South Africa’s potential as a market for energy storage could be set to improve following a change in leadership last month.

The appointment of a new president, Cyril Ramaphosa, looks likely to unblock a stalled renewable energy programme and woo back foreign investment scared off by irregularities in the previous administration.

Ramaphosa this week reinstated Nhlanhla Nene, a highly regarded finance minister ousted in 2015 by former head of state Jacob Zuma.

The new leader, who took control of the country after Zuma succumbed to pressure to resign over corruption allegations, named another former finance minister, Pravin Gordhan, to run the Ministry of Public Enterprises.

The Ministry is key to the energy sector because it is in charge of signing off power-purchase agreements between the state electricity company Eskom and plants developed under the nation’s renewables procurement programme. 

South Africa’s renewable energy programme

Developers selected under recent rounds of South Africa’s Renewable Energy Independent Power Producers Procurement Program (REIPPPP) had been trapped in a hiatus caused by a scandal involving Zuma and Eskom.

Zuma’s government had dragged its feet over signing the agreements while Zuma handed Eskom coal supply contracts to a family business tied up in the corruption allegations.

When Eskom came clean over faltering finances this year, Gordhan’s predecessor hastily approved outstanding REIPPPP power-purchase agreements in the days before Zuma was forced to resign.

Assuming Eskom can now limp back to financial health, which observers say is only a matter of time, the outlook for renewables in South Africa is once again bright.

One of the consequences of Eskom’s financial ill-health is that it has abandoned plans to build new nuclear plants, leaving renewables as one of the most viable options to increase generation capacity in future. 

Since the success of its giant Powerpack system in Australia, Tesla has been rolling out several other massive energy storage projects in the country despite some high-profile critics at the federal level and now within the new South Australian government who think the initiative is overvalued.

Nonetheless, the Australian Energy Market Operator praised the performance of the system in a new report this month.

Tesla’s 100MW/129MWh Powerpack project in South Australia, the largest in the world for now, has been demonstrating its capacity since going into operation in December.

When an issue happens or maintenance is required on the power grid in Australia, the Energy Market Operator calls for FCAS (frequency control and ancillary services) which consists of large and costly gas generators and steam turbines kicking in to compensate for the loss of power.

Electricity rates can be seen reaching $14,000 per MW during those FCAS periods.

Tesla’s battery system can provide the same service cheaper, quicker, and with zero-emissions, through its battery system.

It is so efficient that it reportedly should have made around $1 million in just a few days in January, but Tesla complained last month that they are not being paid correctly because the system doesn’t account for how fast Tesla’s Powerpacks start discharging their power into the grid.

The system is basically a victim of its own efficiency, which the Australian Energy Market Operator confirmed is much more rapid, accurate and valuable than a conventional steam turbine (left) in a new report:

The (possible) solutions

An alliance announced in March could result in one of the most complete blockchain-based energy trading pilots to date — by adding batteries into the mix.

Sonnen’s decision to join the NEMoGrid project in Europe is thought to be the first instance of a battery vendor taking part in a blockchain energy trading experiment.

The project will look at the economic and technical impact of electricity trading between households within a region, said Sonnen in a press release.

According to the NEMoGrid website, the project will evaluate three business models: centralized utility management, decentralized voltage and power-based tariffs, and a peer-to-peer market using the Ethereum blockchain for transaction recording.

One of NEMoGrid’s aims is to investigate the interaction between electricity tariffs and peer-to-peer trading, as well as the impact of trades on the stability of local distribution grids.

“The goal of energy supply must be to generate as much clean energy as possible right where it is being consumed,” said Jean-Baptiste Cornefert, managing director of sonnen eServices, in press materials.

“If households can sell their own power to their neighbors, this influences local electricity prices and the power grid. Ideally, people would trade in energy and at the same time stabilize the local grids, thus avoiding expensive grid interventions whenever possible.”

Battery storage is seen as being a key ingredient in helping to maintain this grid stability and pricing flexibility, soaking up excesses during periods of high energy production and returning it to the grid when demand outstrips supply.

Blockchain technology, meanwhile, will give residential participants and distribution grid operators a single, distributed ledger of all energy transactions, while reducing the cost of trading.

Germany’s energy storage sector now employs more than half the number of people as the country’s lignite industry, according to figures released last month.

An annual report by the German Energy Storage Association (Bundesverband Energiespeicher or BVES), compiled in association with Berlin-based energy sector consultancy Team Consult, found the energy storage industry employed around 11,130 workers in 2017.

This is set to rise 9 percent to around 12,140 in 2018. Meanwhile figures from Euracoal, the European Association for Coal and Lignite, show Germany’s lignite industry had around 20,740 direct and indirect workers in 2015.

The BVES data shows employment in Germany’s residential battery market has grown 131 percent since 2015. The segment is expected to employ 1,800 professionals this year.

More people are employed by industrial and utility-scale battery companies, although growth in this segment has been more modest, rising from 2,250 in 2015 to an expected 3,200 this year.

The report also showed the Germany energy storage industry made €4.6 billion ($5.6 billion) in sales in 2017.

That is expected to grow to around €5.1 billion ($6.2 billion) this year, of which around €3.3 billion ($4 billion) is to come from what the BVES terms “new storage technologies” and their applications.

These technologies cover just about everything other than pumped hydro, including batteries, power-to-gas and thermal energy storage. Their contribution to Germany’s energy storage sector revenues has increased almost 74 percent since 2015.

Over the same period, the pumped hydro sector has declined slightly in revenues, from €2 billion ($2.5 billion) in 2015 to an expected €1.8 billion ($2.2 billion) this year. Most of the growth in new technologies is attributable to rapid expansion in the battery market.

The big driver financially was battery sales to utilities and commercial and industrial (C&I) customers. These were worth €1.12 billion ($1.37 billion) in 2017 and are set to grow more than 22 percent to €1.37 billion ($1.68 billion) this year.

Spectacular falls in the cost of wind, solar and battery technology mean that clean energy is increasingly pushing coal and gas out of the world’s electricity generation mix in a “chilling” development for the future of fossil fuel power generation.

Research group Bloomberg New Energy Finance (BNEF) has released its latest report on the levelized cost of electricity (LCOE) and it suggests that President Donald Trump’s attempts to revive the U.S. coal industry is doomed to failure. That’s because the price of battery storage has tumbled by 79% since 2010, from $1,000/kWh to $209/kWh while both wind and solar power have fallen by 18% in just a year.

BNEF says that fossil fuel power, which is responsible for the bulk of the world’s greenhouse gas (GHG) emissions, which cause climate change, “is facing an unprecedented challenge in all three roles it performs in the energy mix – the supply of ‘bulk generation,’ the supply of ‘dispatchable generation,’ and the provision of ‘flexibility.’”

Wind and solar PV costs have continued to fall over the last year thanks to falling capital costs, higher efficiency and the spread of competitive tenders for clean power around the world, increasing their viability in bulk generation.

Dispatchable power is the ability to respond to requests from the power network to increase or decrease generation and here, it is the pairing of battery storage with wind and solar to enable these intermittent sources of generation to tackle fluctuations in demand by smoothing output or diverting power into batteries to be used at a later date.

Flexibility is the ability to respond to supply shortages and surpluses over a period of hours, and here batteries on their own are now increasingly competitive not just with open-cycle gas plants but also other options such as pumped hydro.

Elena Giannakopoulou, head of energy economics at BNEF, said: “Our team has looked closely at the impact of the 79% decrease seen in lithium-ion battery costs since 2010 on the economics of this storage technology in different parts of the electricity system. The conclusions are chilling for the fossil fuel sector.