What is energy storage? The energy store absorbs and then releases the electricity so that electricity can be produced at one point in time and at another point in time. The main forms of energy storage include lithium-ion, lead-acid and molten salt batteries and flow cells. Energy storage has four main advantages: first, it can be used to smooth the amount of current, because the amount of current can be increased or decreased in an unpredictable way; second, storage can be integrated into the power system, so that if the main source of power is broken Storage can provide backup services to improve the stability of the power system. Third, storage can improve the utilization of power generation or transmission of distribution assets, for example, can store electricity more than the current demand; Fourth, in some markets, the cost of power generation is in certain A moment will be significantly lower than other points in time, and storage will help to smooth costs. Historically, companies, grid operators, independent power suppliers, and public institutions have invested in energy storage equipment, both for themselves and for the entire grid. As storage costs decline, ownership will widen and many new business models will emerge.
Many people view cost-effective energy storage as a connector for the loss of discrete renewable energy sources such as solar and wind power, and energy storage is reliable 24 hours a day, 7 days a week. The potential for storage to meet other needs, such as easing congestion and smoothing renewable energy generation, has led to a huge interest in power supply instability, which has generated great interest from public institutions. Major industrial companies see storage as a technology that can change cars, turbines and consumer electronics.
However, others hold different views and firmly believe that storage cannot be cost-effective in a short period of time. This kind of pessimism cannot be eliminated. A fundamental change in energy storage will occur at some point in the future, and storage is still a drop in the ocean. In 2015, the United States recorded a record 221 megawatts of new storage capacity, more than three times that of 65 megawatts in 2014. In 2014, it has increased significantly from the previous year. However, in 2015 more than 160 MW was deployed by the regional transport organization PJM. And 221 megawatts accounted for a small percentage of the total power generation of more than 1 million megawatts in the United States.
Industry research indicates that there is a huge potential for fixed energy storage in the near future. One reason is that costs are falling, reaching $200/kWh by 2020, half the current price, reaching $160/kWh or less by 2025; another reason is to identify the most economical projects and the highest potential Storage customers have become a top priority for a variety of companies, including power suppliers, grid operators, battery manufacturers, energy storage integrators, and companies that have established strong relationships with potential customers such as solar developers and energy service companies.
Where is the competition? Model exploration
Determining and optimizing projects and customers is more complex, meaning measuring how electricity is used, how much it costs, and what the storage price is.
However, institutions that have more access to electricity usage data do not fully understand how to estimate the economics of storage; institutions that understand these economic indicators are struggling to access real data on electricity use. Moreover, the trend is to average the data when doing the analysis. However, the total number of uses is not very useful when estimating the prospects for energy storage, as the type of power usage of similar buildings next to each other may be completely different. Conclusions based on average data are not accurate in determining which customers are able to achieve profitability.
In order to determine the ideal customer, we need to establish a set of energy storage allocation models that consider the following three types of real data:
* Electricity production and consumption ("load distribution"), in at least seconds or minutes;
* Battery characteristics, including price and performance;
* Electricity prices and taxes.
The figure below shows a model for determining the size and type of energy storage. These stores are primarily used to meet goals such as mitigating demand, providing frequency adjustment services, changing or increasing the control of renewable power in a scaled grid, and storing power from residential solar power.
The model shows that energy storage solutions for each of the four most important applications (demand electricity management, grid-level renewable energy, small-scale solar + storage and frequency regulation) are already profitable.
Demand electricity management
Some customers need to pay for electricity during peak hours (requires electricity). Energy storage can be used to reduce the maximum consumption (the maximum power the customer uses from the grid), thereby reducing the customer's demand for electricity. According to McKinsey, the balance of payments for electricity bills for most customers in North America is $9/kW. McKinsey estimates that by 2020 the cost can be reduced to $4 or $5/kW. Importantly, even if you serve potential energy storage customers in the same geographic area and pay the same taxes, the profitability is not the same, mainly because the customer-specific activities are different. Another interesting situation is that as storage costs decline, not only does it provide an economic basis for serving more customers, but the optimal size of existing customer storage increases accordingly.
Grid-level renewable energy
Energy storage can smooth or stabilize the output of wind and solar fields, that is, reduce the uncertainty of power generation at specific times. The extra cost to stabilize wind power can be as low as 2 or 3 cents per kWh. The cost of stabilizing solar energy is about 10 cents per kWh, because the energy field runs less every day than the wind field.
