Global oil companies are plowing billions of dollars per year into solar and into energy storage, as more nations seek to switch their energy sources away from fossil fuels. In only 5 out of 15 acquisition deals done in solar over the past two years, over $8 billion was spent, according to an analysis by Mercom Capital Group.
Similarly, out of 7 funding deals by oil companies over the past two years, more than $240 million was provided to solar companies, Mercom calculates.

For battery storage investments, 6 acquisition deals were reported during the past two years, without values, Mercom says. During the same time period, 7 funding deals were done, involving nearly $133 million, Mercom says.

The largest of the oil investments into solar was by Germany’s E.on, with a $5.8 billion investment into Innogy, earning it a stake of 76.8% of the company in June 2018, Mercom shows. The next largest acquisition was by France’s Total, with a $1.7 billion investment in Direct Energie for a 74.3% stake.

The value of the largest oil investment in battery storage was not disclosed, but is likely the acquisition by the Netherland’s Shell of Sonnen, earlier this month. The largest funding operation of a battery storage company was a loan of $70 million from Shell in May 2018 for Sonnen.

Many more oil companies are in the solar and battery storage investment fray. Royal Dutch Shell has acquired a 44% stake in solar developer Silicon Ranch for $217 million, Chevron has made investments in solar, BP spent $299 million for a 43% share of Lightsource’s combined 1.4 gigawatts portfolio of wind and solar, and Total Energy Ventures owns 56% of solar panel manufacturer SunPower, and has invested about $160 million in 20 renewable energy startups including solid-state lithium-ion batteries, according to the Motley Fool.

Behind-the-meter (BTM) energy storage—on-site options that allow energy customers to store capacity for use as needed—surged in 2018. In fact, for the first time, customer-operated BTM storage surpassed front-of-meter capacity (operated by electric providers) in the second quarter of 2018.

Multiple factors—including high demand charges, reliance on solar, changes to energy tariffs and lower storage costs—are driving the trend, according to industry experts.

Demand charges—the portion of an electric bill that reflect a customer’s peak level of demand—can account for 30 to 70% of a customer’s electricity bill. They typically are based on the highest average electricity use during a specific time period.

“[Storage] gives customers a lot of power over when they consume electricity during the day,” explained Eric Gimon, independent consultant and senior fellow at Energy Innovation. By storing energy purchased during low-cost periods, customers “can work around all kinds of schemes that utilities have for energy rates.”

“If my storage system allows me to reduce my consumption during the window when the demand charges are high, that can be very valuable,” noted Gimon, who predicts that the growth in BTM energy storage will be disruptive to the industry.

Increased reliance on solar power also is pushing interest in energy storage.

“You can buy a solar-plus-storage system where the storage evens out the output from your solar, and where the combined cost per kilowatt hour is cheaper than what the utility’s selling you,” Gimon said. “So, that’s getting people interested.”

As an example, in the next few years, the combination of solar and battery storage could supply an Arizona electric customer with 80 to 90% of their electricity needs less expensively than buying from their utility company, according to a McKinsey & Co. report.

Federal and state officials stressed the importance of energy storage in the clean energy economy and the need for a supportive regulatory environment at the Energy Storage Association’s annual Policy Forum in Washington, D.C.

More than 200 energy storage industry stakeholders and leaders in attendance heard United States Sen. Martin Heinrich announce plans to introduce bipartisan legislation to expand the Investment Tax Credit to include standalone energy storage. He said that Sen. Cory Gardner would co-sponsor the bill.

“The deployment of storage needs to be at the center of our ongoing effort to move toward a cleaner and more reliable electrical grid,” Heinrich said. “We know that renewables grow from strong and enduring tax policy and I am proud to announce that I will soon be reintroducing the Energy Storage Tax Incentive and Deployment Act.”

In 2018, cities and states across the country set ambitious targets to reach 100% clean energy, and energy storage will play a key role in helping them reach those goals. Keynote speaker Neil Chatterjee, chairman of FERC, discussed regulations that open the markets for storage to compete on a level playing field with other technologies. Specifically, FERC Order 841, which will be implemented in 2019, could dramatically boost the market for investment in energy storage.

“I believe in the potential of storage to be a transformative technology for our grid,” Chatterjee said. “Storage is a game changer. I see exciting potential to lower costs and enhance reliability for customers.”

