The levelised cost of electricity (LCOE) that can be achieved today for battery energy storage means that “batteries are not going to need subsidies to be competitive for short to mid-term balancing” applications, according to Bloomberg New Energy Finance (BloombergNEF).

Our sister site PV Tech reported yesterday that according to analysis BloombergNEF’s newly-published LCOE reports, solar’s levelised cost of electricity has fallen below US$30/MWh with the PV industry expected to break the US$20/MWh average in a decade.

New-build utility-scale solar and onshore wind are the cheapest options in much of the world, putting existing coal and gas power plants at risk, with BloombergNEF assessing 25 different technologies and 7,000 projects in 47 countries.

The LCOE of battery storage systems meanwhile has halved in just two years, to a benchmark of US$150 per MWh for four-hour duration projects. In an interview, BloombergNEF analyst Tiffen Brandily, the report’s lead author, told Energy-Storage.news that below two-hours duration, batteries are already cheaper for peak shaving than combined cycle gas turbines (CCGT), traditionally the go-to technology for that purpose.

“If you need to shave a peak in the load, it’s going to cost less to install a battery than CCGT or gas reciprocating power plants, peaking plants,” Brandily said.

‘Tremendous’ reductions driven by both upstream and downstream market dynamics
BloombergNEF has only been tracking the battery storage space for the past couple of years as the market went from being “relatively limited,” the analyst said, but “since then we’re really seeing a trend now – the LCOE has come down quite tremendously, actually faster than PV or wind”.

While the report said that manufacturing scale and standardisation, as well as technology improvements on the upstream side have contributed to this rapid decline in costs, the other big piece of the puzzle is on the downstream end – battery projects are getting bigger and bigger, both in megawatt (MW) and in megawatt-hour (MWh) metrics.

While there is an increased focus on local content across several South African industries, government could do more in terms of incentivising local manufacturing, says energy solutions company i-G3n co-founder and director Sydney Phakathi.

“The mere fact that there is not enough local production of energy storage systems indicates that there is a gap. We do see, however, quite a large number of importers coming into the country. In a job-scarce economy, you would think that a key driver would be incentivising local production because it would also create jobs,” he adds.

The company manufactures solar-powered battery technologies that are suitable for use in household and any utility- scale energy production process.

“South Africa has the capability to not only adopt renewables on a larger scale but also manufacture the components required for it. Policy must encourage just that to propel economic growth in the country,” i-G3n co-founder and director Tumi Mphahlele tells Engineering News.

While there should still be a coal component in the energy mix, it should not be the main focus going forward, says i-G3n co-founder and director Jacques Buys.

“We should rather have an assortment of renewable-energy sources – preferably solar and wind – at the forefront and coal as the buffer to assist during peak hours. However, energy storage also plays a part in those peak hours, as you can choose when to replenish that stored energy,” he asserts.

Further, the Integrated Resource Plan 2019 (IRP 2019) has called for a fair energy mix leading towards the just transition, which could result in renewables playing an increased role.

“We strive to be the catalyst for enabling more households and businesses across Africa to harness the power of sustainable and renewable-energy products at competitive prices,” the company says.

This is pivotal, as it not only addresses the current need for supply in South Africa but also positions i-G3n to respond to the current “energy crisis” on the continent, which could have long-standing negative impacts on the way of life and the standard of living for its populations.

Although tightening emissions globally require the industry to move progressively towards renewables, Mphahlele underscores that it is mainly being driven locally owing to inadequate supply.

Maintaining grid reliability and stability is increasingly challenging as renewable energy resources are added to the power mix. Combining battery storage systems with gas turbine units can improve overall plant performance and ensure black-start capability is available, when needed.

Keeping the lights on has been the mantra from governments and utilities, particularly after several high-profile power cuts in the last decade. There has been much spoken about the reliability of the electrical network and concerns raised by the diminishing input from fossil-powered generation. This concern was raised again last year when a large-scale power outage struck South America.

