict the storage market could expand by 70 per cent from the current total of USD 30 billion if the Federal Energy Regulatory Commission permits storage deployments in deregulated markets.
Research compiled by the US Energy Storage Data Hub suggests that 21 US states now have 20 MW of energy storage projects that are in construction, proposed or operational. With support at the state and federal level, the energy storage pipeline will continue to grow, and is predicted to surpass 1 GW of deployed front-of-meter storage in 2018.
E.ON North America will co-locate its Texas Waves energy storage projects with the company’s existing Pyron and Inadale wind farms in West Texas. Texas Waves consists of two 9.9-MW short-duration energy storage projects using lithium-ion batteries. The projects will provide ancillary services to the Electric Reliability Council of Texas (ERCOT) market. E.ON expects the projects to be online by the end of 2017.
The energy storage industry is growing quickly as battery technologies evolve and costs continue to fall. Electronic Design has identified a list of seven energy storage disruptors that are innovating and changing the storage market.
This article comprises insights from panellists Katherine Ryzhaya (chief commercial officer of Advanced Microgrid Solutions at the time of the panel discussion), Karen Butterfield (chief commercial officer of Stem) and Craig Horne (VP for energy storage at RES Americas) from the Infocast Storage Week conference in Oakland, California. The panel covered aggregated storage models, installed cost, customer arrangements and utility-scale models.
Panellists Jon Fortune (senior director of product strategy and market development at Sunverge Energy), Mike Hopkins (CEO of Ice Energy) and Ryan Wartena (co-founder of Growing Energy Labs) considered opportunities in battery installation and rooftop solar systems at the Infocast Storage Week conference.
SolarReserve has received environmental approval from the Chilean government to build the Tamarugal concentrating solar power project in the Tarapacá region of Chile. The project will have three 150 MW solar thermal towers, each with 13 hours of full load energy storage, and 5.8 GWh of total energy storage capacity. SolarReserve will bid energy and associated capacity into the upcoming international public auction for 24-hour energy supply issued annually by Chile’s power distribution companies.
Engie will install a 1MW / 4MWh grid-scale energy storage solution for a new hybrid solar and wind demonstration project in Brazil. Eos and Northern Power will be responsible for manufacturing and delivering the fully-integrated energy storage system. The system will be co-located with more than 5MW of solar and wind generation at a medium voltage substation in Tubarão, Brazil.
Azure International’s Cleantech Advisory has published a report on global energy storage markets. The report aims to give a comparative look at market attractiveness, and focuses on where energy storage makes most economic sense today and in the near future, with a particular emphasis on comparative countries, regions, policies and applications. The report focuses on the regions that are well-known for being first-movers in energy storage or clean energy: California, Japan, Germany, China specifically; and Asia, Europe, Australia and the US more broadly. The key findings are: Germany has taken the lead with subsidies; California has taken the lead with targets; Australia has great distributed solar penetration and, provided solar installations get back on track, may need energy storage in South Australia; the US and South Korea have good ancillary service markets for storage.
The importance of storage in the integration of renewable energy into electricity networks has been recognised by REN 21. The Renewables 2017 Global Status Report has, for the first time, included energy storage within the report’s chapter on enabling technologies and energy systems integration of renewable energy. The report provides an overview of the global storage market in 2016 based on contributions from Strategen Consulting and Norton Rose Fulbright.
The US Trade and Development Agency (USTDA) via the Power Africa initiative, has awarded USD 1.1 million to Nairobi-based Xago Africa for the development of a utility-scale solar-storage farm in Kenya. North Carolina-based Alevo, a battery storage technology manufacturer, will provide technology and analytics services for the project. The plant will be among the first utility-scale battery storage installations in Sub-Saharan Africa. The USTDA is also working to assist other energy projects in Africa. The group has awarded Power Africa with a grant aimed at developing 25 solar microgrids throughout Nigeria.
The University of Western Australia modelled that the growing popularity of household and business solar panels could produce 85 per cent of Perth’s electricity demand by 2050 and that, due to the growing affordability of solar panels, nearly 60 per cent of houses and 50 per cent of businesses will likely have onsite solar PV systems by 2050, and a majority of these will also have onsite battery storage. The South West Interconnected System (SWIS) will need to introduce network storage capacity and be capable of providing additional electricity quickly when solar power is not available and onsite storage is depleted.
The Australian state governments of Victoria and South Australia have outlined plans to build two large-scale energy storage projects, with a combined capacity of 200MW. The Victorian state government said it plans to invest an additional AUD 20 million to fund the construction of the 100MW grid-connected battery project. The South Australian government’s energy plan also involves construction of a government-owned 250 MW gas-fired power plant with an investment of AUD 360 million.
