Utility companies seeking to reduce CO2 emissions are increasingly relying on battery energy storage systems to meet peak-power demand as they retire their gas-fired plants. “Providing peaking capacity could be a significant U.S. market for energy storage,” according to a June report from the National Renewable Energy Laboratory. Rapidly falling battery costs make the transition attractive.
“In the next year or two, we’ll see an increasing number of locations where batteries are at the break-even point” of grid parity, says Paul Denholm, NREL principal analyst. “There’s still a tremendous market, on the order of tens of gigawatts of capacity that I think are suitable eventually for replacement by batteries.”
Battery energy storage systems (BESS) are often used to store excess solar and wind energy, and both BESS and renewable-energy generation have grown each year. In 2019, the cost of lithium-ion batteries has plunged while growth of BESS facilities has soared.
In March, BloombergNEF reported the benchmark levelized cost of electricity for Li-ion batteries has fallen 35% since the first half of 2018. And in Q1 2019, U.S. energy storage deployments totaled 148.8 MW, 232% greater than in Q1 2018, the Wood Mackenzie U.S. Energy Storage Monitor reported.
Perhaps more significantly, Q1 2019’s total topped Q4 2018 deployments by 6%, auguring a future of rapid growth. Q4 deployments typically are the highest of the year as developers rush to book completions before year’s end. Deployments in 2019 will total 647 MW, Wood Mackenzie estimates, but by 2024, U.S. energy storage deployments are forecast to reach over 4.5 GW annually.
AES Alamitos broke ground June 27 on a 100-MW/400-MWh battery-based storage system for AES Alamitos Energy Center in Long Beach, Calif., as part of a larger modernization and replacement project at the 2,025-MW gas-turbine AES Alamitos Generating Station. AES claims the new battery storage array will be more than twice the size of the largest such facility currently operating in the U.S. The Alamitos power plant was procured specifically to provide peaking power, company officials say, and its permit for 300-MW capacity allows for considerable growth.
Southern California Edison Co. has a 20-year power-purchase agreement with AES for the 100-MW capacity of the Alamitos Energy Storage project, which will be able to operate continuously for four hours, says Gus Flores, principal manager, origination, at SCE. It’s being built at the existing site of old gas plants. Many gas plants were built along the California coast using ocean water for cooling, but that is no longer allowed and they will be retired in the next five years.
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