In our previous article, we covered how technology costs aren’t yet low enough for energy storage to be economically viable as standalone projects, and some of the innovative ways developers are using to overcome these limitations. Here we’ll flesh out one of the more attractive – yet elusive – options: revenue stacking.

Mentions of revenue stacking frequently crop up in energy storage publications and in our own interviews, but why does it appeal so much? It’s simple. When making a business case for a new project and examining all the potential sources of revenue one could think “Why not offer many of these services, increase our revenue and diversify our income stream?”

If this sounds simplistic and too good to be true to you, you’re absolutely correct.

Most obviously, some revenue streams are not suitable for stacking, with different and even opposing technical requirements for optimum operation – frequency response and arbitrage, for example. Even for applications where operational requirements are more closely aligned, there’s a real risk of being forced into a solution that is average for every application rather than great for one.

Another challenge is that regulation still lags behind energy storage advancements. Existing revenue streams are subject to complex regulatory policies, which again, can inhibit or oppose one another. The restrictions in most countries, such as the UK, as to who can own and operate energy storage assets make co-ordinating grid-level applications difficult.

While there is no question that current regulations are outdated for today’s energy storage landscape, it is equally true that regulation changes can be introduced rapidly – for example, last week’s announced change in Capacity Market de-rating factors. The future is inherently uncertain, characterised by rapidly falling technology costs, saturated markets, planned regulatory changes and changing contract lengths. Accurate forecasting is a risky business for one revenue stream, let alone three, or six.

So does this mean that the benefits of revenue stacking should be discounted? We think not, and we can look to successful examples to see who is making it work, and how:

Don’t take on too much: There are far more successful examples focusing on two or three complimentary revenue streams than four/five. Fewer variables mean more accurate forecasting and better optimisation. An example of this strategy include solar plus storage “virtual power plants”, which receive income from direct energy consumers as well as for grid ancillary services.

Click Here to Read Full Article

2017 has been a big year for energy storage projects — Aliso Canyon, California’s six month rapid-fire deployment of 100 MW of storage in response to gas leaks, Tesla’s record breaking big battery bet in South Australia. Utilities across the globe are commissioning more and larger energy storage installations, from backup power supplies in island locations like Nantucket to E.ON’s most recent large project in Texas.

These big projects have been making big waves — but big profits are proving trickier. UK battery energy storage investors Foresight calculate that battery storage costs need to fall a further 30% to be truly competitive. Forging ahead, energy storage developers have had to seek other ways to make their projects economically viable.

The Rocky Mountain Institute in their 2015 white paper “The Economics of Battery Energy Storage” identify 13 value drivers in the sector — but the fast-paced nature of new developments and rapidly falling costs of technology mean the figures are already out of date. So how are developers making bankable projects in practice?

Solar developers SunRun in California have been seeing both profit and growth, using energy storage to add value to their rooftop solar systems. Anesco’s Clay Hill development in the UK, the first to forgo subsidies, also credits its success to energy storage. Leasing solar-plus-storage systems allows for both an ongoing income stream from consumer contracts and grid-balancing opportunities — Germany (SonnenFlat), Australia (GridCredits) and the UK (GridShare) are seeing promising early results.

Adding energy storage to existing generation sites (such as with Tesla’s South Australia installation) is another way to reduce overall costs. By taking advantage of existing transmission and distribution infrastructure, initial capital expenditure is reduced and revenue generating activities can start on an accelerated timeline.

Utilities are finding that the cost of energy storage is measured as much in what you don’t spend as what you do. Energy storage can be used to defer or avoid upgrading electrical transmission and distribution equipment (T&D deferral), as in the aforementioned Nantucket example. This value proposition is especially interesting for remote sites or emerging markets where reliable grid connections are not or cannot be established.

Click Here to Read Full Article

Although electrical energy storage is considered the missing link between majority-renewable grids and consistent, sustainable power, the sector is being held back by a lack of standardisation. Clear, wide-ranging standards, in addition to a regulatory environment that recognises the significance of energy storage, are sorely needed.

