According to GTM’s new report, the costs of storage are dropping at a rate that will allow it to start being competitive with new peaking plants in about five years. But ten years from now, energy storage will “almost always” win out over the cost of a new peaking plant.

It could take years or even decades for energy storage to compete with the GTM-estimated 120 GW of existing peakers, Ravi Manghani, director of energy storage at GTM Research, said during a webinar to discuss the report. The existing plants have lower operating costs because they have largely paid off their debt.

The key to the competitiveness of storage compared with peakers is not just lower costs, but lower costs for longer durations. Duration, how long a storage device can pump energy into the grid, has been the limiting factor when batteries are used to replace peakers. The other side of that concept is that peakers are an inefficient use of capital because they run so infrequently.

GTM’s research found that the median capacity factor of the operating U.S. peaker fleet is 3% and that the median hours of operation per start is 5.3 hours. In addition, 73% of the operating fleet averages eight hours or less per start.

The data show that battery systems are beginning to have sufficient duration to meet a high proportion of peaking needs, Manghani said.

The economics of battery storage used for peaking needs can also be enhanced if the batteries can serve other grid needs when they are not being used for peaking capacity. The Federal Energy Regulatory Commission’s recent Order 841 aims to creates opportunity for energy storage to compete on a level playing field in energy, capacity and ancillary service markets, Manghani noted. The opportunities will be regionally specific, as each ISO or RTO will devise their own set of rules, he added.

As the markets for energy storage continue to grow and companies in those markets mature, business models and financing mechanisms are getting more attention.

Those models can involve alternatives to a traditional asset sale approach that can reduce the cost of entry for potential customers and lower the cost of capital for energy storage companies.

The trend was highlighted last week when Younicos announced its energy storage rental service. Renting energy storage equipment was an obvious step for Younicos, given that its corporate parent, Aggreko, rents power generation equipment on a global scale.

Younicos hopes that by lowering the cost of energy, it will be able to expand the market for its energy storage services. The idea is that in many cases renting storage equipment is cheaper than buying and owning it.

The main driver in that business model is “to help the economics a little bit by lightening the capital expenditure for the customer,” Tim Grejtak, an analyst with Lux Research, told Utility Dive. A lot of businesses use a discounted cash flow model and “any payment you defer into the future helps your cash flow,” he explained.

For the first phase of its marketing efforts, Younicos says it is targeting hybrid systems and microgrids in the commercial and industrial market, rather than large scale utility energy storage installations.

Younicos’s new business model is part of a wider trend under way in the industry, Grejtak said. Energy storage companies previously differentiated themselves with technology, especially before lithium-ion batteries became dominant. Then, they highlighted the control software for their energy storage systems. Now, companies are increasingly highlighting their financial and business models, Grejtak told Utility Dive.

Future of European business models is still opaque

Bay State Wind has signed a letter of intent (LOI) to collaborate with NEC Energy Solutions to develop an energy storage system for its 800MW wind/55MW – 110MWh energy storage combined project, which will be located in Massachusetts, US.

The project is expected to be the world’s largest wind-paired energy storage system for commercial-scale energy.

Bay State Wind is the 50/50 partnership between Ørsted and New England’s transmission builder Eversource.

Under the deal, the company have agreed to accelerate the development of early commercial integration of storage technologies into the electricity supply chain.

The deal will also capitalise on storage technology’s benefits to clean energy integration, grid reliability, system-wide efficiency, and system peak demand reduction.

Eversource business development vice-president Mike Auseré said: “The development of a robust battery storage system is going to help Massachusetts become a leader in renewable energy, and more importantly, it will help small businesses and consumers by ensuring a steady supply of energy, thereby reducing high-demand energy spikes.”

The deal will expand Bay State Wind’s commitment to supporting and promoting energy storage in Massachusetts.

Ørsted North America president Thomas Brostrøm said: “We could not be more thrilled to work with a Massachusetts company that is a global leader in battery storage technology and products.

“NEC Energy Solutions is widely recognised as a pioneer and leader in the market for utility-scale energy storage, and their ability to recruit talent from the local workforce will help not only Bay State Wind, but it will help solidify Massachusetts as a global leader in the green energy revolution.”