Storage is already eligible for the federal ITC when paired with solar, but bipartisan, bicameral legislation would clarify the eligibility of standalone storage. In turn, this would level the playing field for all energy technologies and send economic signals that trigger long-term investment in the U.S. The energy storage industry supported over 90,000 jobs in 2017, according to the U.S. Energy and Employment Report, but an ITC would generate even more jobs across the nation. The ITC is scheduled to sunset in 2023, so experts expect more projects to come online in 2019.

With the Junelight Smart Battery, Siemens is offering its first battery storage specially geared to the requirements in private homes for the storage and use of self-generated energy.

The lithium-ion storage combines functions for intelligent and safe energy management and a modern design. Homeowners can use it to maximize the share of their self-generated energy, e.g. from photovoltaic systems, for their own consumption, to minimize their energy procurement costs and to make a long-term contribution towards the reduction of CO2 emissions.

The Junelight Smart Battery coordinates the predictive charging and discharging procedures depending on the weather-related yield forecast of the photovoltaic system and the individual consumption profile of the household.

Using the mobile Junelight Smart App, all energy flows – from production, through storage, right down to consumption and grid in-feed – can always be monitored in real time. The storage capacity can be flexibly adapted to individual needs at any time, encompassing up to 19.8 kWh. The Junelight Smart Battery is now available in Germany and will be launched in Austria in April 2019.

“More and more homeowners are generating their own solar power – and, in light of sinking feed-in tariffs and rising electricity prices, they want to use it completely for their own consumption wherever possible. The Junelight Smart Battery creates the technical basis for future-driven, sustainable and economical energy management within the home. This allows homeowners not only to lower their energy costs, they are also making a substantive contribution towards the success of the energy transition,” says Andreas Matthé, CEO of the Siemens Business Unit Low Voltage & Products.

With carbon reduction goals a long way off from being met in Europe’s transport sector, energy storage can play a key role in coupling transportation and energy technologies, the European Association for Storage of Energy (EASE) has said.

The association has just published ‘Energy storage: a key enabler for the decarbonisation of the transport sector’, a position paper on how the continent should approach many of the issues associated with the rapid roll-out of electric vehicles (EVs) and their respective charging networks.

EASE argues that transport is the only sector where EU emissions reductions efforts have lagged, actually seeing a rise in carbon emissions since 1990. Electrification is underway, but without effectively managing electricity networks to accommodate the new vehicles and ways to power them with renewables, “significant stress and costs” could be incurred by this challenge.

For several years European trade events such as Energy Storage Europe and latterly US events such as Energy Storage North America have begun recognising the necessity and opportunity of sector coupling – not only between transport and electricity/energy but also with the heating and cooling sectors. However, EASE argues that the correct or most favourable regulatory frameworks and market designs to enable this closer cohesion do not yet exist.

The group makes a raft of recommendations for the regulatory treatment of electric mobility in general, such as arguing for free market competition for contracts to build chargers and charger networks, the recognition of EVs as an eligible energy efficiency technology, and recognition of the potential for electrification of mobility to contribute to overall environmental goals.

A new poll has identified energy storage as the most promising technology for institutional investors keen on renewable assets, amid plans by many to ramp up allocations.

Nearly two-thirds of all asset owners and managers quizzed by the firm chose batteries and other energy storage technologies as the renewables subsector with the greatest potential.

The appeal of storage rests on the “growing role” it will play in the European energy mix as renewables become more prominent, Aquila said as it released the findings. “Cost reductions, technology development and improving regulations will continue to strengthen the investment case for storage moving forward,” the firm added.

The respondents – a 103-strong base featuring pension funds – dedicated on average 3.6% of their portfolio in 2018 to renewable infrastructure, a rise from the 2% recorded in 2016. For 12% of these investors, the exposure last year reached into the 10-15% region.

According to the survey, the institutional appetite for renewables looks set to build all the way to 2021, with 49% poised to ramp up exposure by that year. Despite their optimism around storage, the polled financiers planned their largest allocation increases in offshore wind, solar thermal and onshore wind.

Regardless of their investment target of choice, institutional players were drawn to renewables as a whole by long-term cash flows (the top reason for 55% of respondents). Geographic diversification, low correlation to other asset classes, inflation hedging and ethical considerations were, in descending order, the other key drivers.

Energy storage aside, electricity transmission was seen as the second most promising investment area, with interconnector projects close behind. Allocations in these two areas could be key for a solar industry faced with grid challenges in certain markets and question marks over interconnection projects, with the UK particularly exposed if no-deal Brexit comes to pass.