Creating and following technical standards improves enterprise resource use — no reinventing the wheel —, facilitates penetration of new technologies across regional, national and international markets, and allows faster and more effective integration into existing systems. So what would effective standards look like for the energy storage sector?

Both governments and the private sector have identified several areas where further standardisation is essential. First, to ensure that energy storage terms are referred to using a common language; while several standards committees are working on the issue, as it stands vendors and consumers in separate — and sometimes, even the same — markets can find themselves comparing apples to oranges.

In addition to a common language for system definitions, common standards are needed for energy storage metrics — efficiency, capacity, power ratings, system inefficiencies — and testing methods. Standard testing methods must be outlined not only for proving component functionality but for system functionality at the point of connection to the grid.

Another issue is that current standards can be both too specific and not specific enough. In the first case, initial standards regarding energy storage were too highly focused on the particular technology — with new batterychemistries being developed every year, this way of issuing standards slows the adoption of new innovations. In the second case, vendors looking to develop their own hardware and systems lack incentive to make their proprietary products play nicely with others.

Private and public sector initiatives are taking place to expand and clarify energy storage standards, both regionally and internationally. Potentially the most impactful of these will come from IEC TC 120 (International Electrotechnical Commission – Technical Committee), expected to publish its new standards at the end of 2017. IEC TC 120 has focused on taking a technology-agnostic, systems based approach.

The brains behind MESA (Modular Energy Storage Architecture), in comparison, are working to develop standards at the component level. Fragmented markets with multiple competing suppliers find that multi-vendor systems are plagued with integration problems.

Click Here to Read Full Article

The energy storage market is growing exponentially, however, as a percentage of total grid capacity it still only makes up a tiny fraction of the whole. Even among energy storage applications, pumped hydropower still retains a 95% market share. The major factor inhibiting further uptake — cost.

One factor emerging as a clear driver of cost reductions is economy of scale. As demand for energy storageincreases, mass production becomes feasible. Take Tesla’s Gigafactories: with a planned annual battery production capacity of 35 GWh — close to the current level of battery production of the entire world.

Tesla’s ambitious factory plans may be getting the most press, but they’re far from the only game in town. Accumotive (Germany), Energy Absolute (Thailand) and a consortium including Boston Energy and Innovation (BEI), Charge CCCV, C&D Assembly, Primet Precision Materials and Magnis Resources (USA) all have large-scale manufacturing plants in the pipeline.

These new large factories will allow energy storage to benefit from spreading the hefty upfront costs over the number of units produced. Tesla also expects that implementing innovative manufacturing processes will further drive cost reduction.

Lithium-ion based technologies account for close to 95% of new deployments of energy storage. They will undoubtedly see the most reductions in cost in the near future, however, production growth will still have to contend with the scarce quantities and precarious supply chains of the required raw materials.

The supply chain concerns for lithium-ion batteries is a main driver of research into new battery technologies — cost reduction is another. While redox flow batteries are not a new technology, this area of energy storage is seeing continuous development of new battery chemistries.

Some of these chemistries are already being tested and manufactured commercially, while others are only just being proven in university laboratories. In almost every case, the focus is on making effective batteries with common, cost-effective and safe raw materials.

Click Here to Read Full Article

As an increasingly high proportion of energy grids are fed by renewable energy, developing storage solutions that can deal with intermittency in sustainably, safely and cost-effectively is key.

Lithium-ion batteries are still the frontrunner technology for large-scale energy storage, and their benefits are clear — high energy densities, relatively low maintenance and a rapidly dropping cost per kWh. But their drawbacks of limited lifespans, explosive failure modes and potentially precarious chains of component supply are equally well publicized.

What battery technologies and chemistries are making waves for stationary storage applications?