The Australian state of Queensland has announced a 400 MW renewable energy auction with 100 MW ring-fenced for energy storage. It is expected that the majority of the 100 MW set aside for energy storage will be paired with solar PV. Queensland witnessed almost 20 renewables projects commence construction in the previous 6 months.
The European Association for the Storage of Energy (EASE) and its Dutch counterpart, Energy Storage NL, announced that the project “TSO 2020: Electric Storage Options along TEN E and TEN T corridors for 2020” was selected for funding through the CEF. With co-ordination by the Dutch Ministry of Infrastructure and Environment, EASE – in partnership with TenneT TSO, Nederlandse Gasunie, Green Planet Real Estate, TU Delft, and Stichting Energy Valley – will assess and evaluate the key role of energy storage in the electricity transmission system by exploiting synergies between energy storage solutions and alternative transport infrastructure needs.
Analysts are expecting a modest increase in residential battery sales in France following the approval of a solar self-consumption law in February 2017. Under the new residential self-consumption rules, grid operators are obliged to support individuals and collectives with solar generation capacity of up to 100 kW. The law is expected to be expanded later this year so that homeowners can get a rebate of around EUR 800 per kW of solar panels purchased. However, with a payback period under the new regime of 20 – 25 years, uptake is expected to be modest.
UK distribution network operator, Western Power Distribution, has launched a consultation seeking views on the potential growth of energy storage on its network after receiving an ‘unprecedented’ 8GW of applications in the last 18 months. The consultation closes on 21 June 2017 and will be used to further develop storage activity throughout the Midlands, south Wales and the south west of England.
The UK government will spend GBP 246 million over the next four years on “batteries for clean and flexible energy storage” as part of a GBP 1 billion fund to support cutting-edge technologies. The investment planned for clean and flexible energy technologies is designed to help UK businesses take advantage of the opportunities created by the shift to a low carbon economy and ensure the country leads the world in the design, development and production of batteries for electric vehicles.
The German federal state of Brandenburg has announced that it is working on a pioneering new storage subsidy programme, expected to come into force in 2017. The programme is intended to support the integration of storage systems in industrial applications. The EUR 50 million programme will be funded by Brandenburg and the EU and will be open to all types of storage technologies, including R&D projects as well as more developed techniques and business models. No similar support scheme exists to date in the EU. Brandenburg is currently awaiting EU Commission approval of the scheme.
The number of utility and behind-the-meter storage projects is set to increase due to cost and technological advancements. According to US industry experts, energy storage installations are expected to reach 7,300 MWh and generate revenues of USD 3.3 billion by 2022. This article considers the storage-specific questions that funders of energy storage projects need to consider, including the regulatory challenges and the emerging incentive regimes and other available revenue streams.
Canadian Finance Minister Bill Morneau tabled the federal government’s 2017 budget in March 2017, laying out a multibillion-dollar investment in clean technology, including funds for energy storage, smart grids and electric vehicles. Long-term measures include CAD 100 million of spending on smart grids, storage and clean electricity demonstration projects.
In response to a complaint filed by Indianapolis Power in October 2016 against the Midcontinent Independent System Operator’s (MISO) Open Access Transmission, Energy and Operating Reserve Markets Tariff, FERC has found that the tariff is unjust, unreasonable, and unduly discriminatory because it unnecessarily restricts competition by preventing electric storage resources from providing all the services that they are technically capable of providing, which could lead to unjust and unreasonable rates.
The Energy Storage Association together with 52 other organisations have written a letter to Congress to argue for a place for storage in the Trump’s administration’s infrastructure priorities. The letter outlined ways in which the federal government might promote storage. Signatories to the letter included Johnson Controls, Lockheed Martin, 24m Technologies, AES Energy Storage, LG Chem, Enel Green Power North America, Green Charge, Greensmith, National Electrical Contractors Association, Panasonic, Parker Hannifin, Siemens, Stem, Sunverge and UL.
A new law passed in Maryland ensures that energy storage systems will qualify for a tax credit. The new regime will provide a 30 per cent. tax credit from the cost of new storage system installed between 2018 and 2022, with a cap at USD 5,000 for residential and USD 75,000 for commercial systems. To qualify, taxpayers must apply to the Maryland Energy Administration for a certificate.
Bolivia is taking the first steps in developing small storage energy systems to support the national grid. The 5 MW Cobija solar plant was first connected to the grid in September 2014 and has been combined with a 2.2 MW lithium-battery storage system. Under the 2014 Decree 2048 to encourage clean energy development and the Electricity for Life with Dignity programme, Bolivia intends to encourage alternative energy sources and reach 100% access to electricity by 2025.
First published in the 1LoD Global Benchmarking Survey & Annual Report 2019
Insights on global urban migration and infrastructure projects in an evolving market