The world’s biggest and most effective battery, hydroelectric pumped storage, is more in demand than ever. The technology that uses water in an upper and lower reservoir to store and provide energy on demand is proving an important player in the rapidly changing global energy market.

The biggest driver for energy storage is the need for a reliable clean energy source that can ensure the success of the global movement to reduce greenhouse gas emissions (GHGs). It is estimated that the pumped storage market size will surpass $390 Billion by 2024. The demand can be seen from Australia to California, the United Kingdom to China. Pumped hydro, which already accounts for 97% of installed energy storage capacity, is rapidly growing.

The push for GHG reductions and the need for energy storage at national, state, and local levels around the world continues to be the biggest market drivers in a changing energy mix. In 2016, the Paris Climate Agreement brought 195 nations together to move forward in this push. Recently the UN’s Intergovernmental Panel on Climate Change (IGCC) painted a bleak picture . The Paris agreement is not enough.

Communities are increasing the number of intermittent renewables that need large-scale energy storage options to integrate them into the electricity market, making energy available when people need it and storing excess generation when the wind blows and the sun shines, but there’s no demand for the power. While batteries, compressed air and fly-wheels are small-scale energy storage solutions, pumped storage remains the most reliable and most impactful scalable solution.

Obstacles to Meeting the Need

Despite an increase market demand for pumped storage, several obstacles continue to plague the industry. In the United States one of the biggest issues is the long and arduous licensing and permitting process for hydropower projects. The Federal Energy Regulatory Commission (FERC) has issued only a small handful of pumped-storage facility licenses in recent years. It can take up to five years just to get the approvals for a project, before construction can start. There must be more integration of federal and state agencies into the early-stage licensing process for these projects. Additionally, alternative streamlined licensing processes for low-impact pumped storage hydropower, such as off-channel or closed-loop projects with minimal environmental impacts, are needed.

The 21st-century grid is transforming faster than anyone imagined ten years ago, when natural gas seemed to be our power source of the future. Today, with ever-dropping prices in renewables and storage, the future is being re-defined.

A decade ago, the advent of horizontal drilling made natural gas the darling of the U.S. power sector, and for many good reasons. Natural gas lends itself to providing both steady baseload and easily dispatchable peak load power. Inexpensive, domestically produced and significantly lower in emissions than coal, natural gas was lauded as an abundant, cost-effective vehicle for enabling the lengthy transition to a renewables future that the domestic power sector faced. However, it now appears that the transition is happening much sooner than anticipated. As the deployment of renewables plus energy storage accelerates exponentially across the country, utilities are recognizing the proven ability of storage resources to supplement and, in some cases, completely replace gas-fired generation.

Stiff Competition from Renewables and Storage

In North America, natural gas is no longer necessarily the most cost-effective nor lowest-carbon energy resource to deploy. While gas will remain an important fuel source for a diverse generation base for years to come, it is facing competition. In early 2017, for example, for the first time in history, low-cost, clean electricity from Midwest-based wind turbines supplied over 50% of all power to the grid across 14 states in the central United States, from Montana to Texas. Utility-scale solar prices in the U.S. have fallen 73% since 2010, with average prices (not including subsidies or tax credits) at $45/MWh – and as low as $23/MWh in solar-rich southwestern states. Mexico’s 2017 solar auction resulted in the lowest price seen the world has seen to date: $19.18/MWh. Globally, the International Renewable Energy Agency (IRENA) has stated that renewable energy technologies should be competitive on price with fossil fuels by 2020.

Batteries selected from list of contenders

As New York draws closer to becoming the fourth state in the nation to implement an energy storage target, stakeholders agree on the destination, but not on how to get there.

Among the issues still being hammered out are the extent of a bridge incentive for energy storage, a contract offering requirement for distribution providers, and the possibility of a central, state-run purchasing agency for the output from energy storage projects.

New York Gov. Andrew Cuomo, D, has called for a 1,500 MW energy storage target, but when the state released its Energy Storage Roadmap in June, it became clear that the target could be as high as 3,000 MW.

Since then, Cuomo has bolstered the prospects of both energy storage and his goal to have the state source 50% of its power from clean energy sources by 2030 by making available $40 million to support projects that combine solar power and energy storage.