All-Iron Flow Batteries (RFB)
Redox Flow Batteries (RFBs) are hardly a new technology, but have received renewed interest in the past few years as grid energy storage solutions. Benefits include long lifespans, theoretically limitless scalability and long discharge times, however, they have been held back by their drawbacks including low energy densities, expensive component costs and in some cases toxic or dangerous electrolyte materials.

Energy Storage Solutions (ESS) have been working on developing and proving the commercial case for their all-iron flow battery which aims to solve several of these issues. In contrast to Vanadium flow batteries, the electrolyte materials are selected for their abundance, safety and low-cost — salt, iron and water. The battery can be transported “dry” and hydrated on site, also lowering logistics costs and improving mobility.

The non-corrosive electrolyte also allows for cheaper materials to be used for the power stack and other battery components. With a mild electrolyte pH (1 to 4) electrode reaction potential lower than the 0.8V carbon corrosion potential, all-iron flow batteries experience little electrode degradation — ESS’s modules experience minimal performance loss over 20 000+ cycles with approximately 70% peak round trip efficiency.

ESS are testing the business case under a contract with the U.S Army Corps of Engineers, with initial cost estimates at have set an estimated cost for their battery at $500/kWh. At this relatively early stage of development, the cost is certainly not attractive enough to compete with Li-on or even Vanadium flow on a wide scale but could be an ideal solution for smaller and/or remote grids.

Aqueous soluble ferrocenes (RFB)
Researchers from Harvard John A. Paulson School of Engineering and Applied Sciences (SEAS) have made great strides in developing flow batteries using aqueous soluble organic electrolytes. These have the advantage of being non-corrosive and non-toxic — not only are they safer, but the component parts can be made of cheaper, less durable materials.

Click Here to Read Full Article

As renewable energy becomes a more prominent participant in grid energy generation, it is clear that the regulatory frameworks in place, in the EU as in the world, are currently unable to adequately address the question of energy storage.

The current framework, which has decades of history with few significant structural changes, was designed when energy storage was negligible compared to generation and transmission — so negligible it was largely ignored.

With large scale energy storage emerging as key to secure, flexible renewable power grids, overhauling these regulations is now a priority. Most significantly, the EU’s 2016 Clean Energy For all Europeans Directive (Winter Package) identifies the significance of energy storage as part of the wider green energy environment and addresses several regulatory challenges.

Defining Energy Storage

One key issue within the regulatory frameworks is that energy storage did not have a clear definition. As a previously negligible component of the energy grid — barring pumped hydro, which would generally be lumped into generation rather than storage —, it was easy to ignore. Now, across the member EU states, there is no consistent treatment of energy storage and even differing definitions of what energy storage means — or no definition at all.

This definition issue causes inconsistency across member states and difficulty in determining when fees and tariffs are applied. For example, energy storage resources can unfairly face double distribution costs for both charging and discharging.

To keep pace with developments in the field, the European Parliament’s committee for industry, research and energy (ITRE) proposed amendments to the Winter Package encouraging a technology neutral definition of energy storage as a “separate asset category”, allowing for developed technologies such as lithium-ion or flow batteries along with new innovations that may emerge. Describing energy storage using its functional characteristics (power, capacity, response time) rather than its technology allows space in the framework for future improvements.

The Winter Package addresses the question of defining energy storage, however, it does not go as far as classifying energy storage as a separate asset category within the energy market.

Click Here to Read Full Article

As an increasingly high proportion of energy grids are fed by renewable energy, developing storage solutions that can deal with intermittency in sustainably, safely and cost-effectively is key.

Lithium-ion batteries are still the frontrunner technology for large-scale energy storage, and their benefits are clear — high energy densities, relatively low maintenance and a rapidly dropping cost per kWh. But their drawbacks of limited lifespans, explosive failure modes and potentially precarious chains of component supply are equally well publicized.

What battery technologies and chemistries are making waves for stationary storage applications?