Held once again in Düsseldorf, Germany’s huge exhibition center March 13–15, the 12th annual International Renewable Energy Storage (IRES) Conference and Energy Storage Europe Conference attracted roughly 4,500 international visitors, and more than 170 exhibitors, from over 60 nations.

While showcasing the latest in energy storage technologies, presenters discussed developing markets worldwide, offered detailed case studies, and explained how transforming renewable energy into hydrogen, both for storage and for additional applications, is becoming an ever-more cost-effective “green gas” solution.

Main themes at IRES (Figure 1) included flexible sector coupling and de-coupling as well as system-useful storage solutions that stabilize networks. Several speakers detailed how they see storage continuing to nibble around the edges of the grid as it’s currently configured. Many envisioned that, in the near-term, storage systems will essentially displace expensive fossil-fueled peaker plants, discharging banked emissions-free renewable-generated energy instead of relying on natural gas or coal.

Storage takes many forms: some of it is based on heat pumps and pumped hydro, some on banks of lithium-ion batteries, and now new hydrogen storage units. But all systems are geared to take advantage of ever-increasing amounts of cheap renewable energy from solar and wind. Indeed, as more renewables come online in Europe and worldwide, the need to balance load and demand as well as store intermittent energy has long been a driving factor. But as more comes online and prices fall, batteries-in-a-box container units and other mobile solutions are also finding niches both in “island” and distributed grids worldwide.

Last month, in a move aimed at bringing storage resources into wholesale markets, FERC directed regional grid operators to devise new tariffs for storage market participation that allow the resources to provide multiple electricity market services.

On Monday, a handful of market participants, including one regional grid operator, filed for rehearing on the proposal.

MISO noted that while the commission approved an order for storage resources above 100 kW, it deferred issues about aggregations of smaller distributed energy resources to a technical conference on April 9-10. FERC, it argued, should give stakeholders more time to devise how the outcomes of that conference will affect its compliance filing on the FERC order.

Other stakeholders argued FERC’s order goes too far, stepping into state jurisdiction over energy resources connected to the distribution grid.

TAPS argues FERC should require distributed storage resources to “make a binding choice” to participate exclusively either in the wholesale markets or at the retail level.

TAPS says it is seeking rehearing because regulators did not acknowledge or provide a reason for rejecting recommendations for an opt-out provision to storage rules. There is an opt-out provision in the commission’s demand response rules, and TAPS argues a similar mechanism should be put in place.

Xcel makes a similar argument, writing that allowing distribution-connected storage to provide both retail and wholesale services “oversteps the limits on the Commission’s jurisdiction under the Federal Power Act by interfering in state jurisdiction over retail sales and affecting the ability to preserve distribution system reliability.”

Ari Peskoe, director of the Electricity Law Initiative at Harvard Law noted in a series of tweets the TAPS and Xcel filings could potentially set up a challenge at the U.S. Court of Appeals for the District of Columbia Circuit Court if FERC rejects rehearing requests.

Elon Musk’s Tesla company last year built the world’s most powerful battery, but a new project means it could soon be out of the record books.

British billionaire Sanjeev Gupta is behind the development of a 120 megawatts/140 megawatt-hours storage facility, which will be larger than the 100 megawatt/129 megawatt-hours battery constructed by Tesla in Jamestown, South Australia, last year.

The new battery storage facility will be built at a location less than 100 miles from Tesla’s effort and be linked to a new solar farm at the Whyalla Steelworks, a site recently acquired by Gupta’s Liberty House firm when it bought Australian mining and materials company Arrium last year, ABC News reported.

The plan for another mega-battery reflects South Australia’s ongoing interest in renewable energy that was largely motivated by a widespread power outage that hit the state in 2016 during a huge storm. Described as a once-in-every-50-years weather event, the storm temporarily cut power for 1.7 million residents in Adelaide and the surrounding area, and served to focus the minds of local officials as they sought an effective solution to ensure that such serious outages could never happen again.

South Australia currently sources nearly 50 percent of its power from wind and solar, and according to outgoing South Australia premier Jay Weatherill, the new battery will “help underpin the long-term viability of the Whyalla steelworks, as well as provide additional benefits to the South Australian grid.” Construction will begin later this year.