Meanwhile, the state’s Public Service Commission (PSC) has fielded comments from stakeholders in preparation for the expected December release of its order implementing the Energy Storage Roadmap.

Anticipating the implementation order

In filed comments, stakeholders generally applaud the governor’s goals, but indicate that there are some significant issues that need to be settled before energy storage takes off in the Empire State.

Many developers of energy storage projects are concerned about their access to dual or multiple markets as a way of guaranteeing sufficient revenues to support their projects.

A 30MW / 30MWh battery energy storage system has been inaugurated with a ceremony in Victoria, Australia, with one project partner describing the switching-on as “a real watershed moment in the continuing modernisation” of the state’s energy supply.

This morning, Victoria’s Minister for Energy, Environment and Climate Change Lily D’Ambrosio officially opened the battery energy storage system (BESS) at Ballarat Terminal Station, Warrenheip. The lithium-ion battery project was announced in March this year, along with another 25MW/50MWh project at the 60MW Gannawarra Solar Farm.

At the time of that announcement in March, AES-Siemens joint venture company Fluence was announced as supplier of the Ballarat system, part of a consortium which includes developer Spotless (now Downer-Spotless, having been taken over by the former company), electricity and gas supplier EnergyAustralia and energy delivery company AusNet. Meanwhile the Gannawarra project is being supplied with its battery system by Tesla along with developer Wirsol and project owner Edify Energy.

The two projects are being funded by the Australian Renewable Energy Agency (ARENA) and Victoria’s government, with each organisation matching the AU$25 million (US$19.31 million) commitment of the other. The electricity transmission terminal at Ballarat is congested, particularly at peak times, meaning the storage system can help stabilise the grid by drawing power at times of peak generation and push it out again when demand peaks. The batteries could also prevent the need for expensive substation upgrades. Both battery projects will be operated by EnergyAustralia through long-term power purchase agreements (PPA).

The advent of technologies such as energy storage, small-scale embedded generation and smart grid solutions are set to fundamentally change South Africa’s electricitylandscape, outgoing Eskom generation group executive Thava Govender said during an opening address at the SA Energy Storage conference on Tuesday.

“The challenge we face today is making this invisible produc tcalled electricity visible. Once visible, electricity can be better directed and optimised. Energy storage offers the means to make electricity visible.”

The recently released draft Integrated Resources Plan 2018 targets an electricity generation mix that comprises 20% renewables by 2030, thereby confirming that South Africawill continue to integrate intermittent and variable energy sources.

“Those 2030 visions increase the need for advanced grid management mechanisms and revised grid operating philosophies to ensure the South African grid is flexible, robust and reliable,” Govender said.

He added that energy storage provided a multitude of solutions to enable a smooth transition to grid modernisation, while providing utilities with capabilities such as load shifting and backup and reserve capacity.

Govender stated that energy storage must not be considered a form of energy generation, and is probably the reason why the IRP has not quantified the requirement or mentioned the integration of energy storage, since it is rather a tool used to realise or optimise a particular form of electricity generation.

Moreover, he explained that there is immense value in battery storage. He said the African continent is rich in natural mineral resources that are used in manufacturingbatteries for energy storage.

“With Southern African Development Community countries possessing an abundance of vanadium, lithium and cobalt, it renders Africa a key player in the battery manufacturing industry globally.”

2018 has been a good year so far for battery storage. Not only is the U.S. residential storage market booming, but an extension of the Self Generation Incentive Program (SGIP) in California is paving the way for ongoing growth over the next five years.

But even before the SGIP extension passed, the dollars were flowing into energy storage. According to Mercom Capital’s 9M & Q3 2018 Funding and M&A report for Storage, Smart Grid and Efficiency, in the first nine months of 2018 funding increased in two key categories for battery storage.

According to the report, venture capital funding for battery storage increased 39% during the first nine months of 2018 to $469 million in 23 deals, while debt and public market financing grew 156% to $446 million.

By contrast the volume in project funding deals fell sharply, however Mercom Capital CEO Raj Prabhu says that this likely reflects the limited information about funding levels for battery projects more than anything else.

“Not everybody goes out and discloses information,” Prabhu told pv magazine.