In June 2019, a large-scale blackout affected Argentina, Uruguay, and Paraguay, leaving an estimated total of 48 million people without electrical supply. According to local supply company Edesur, problems with several 500-kV transmission lines disrupted the flow of electricity from two dams to Argentina’s power grid. It took more than 24 hours for electricity to start flowing again, highlighting the challenges of restarting a power grid in such a situation. Preventing these outages is one thing, but ensuring that power is restored as quickly as possible is equally important.

Black-Start Challenges

The procedure that network operators adopt to restore power in the event of a total or partial shutdown of the electricity transmission system is called black start. Most nations have a requirement that this black-start capability is built into the power grid, with certain generating facilities having specific black-start capabilities. Traditionally, power plants use small diesel generators to start turbines or to provide power references, such as voltage and frequency, to allow renewable power generators to reconnect. Another option is to use battery storage, such as forms part of Siemens’ Siestart system (Figure 1).

1. Adding a lithium-ion battery energy storage system to a combined cycle gas turbine power plant offers several benefits, including black-start functionality. Courtesy: Siemens

Grid stability and reliability have always been top priorities for network operators, and will continue to be, but with the growth of renewable energy solutions on the grid, the challenges of maintaining that stability and reliability are growing. There is no denying that the growth of renewable energy is positive news for the worldwide fight against climate change; however, there are some other consequences of this growth that operators need to consider. When grid stability is considered, it must be recognized that both wind power and solar photovoltaics are highly dependent on the weather, which can lead to some variation, which needs to be balanced and compensated. It is a quite simple correlation—the higher the share of renewable energy sources, the harder it is to ensure stability.

However, as mentioned previously, grid stability needs support, otherwise there can be serious consequences, even in highly developed countries where significant blackouts have also occurred, such as in South Australia in 2016 or Argentina in mid-2019. It can and does happen, and it is really not an easy exercise to restart grids, once they are black.

Wärtsilä is finalising a 70 MW energy storage and energy management system project in the California Independent System Operator (CAISO) energy market. The energy storage system will be paired with Wärtsilä GEMS platform to maximise system efficiencies and will add renewable power to the grid at times when it otherwise wouldn’t be available. The order was booked by Wärtsilä in late 2019 and the project will be finalised in mid-2020.

Wärtsilä GEMS advanced software platform will optimise the deployment and functionality of the customer’s existing renewable energy power system, and will connect the site to the local energy market. GEMS will increase revenue and ROI by maximising battery performance and longevity and enabling additional value streams. For example, GEMS will facilitate ‘energy arbitrage’ with the system’s battery storage capabilities. This allows the customer to purchase electricity from the market when prices are low, and sell stored energy back into the market when short-term costs spike.

Other technical considerations include battery chemistry. Wärtsilä is incorporating lithium iron phosphate batteries, enhancing safety measures of the site.

This project adds to Wärtsilä’s portfolio of 20+ operating energy storage projects in North America, including two grid-scale 9.9 MW energy storage systems in Roscoe, Texas.

For the stationary battery sector, the next two decades are going to be seismic. According to BloombergNEF’s Energy Storage Outlook 2019, capacity will grow from 9GW in 2018 to a staggering 1,100GW by 2040, a 122-fold increase. However, if the sector is to rise to the challenges it needs significant investment, to the tune of $662bn according to the research provider.

The report highlighted a number of significant changes that are, or will, shape the market in the coming decades: from the continuing fall in raw material costs to growing utilisation of stationary storage on an industry scale. Report co-author Yayoi Sekine said analysts now think, “the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses.”

It’s a significant shift from what has previously been seen, but one that will shape the market as it moves towards a critical and increasingly advanced stage. However, many have warned that, despite its growing importance, the electric vehicle (EV) portion – and to a lesser extent mobile devices – are dominating the narrative and potentially holding back development, something that needs to be addressed.

