Lux Research: Grid-scale Energy Storage

John Kluza, Alternative Power and Energy Storage analyst at Lux Research, hosted a webinar discussing energy storage on the grid.  The scope of energy storage ranges from the utility to distributed renewable energy generation sites.

Background:
To begin, some drivers of energy storage on the grid, besides utilities' attempts to store wasted energy during non-peak hours:
(note: all images sourced from Lux Research)
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We look at several sets of variables to provide a framework with which we can evaluate which method of energy storage is best suited to various applications on the grid.  Here are five sets of variables Lux considered:
1. Power versus energy applications
2. Centralized versus distributed siting
3. Regional generation mix
4. Geographical influences
5. Fully regulated versus restructured regulations

Provided below is an easy to understand explanation of the difference when thinking of a "power" versus "energy":

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There are a number of technologies available for storage and significant innovation continues to occur in the space.  Below are examples of several main categories charted based on the time taken to discharge (a measure of power vs. energy) and storage capacity.  Those technologies vertically situated the lowest on the chart make for the best power applications while those situated the highest make for the best energy applications.

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Given the different characteristics of power and energy, below are examples of applications that best suit each.  A good rule of thumb is that a power application is required to charge and discharge in less than two hours, whereas an energy application requires more than two hours.

Power Applications:

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Energy Applications:

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Another key factor is the distribution of the generation assets on the grid.  Storage was typically considered at the site of the utility where generation occurred.  However, in an increasingly renewable energy environment, storage can be distributed widely at these typically smaller generation sites.  The application of the storage will change depending on the place on the grid.

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Geography influences the methods of electricity transmission and distribution and therefore can have a significant effect on the delivery price of electricity.  The three  regions examined - New York, California, and Hawaii - give a broad sense of variances in electricity provisioning, with Hawaii being an extreme example as an island.Additionally, the status of regulation and associated legislation within a region can have a significant impact on pricing and needs to be considered when determining the economics of a storage installation.

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Research Findings:The findings consider the application (power vs. energy) across the three different regions - NY, CA, HI - based on estimates of installation and electricity prices.  Looking at the graph in the below slide, if the capital cost (dark blue bar) is less than the present value of lifetime benefit (light blue bar), then the storage technology generates a return.

The research findings indicate that for power applications:
- In the NY region, Flywheels are almost cost effective
- In the CA region, no power application seems to make economic sense
- In the HI region, Lithium-ion power applications make economic sense today

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The research findings indicate that for energy applications:
- In the NY region, CAES (compressed air energy storage) is economically viable today

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- In the CA region, Ice is the most attractive, but Li-ion is also economically viable today
- In the HI region, Ice is again the most attractive, but Li-ion and molten salt technologies are close to break-even

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In terms of sizing the market, Lux determined that energy applications will continue to be a larger market than power applications.

Power applications are expected to grow from approximately $65 million in 2010 to $220 million in 2015, a CAGR (compound annual growth rate) of 28%.

Energy applications are expected to grow from $390 million in 2010 to $1.2 billion in 2015, a CAGR of 25%.

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Thoughts & Analysis:

It is extremely difficult to draw a line in the sand and predict which storage technologies will win in which markets, but Lux Research has established a nice framework with which we can begin. Understanding the initial difference between power and energy applications is enough to explain why there will be several different storage technology winners. What is hard to predict, however, is how technology will continue to change to produce new, better types of storage at various price points. Additionally, there is big question as to what legislation will be enacted, and this can effect the picture in several ways, for instance:
- Perhaps increasing the presence of variable pricing models across the country
- Changing the way in which utilities deal with new renewable generation sources, such as feed-in-tariffs
- Requiring a greater percentage of energy storage
- Providing rebates or other financial stimulus to encourage energy storage
In any case, one needs to continue to watch changes in legislation to determine which storage technology may become most economically viable.

One aspect which was not considered was energy density, which one can simply consider as physical footprint of the battery. As additional renewable generation sources develop at the extremes of the grid, i.e. at residences, the form factor of the battery will be more important and technologies like Li-ion which has among the highest battery density will dominate. However, with the expected arrival of a greater number of xEVs, Li-ion may already be on the scene in one's garage.