All-Iron Flow Batteries (RFB)
Redox Flow Batteries (RFBs) are hardly a new technology, but have received renewed interest in the past few years as grid energy storage solutions. Benefits include long lifespans, theoretically limitless scalability and long discharge times, however, they have been held back by their drawbacks including low energy densities, expensive component costs and in some cases toxic or dangerous electrolyte materials.

Energy Storage Solutions (ESS) have been working on developing and proving the commercial case for their all-iron flow battery which aims to solve several of these issues. In contrast to Vanadium flow batteries, the electrolyte materials are selected for their abundance, safety and low-cost — salt, iron and water. The battery can be transported “dry” and hydrated on site, also lowering logistics costs and improving mobility.

The non-corrosive electrolyte also allows for cheaper materials to be used for the power stack and other battery components. With a mild electrolyte pH (1 to 4) electrode reaction potential lower than the 0.8V carbon corrosion potential, all-iron flow batteries experience little electrode degradation — ESS’s modules experience minimal performance loss over 20 000+ cycles with approximately 70% peak round trip efficiency.

ESS are testing the business case under a contract with the U.S Army Corps of Engineers, with initial cost estimates at have set an estimated cost for their battery at $500/kWh. At this relatively early stage of development, the cost is certainly not attractive enough to compete with Li-on or even Vanadium flow on a wide scale but could be an ideal solution for smaller and/or remote grids.

Click Here to Read Full Article

We are pleased to share our Energy Storage interview with Bono Ge, Senior Sales Manager, BYD Energy Storage in Europe.

How to make energy storage projects bankable?
First of all, the profitability of all energy storage projects is the most important factor to manufacturers, developers, operators, investors and so on. To make the energy storage projects bankable, I believe joint efforts from the industry are desired. Manufacturers need to control the cost and quality and prolong the duration of operation life of products, this will give other players in the chain more flexibility. Developers need to make a clearer definition of the project and well budget the project at the beginning. Operators shall operate the system as pre-defined and try to search for more revenue streams for energy storage systems. Investors shall do their best to provide less expensive funding. At the same time, regulators need to initiate and create better policies for the market.

How to best reduce the costs of energy storage?
At the right moment, energy storage price is mainly based on the battery price. And battery cost down is primarily driven by the automotive industry. For example, 95% of BYD’s battery production has been utilised on the vehicles while only 5% has been used for stationary energy storage. So to increase the energy storage market size is the key point to reduce the cost. The other way is standardisation, market players need to make clearer on the product definition and figure out specifications within the industry. This will help to reduce the production and maintenance cost.

How to create more standardisation and clearer specifications?
Regulators need to be clear about what are desired and make clear about the revenue streams for energy storage users. Based on the policies and revenue streams, manufacturers can figure out the specifications with other players in the chain to work out the specifications and the produce standard products for the market. Like in the UK, FFR, EFR are the main opportunities for energy storage, and people can forecast that that market will last for some time, then they will be encouraged to design and accept standard products.

Click Here to Read Full Article

We are pleased to share our Energy Storage interview with Dr. Carolin Funk,  Chief Operating Officer, FreeWire Technologies, USA. Dr. Carolin was a speaker at the 10th Energy Storage World Forum in May 2017 in Berlin. Learn more about the 11th Energy Storage World Forum and the 5th Residential Energy Storage Forum 2018 in Berlin by downloading the program

And here are the questions from our editor. Enjoy the interview!

What are the global technological market innovations that drive the next generation Energy Storage solutions? And in your opinion, what are the biggest challenges?

A number of variables contribute to, and detract from, growth in the energy storage market. As with many industries, we are seeing economic and political factors playing vital roles. Cost reductions from adjacent markets, such as battery-powered electronics (like electric vehicles) and large-scale renewable energy growth (such as solar) are paving the way for increased storage, while regulation around grid stability and renewable adoption has been extremely inviting as well. That being said, significant challenges exist in the market, too. In particular, there is no “one-size-fits-all” solution to energy storage, meaning a certain amount of customization is required. Value stacking and flexible solutions are the key to finding the right option across customer segments and scaling up manufacturing.