In the last few years, India has been making huge strides in transitioning to renewable energy, and is today, one of the top 10 countries in the world utilising solar power. However, there is still potential that remains untapped, and to make renewable energy a successful source to answer all power needs, it is important to have a means to store the surplus power generated.
This is because non-conventional energy sources, like Solar, Wind, and Hydro, among others, do not have a constant production. For instance, while it might not be possible to harness the power of the sun at night, with energy storage solutions, one can use the stored energy, based on the requirement, irrespective of whether the power is being generated at the time or not. In fact, energy storage is today the only way to reduce our carbon footprint, and become a country reliant on clean energy!

Currently, there is a severe lack of utility scale energy storage solutions across the sector. While developments are in place, the implementation needs to be quick and efficient. It was only recently that renewable energy achieved certain economies of scale, leading to them becoming comparatively affordable and accessible. This has made it possible to consider renewable energy as a viable option, and has led to the development of a wide range of supporting infrastructure, including investments in robust energy storage solutions. It has also been possible, in large part, due to the innovative technology now available to companies in the
storage space, and the development of cutting edge solutions and batteries.

With the Government aiming for 100% electrification of households under SAUBHAGYA (Pradhan Mantri Sahaj Bijli Har Ghar Yojana), coupled with the growing demand for non-conventional sources to power energy needs, the need is urgent. However, as we, as a nation, take an expedited growth path towards the elimination of power deficiency and transition to renewable energy, not having a system to store the energy generated on the grid presents a huge barrier.

In addition to that, most grids in the country are thermal-fed. The hesitation to transition is based on the fluctuations that are seen in the output, making direct grid connectivity an area of concern. While during the day, there is a balance, the usage witnesses a peak during evening. Energy storage solutions or batteries provide the option for the requisite linear output that can address many of these challenges.

According to the Wood Mackenzie U.S. Energy Storage Monitor’s Q4 report, the expected utility procurements, regulatory changes and grid-related developments will result in annual market deployment of 3,900 MW of storage capacity by 2023 and the market value of this development will be US$4.5 billion. This prediction represents very healthy growth since the latest actual annual deployment was 215 MW in 2017 and the preliminary number for 2018 is about double the 2017 figure. Does the growth we are seeing and this forecast indicate that battery storage has become the silver bullet for the electric sector as many claim?

It depends on who one speaks to. The U.S. Energy Storage Monitor (ESM) report found that nearly 60% of the installed capacity growth in the market during Q3 2018 was behind-the-meter (BTM). The authors attributed this growth to ongoing solar-plus-storage demand by customers seeking greater resiliency and those responding to changes in net metering and utility tariffs. Some analysts viewing the cup as half empty suggest the reason for reduced growth in the front-of-the-meter (FTM) segment relates to restrictions in the wholesale markets that prevent capture of the full value of energy storage. However, in longer term, the ESM authors believe that the FTM sector will overcome these hurdles and be the major driver for the energy storage growth anticipated during the next few years. State-driven regulatory programs, large utility procurements and grid service opportunities are expected to contribute to this growth. Implementation of rules in organized ISO markets as per FERC Order 841 will further assist energy storage development in wholesale markets.

Much of the energy storage growth to date has been driven by programs and projects in a limited number of states with California, Hawaii and New York leading the list for the last several years. That said, an increasing number of states are requiring utilities to incorporate battery storage into their planning and such demand pressure facilitates price reductions. GTM Research estimates lithium-ion battery storage prices were in the area of US$207/kWh in 2018 and that the price will decline about 8 percent per year over the next four to five years. Part of the rationale for the price decline is greater production with the expected startup of a number of major battery manufacturing facilities. Targray, a multinational specialty materials company, has identified 10 giga-factories, i.e. battery plants with a capacity of at least 1 GW, that are expected to come on line within the next several years. Targray also projects that utilities will be increasingly motivated to partner with or acquire solar-based energy storage system (ESS) companies. Among the drivers that are making ESS companies and their projects look attractive to utilities are the declining battery storage costs, more proven technology with LI-solar packages, and more creditworthy project opportunities with lower merchant risk and more secure revenue generation.

So is our opening question answered? Recent results from utility competitive procurement proceedings involving solar and LI battery ESS would make it appear so. Prices in Hawaiihave been in the range of US$0.08 to US$0.12/kWh for long-term solar plus storage contracts. Agreements in the western U.S. have reached levels below US$0.04/kWh for LI-solar ESS power purchase contracts. However, this is a bit misleading because kWh provided by LI storage alone would be about 10 times more expensive than a system with solar and battery backup.