The top five VC deals for battery storage in the first nine months of 2018 were all above $60 million each:

• $100 million raised by QuantumScape
• $80 million raised by Stem
• $71 million raised by sonnen
• $70 million raised by Sila Technologies
• $65 million raised by Ionic Materials

Battery storage is already showing market momentum, and this is only expected to increase when wholesale markets begin to open to the technology via FERC Order 841.

Chinese EV, stationary battery company and PV panel maker BYD has announced the commissioning of Poland’s first large-scale solar power-linked storage project.

The company said the storage system is being operated in cooperation with Polish BIPV cell and module manufacturer, ML System.

The storage unit is linked to a 1 MW PV plant developed under Poland’s auction scheme for solar projects up to 1 MW in scale.

“The newly launched energy storage project will be combined with a 1 MW solar power plant also produced and sold by BYD, enabling peak shaving and [the creation of] a more balanced power network,” the Chinese company said.

BYD’s numbers add up

The storage units were shipped by BYD in May.

“We believe that this project will be able to provide valuable lessons for power market reform and at the same time further consolidate our position in the Polish energy storage market,” said BYD Renewable Energy Business Development Director, Guo Bin.

In 2017, the solar and battery divisions of BYD enjoyed a relatively positive year, with revenue increasing 18.85% on 2016, to reach RMB8.44 billion ($1.34 billion). Last year, batteries and PV accounted for 8% of BYD’s revenue, up from 7% in 2016.

The Chinese group entered an energy storage partnership with German inverter maker Kostal in September.

Among innovative technology providers developing a thermal energy storage system, Norway-based cleantech company EnergyNest is currently one of the partners selected by multinational energy provider Enel for the analysis of the benefits and impacts of the integration of its technology in one of Enel’s numerous power generation assets. According to EnergyNest, impressive economic and climate-relevant figures could be achieved by the company’s latest thermal energy storage technology when integrated in full-scale: annual CO₂reduction of up to 45,000 tons, 14 million liters of fuel oil saved per year and project payback in less than three years.

The collaboration launched with EnergyNest gives Enel the chance to evaluate EnergyNest’s Thermal Energy Battery solution in real-life conditions and identify full-scale business-applications for the technology integrated into thermal power plants. The objective of the innovative project is to demonstrate how waste heat recovery in Thermal Energy Storage can increase flexibility and sustainability of thermal power plants. This activity will allow Enel to assess technology robustness, its potential contribution to increasing efficiency and its positive environmental impact.

Last week, EnergyNest officially unveiled its first Thermal Battery Module, produced in its new manufacturing hub in Europoort, Rotterdam, on the site of partner Mebin. Manufacturing for two commercial projects is now expected to start at the end of the year. EnergyNest’s innovative battery modules consist of locally-sourced, recyclable materials – framed steel pipes set with Heatcrete, a high-performance thermal-energy-storing concrete developed in partnership with HeidelbergCement, Germany’s multinational buildings material company.

San Diego Zoo Global has chosen a unit of EDF Renewables North America to provide a 1 MW/4 MWh energy storage system that is designed to reduce energy costs while limiting emissions at the zoo.

The zoo will use the storage project to smooth spikes in energy usage, thereby, lowering demand charges. The system will also minimize energy costs by recharging the battery when wholesale electricity prices are low and discharging power to the zoo when costs are high.

EDF Renewables North America Distributed Solutions structured the 12-year contract for the energy storage system as a shared savings agreement.

“We operate the battery and split the savings achieved based on performance,” said Michael Robinson, senior business development manager at EDF Renewables.

EDF also financed and installed the storage project.

The zoo used a $1 million rebate from the Center for Sustainable Energy to help cover project costs. Savings achieved from the system will pay for the project on an ongoing basis, said Adam Ringler, director of performance improvement at San Diego Zoo Global.

The zoo is a direct access customer, which means it buys its power at wholesale rates directly from the California Independent System Operator. The only rates it pays to the utility are demand charges. The energy storage system, which is expected to enter service in May or July 2019, avoids demand charges by cutting the zoo’s energy use during periods of peak demand. The storage system will also be used for some energy arbitrage by taking advantage of wholesale power price volatility.

The energy storage project is one of the larger investments in the zoo’s sustainability program and its “first foray into potential new technology we might deploy going forward,” Ringler said. “We have to see what the results are.”