At ESWF in Berlin you tapped into very interesting topic “Will second-life Battery Systems Ever Be More Cost Effective Than An Efficient Battery Recycling Industry?” Is there a straightforward answer and where are the things headed?

The battery world is constantly innovating, meaning there are no straightforward answers! That being said, a number of patterns are emerging in the second-life battery ecosystem that allow us to make some predictions about what factors will be most influential. Right now, there is very little regulation, meaning that utilizing second-life batteries is an economical choice. However, as prices for new batteries fall, and the market becomes more saturated with second-life batteries, we will see new trends emerge based on this changing landscape.

FreeWire believes that second-life batteries have the potential to benefit the entire energy storage market; however, all the players will need to rally together to share insights and make this opportunity a viable one. The question of whether or not it will be more cost-effective than recycling will also depend on the simultaneous development of the lithium-ion battery recycling industry. Battery costs, industry expectations, and other variables — such as regulation — will factor into cost-effectiveness. Whether we are looking at the future of recycling or energy storage, voices from each of these different corners will likely impact the direction of the market. The worst thing that can happen is just seeing these batteries locked up in warehouses; as long as all the different partners work together to offer a better solution, recycling and reuse can both be viable alternatives.

What kind of partnerships do we need to build between different members of the value chain to make energy storage successful?

There are a number of invaluable partnerships on both the supply and demand sides of the process. Fostering relationships early on in the development of energy storage systems with original suppliers (such as lithium-ion battery manufacturers) and policymakers is key to a lean, reliable supply chain. On the other end of the spectrum, tapping into the right markets for demand is vital. Partnering with large-scale adopters of energy storage, such as utilities, ensures a healthy understanding of customer need and viability.

Click Here to Read Full Article

Speakers from 22 countries will be gathering at the 10th Energy Storage World Forum and the 4th Residential Energy Storage in Berlin May 8th-12th at a critical point for the industry. Tesla’s recent pledge to build a 100MWh battery plant in Australia within 100 days, or give it away for free, has put the industry under unprecedented pressure to deliver on its promises. Tesla energy division boss Lyndon Rive offered to install between 100MWh and 300MWh of battery capacity at breakneck speed in South Australia when he introduced Tesla’s new Powerwall and Powerpack systems in March.

The seemingly throwaway comment was picked up in local news reports and prompted Australian software tycoon Mike Cannon-Brookes to reach out to Tesla CEO Elon Musk over whether the offer was for real. Musk said it was, and added the Australians wouldn’t have to pay for the system if Tesla failed to deliver it within 100 days of a contract. The exchange led to a flurry of calls between Musk and Australian dignitaries, up to Prime Minister Malcolm Turnbull, as well as requests for similar projects elsewhere, including one from Ukraine’s leader, Volodymyr Groysman. Under pressure from other storage players, including some based in Australia, the South Australian administration put the proposal for a 100MWh plant out to tender. At the time of writing, around 90 companies from 10 countries had lined up to match Tesla’s vow of achieving a cost of $250 per kilowatt hour for the project (it is unclear whether the Tesla price is in US or Australian dollars).

What happens next is likely to be the biggest test for energy storage since Tesla proved it could deliver residential batteries for less than USD$5,000. Typically for Musk, the spotlight is once again on his company above all others. But the apparent publicity stunt that Tesla staged in Australia is starting to look like a crucial turning point for the industry worldwide. It has pushed already soaring expectations about energy storage to new heights. “Tesla’s interest and enthusiasm in this goes beyond just the Australian market. It is proving a concept and providing a solution,” said Gero Farrugio, managing director of Sustainable Energy Research Analytics, in a Reuters report. Whichever company ultimately wins the South Australian tender will have to provide a record-breaking battery system in record-breaking time, for a rock-bottom price.

Click Here to Read Full Article