Stationary batteries set for a boom?
Branding it the second wave, some industry players, however, believe the stationary power market is set to explode with the right investment and nurturing. US-based analyst with the Institute for Energy Economics and Financial Analysis, Dennis Wamsted, says he finds it hard to fathom the argument that EVs are having a detrimental impact on stationary storage.

“I do not believe the EV market is ‘holding back’ the development,” he says. “In their latest quarterly report, the Energy Storage Association and Wood Mackenzie estimated that installations in the power sector battery storage market would grow to more than 7GW annually by 2025, creating a market worth more than $7bn. That does not seem like a market being held back by anything.”

That is, however, not to say the market doesn’t have its challenges. Whilst the popularity of renewables has been increasing unabated, with new wind and solar farms coming on stream at a record-setting pace, the biggest challenge remains stationary energy storage systems (ESS) batteries. Renewables are now a vital part of many countries’ energy mix, providing significant amounts of power. But capturing unused power when these elements aren’t available continues to be the challenge.

Tesla confirmed that it installed its 100,000th Powerwall, the automaker’s home battery pack, during the last quarter.

With the introduction of Powerwall 2 in 2016, Tesla took the home energy storage business by storm with a leading cost per kWh of energy capacity.

The automaker received tens of thousands of reservations for the device, but the production ramp-up over the last few years has been slow since Tesla focused its efforts and battery supply on Model 3 production.

Last year, Tesla started to ramp up production of all its energy storage product with the Powerwall, Powerpack, and the new Megapack.

With the release of its Q1 2020 results, Tesla gave an update on demand for the Megapack:

Megapack, a battery pack of up to 3 MWh that is preassembled at Gigafactory Nevada as a single unit, is gaining traction. We have seen an inflection point in interest for utility level storage, primarily driven by progress in reducing costs. At the moment, the demand level for this product remains above our capacity. Our order book continues to expand due to multiple projects in the pipeline that are far bigger than our Hornsdale battery in South Australia which is still the largest Li-ion battery in the world.

We previously reported on some of those large projects including a massive 1 GWh Megapack battery project with PG&E in California.

Powerwall deployments also accelerated with large-scale projects, like a virtual power plant in Australia and with an electric utility in Vermont.

Last month, we reported on Tesla Powerwall becoming extremely hard to get as demand increases due to home battery pack incentives.

Now Tesla is confirming that it is seeing strong demand for Powerwall and that it installed its 100,000th Powerwall in Q1:

We have also seen an increase in cross-selling within the energy business as more than 40% of our residential solar customers opt for at least one Powerwall. In Q1, we installed our 100,000th Powerwall.

As we previously reported, on top of Powerwall buyers having access to the Federal Investment Tax Credit (ITC) when buying with a solar power system, the California Self-Generation Incentive Program (SGIP), which gave rebates of up $5,800 per Powerwall, has been significantly increasing demand for the Powerwall.

Utility giant Duke Energy is already halfway toward its goal of 16,000 MW in owned, operated and contracted renewable energy by 2025, the company announced in new climate and sustainability reports released Tuesday.

In addition, Duke said that the combination of clean energy and efficiency programs have reduced its carbon emissions 39 percent below 2005 levels. The utility’s goal is to cut 2005 carbon output levels in half by 2030.

“Our commitment to ESG (environmental, social and governmental initiatives) has delivered strong results for our customers and our shareholders – and we’re focused on maintaining this level of performance and transparency as we work to achieve net-zero carbon emissions by 2050,” said Lynn Good, Duke Energy’s chair, president and CEO. “These two reports showcase the significant progress we’ve made in these areas, and our plan to help address the challenges from climate change.”

Last year, Duke announced 1,500 MW of new renewable energy projects, detailed plans to renew licensing of its carbon-free nuclear fleet for another 20 years and completed gas-fired power projects to replace retiring coal-fired capacity. It also announced plans for extensive electric vehicle charging infrastructure and $600 million in energy storage investment over the next five years.

