Energy generation has never been a single technology market. Gas, coal, nuclear, hydro, solar and wind all make a significant contribution to our global generation capacity, and each play different roles based on their specific characteristics.
For instance, nuclear provides low-carbon baseload, whilst gas generally meets more flexible, peaking requirements with a higher carbon cost. Renewables, once a high-priced subsidy-only option, are now considered to be a key low-cost and low carbon part of our future generating mix.
The energy storage market is no different. I don’t believe there will be a ‘one size fits all’ technology solution, given the wide variety of technical requirements and market designs that allow grids to operate effectively.
Could one energy storage technology technically perform every conceivable requirement? Yes, quite possibly, but specialisation in the market will deliver far more economically optimal solutions.
Approaching the roles that storage can play with a single technology would be like leaving your toolkit at home and turning up to a DIY job with just a hammer – it’s capable of a great many things, but it really isn’t the best tool to paint the bedroom with.
Differentiation will emerge as energy storage grows in future grid scenarios
Instead of a one-size-fits all situation, I believe the future will see a segmentation in the energy storage market, driven by myriad factors including; technology type, age, warranty limitations, control systems, financing structures and operating strategies. The technical and economic factors driving this segmentation will necessitate different storage products for different applications; once deployed, a further segmentation for dispatch will evolve.
We can see this today, for example within gas there are a wide range of solutions, from reciprocating engines to combined-cycle gas turbines (CCGTs). Selection amongst these competing solutions is made at the time of deployment based on the specific purpose they are intended to serve. During their operational lifetime, each generator is dispatched to meet market requirements at lowest cost. The same will be true for energy storage. Within a storage fleet you’re going to have older installations (based on earlier technologies) coming to the end of their life, competing in the same markets alongside newer systems, with different chemistries, warranties and operating strategies. It is easy to see how differentiation will emerge as energy storage grows in future grid scenarios.
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