Duke’s generation portfolio, measured in net output of GWh, is 36 percent natural gas, 35 percent nuclear, 27 percent coal and 2 percent hydro and solar. The plant owned capacity is 42 percent gas-powered, 33 percent coal, 18 percent nuclear and 7 percent hydro and solar.

In the climate report, the utility laid out its plan for achieving net-zero carbon dioxide emissions by 2030. To reach that goal, Duke will need to grow its renewable and energy storage capacity significantly, utilize gas-fired capacity efficiency, keep the nuclear fleet going strong and retire more coal-fired plants.

The California Energy Commission (CEC) clarified that statewide orders in response to COVID-19 identifying essential electricity industry workers include solar photovoltaic and energy storage installers.

The ongoing health and safety of all Californians is of upmost importance to the State of California and the (CEC). Consistent with Governor Gavin Newsom’s Executive Order to combat the COVID-19 Pandemic (N-33-20), the CEC advises all of its partners and stakeholders to abide by its directives.

Under this order, the California Department of Public Health’s (CDPH) State Public Health Officer has ordered “all individuals living in the State of California to stay home or at their place of residence except as needed to maintain continuity of operations of the federal critical infrastructure sectors, as outlined here. In addition, and in consultation with the Director of the Governor’s Office of Emergency Services, I may designate additional sectors as critical in order to protect the health and well-being of all Californians.”

The State Public Health Officer has designated essential critical infrastructure workers needed at this time to support critical sectors, including the construction and energy sectors, as detailed here. This list of essential workers is updated as needed.

The list of identified essential workers for the electricity industry includes “workers who maintain, ensure, or restore the generation, transmission, and distribution of electric power…” This list includes workers whose efforts are needed to supply electricity to households and businesses, and essential workers such as electricians who provide services that are necessary to maintaining the essential operation of construction sites and construction projects (including those that support such projects to ensure the ongoing availability of electricity).

Installation and maintenance of photovoltaics (PV) and energy storage projects have the added importance of supporting the resilience and continued operations of critical equipment and infrastructure across the state that requires uninterrupted power. This may include medical equipment and other devices necessary to ensure ongoing health and safety in consideration of potential grid outages and/or public safety power shutoffs that may occur in the future.

The coronavirus outbreak has resulted in a substantial slowdown in terms of global economic growth. The pandemic has been particularly hard on China, owing to its place as a major global manufacturing center. A large number of production facilities have either been shut down or are not operating at full capacity owing to major disruptions in raw material supply chains. These trends have also impacted stock prices in the industrial battery chargers market.

Chargers for Lithium Ion Batteries Show High Susceptibility

The pandemic has created several hurdles for lithium ion batteries. Countries which are major producers of raw materials that are required for battery production have been subject to stringent restrictions to control the spread of the virus. For instance, Australian lithium production companies have set up strict guidelines for businesses in the industry in terms of long-distance travel restrictions.

Other major producer countries in Africa and Latin America have announced nationwide curfews and quarantines in addition to trade and travel closures. These trends are anticipated to restrict the production and adoption of industrial battery chargers.

On the other hand, 2019 witnessed an oversupply of raw materials, which has mitigated losses from potential raw material supply shortages. However, continued delays and restrictions on transport are a matter of concern in the short term. While production continues apace, problems with shipping, transport routes, and container equipment are critical threats to normal operations.

Logistics Remains a Major Challenge

Companies are feeling pressure in terms of supply chain disruptions. While some countries have designated select industries in the industrial battery chargers supply chain as essential, travel restrictions imposed on workers has made day-to-day functions complex, as remote production activities have not made major inroads into the industry.

Across the world, logistics for raw materials and component supplies are expected to slow down. Consequently, industrial battery charger manufacturers are expected to invest in bringing supply chains for components geographically closer together. The global pandemic is expected to bring about permanent changes in business approaches associated with international supply chains, which can result in growing localization of charger production.