Small-scale solar + storage
At the residential level, solar and storage blending is only possible under specific market and regulatory conditions where storage value is greater than installation cost. This can be done, for example, when additional capacity can be stored for later consumption. In that case, consumers need to buy less power from the grid to reduce costs.
Frequency adjustment
There is continuous instability between power generation and consumption in the grid, as thousands of devices start or shut down unrelatedly. These instability causes inconsistent power frequencies, which can damage sensitive equipment and may affect the stability of the grid if not checked or allowed to extend. Due to its fast response time and effective charge and discharge capacity, the memory system can perform frequency adjustment well.
According to McKinsey analysis, the market in which the frequency adjustment is selected can be profitable. Ideally, the battery can be maintained at a particular state of charge to reduce the amount of storage required.
How to compete: battery status
Battery technology, especially lithium-ion batteries, is gaining more and more attention and making the most progress. 95% of the new energy storage layout in 2015 is lithium ion technology. They are also widely used in consumer electronics, and there are also great prospects in electric vehicle applications, such as hybrid and electric vehicles. The price of lithium-ion batteries has been declining, safety is increasing, and they can be applied in environments that require large amounts of energy in a short period of time (such as the power environment), or in energy environments that require relatively less energy in practice. Overall, these features make lithium-ion batteries suitable for fixed-energy storage across the entire grid, from large public-grade equipment to distribution facilities, as well as independent commercial, industrial, and residential systems.
McKinsey's model demonstrates the centrality of lithium-ion batteries to public-level energy storage, but also raises two warnings: First, matching the performance of different types of lithium-ion batteries is critical to the specific application. For example, two major lithium-ion battery suppliers are competing for a particular industrial application. One of the company's products is more economical than the other in 86% of the work area due to faster charge and discharge capacity. USD/kWh. Second, non-lithium ion technology may work better in some special applications. For demand electricity and residential solar + storage, some lead acid products are more cost effective than lithium ion batteries. For large wind power installations, the flow cell is more economical than lithium-ion batteries except for a very short time (less than one hour), which is expected to last until 2020.
Policy and market restrictions
The McKinsey model shows that even today's energy storage is profitable, and supportive policies will quickly expand the market. In markets that do provide regulatory support, such as the US PJM and California markets, energy storage is faster than other products without policy support. In most markets, policies and incentives have not been able to optimize energy storage configurations. For example, discontinuous renewable energy output can vary at a rate of megawatts per minute, but there is little incentive to use renewable energy storage for smooth power production.
Another issue is the difference in taxes and the lack of continuity in encouraging energy storage allocation. As a result, customers with similar load requirements have different options. Some taxes provide incentives for the power system to use storage, and then some do not. Matching the load to the right tax and ensuring tax stability helps to establish an economic business model for energy storage.
Finally, it is difficult to determine and obtain existing opportunities by not being able to model specific models, customer data, and battery performance (partly due to policy choices and rules restricting data acquisition).
How to grasp the future
First, energy storage has achieved cost-effectiveness in specific applications. This is ignored when emphasizing formal authorization, some storage project subsidies and non-economic or difficult to measure storage economics.
Second, market participants need to obtain detailed data to identify and prioritize customers with financial benefits. Due to the complexity of energy storage, configurations need to promote sales models rather than drive sales models, and companies that prioritize creative access to and use of data.
Third, storage providers must be enlightened when designing storage systems, deciding which ones to use lithium-ion batteries, lead acid, flow cells, or other technologies to get the most value. The use of multiple technologies can incur additional costs, but it also avoids sudden price fluctuations.
Fourth, companies that use battery and load data may get good returns. The unique characteristics of each customer require customized products, including advances in the discovery and acquisition of maximum value calculation methods. With the evolution of regulation and technology, strong customer relationships help to obtain relevant data and develop the most economical solutions.
Fifth, how to use storage to reduce system costs requires some thinking. Cases may include price signals related to major changes in electricity production and consumption, encourage storage to serve rules that are close to multiple regions, and tax that prioritizes renewable electricity self-consumption.
The most important tip is that the large-scale deployment of energy storage may overturn previous businesses for many power markets. For example, in developed countries, traditional central or large-scale power generation facilities have been used to meet immediate demand, and auxiliary service terms have smoothed the contradiction between power generation and load. Energy storage just provides such ancillary services. Ultimately, as costs fall, storage will play more roles, providing more and more power to the grid to replace power plants. Of course, this moment has not yet arrived. It must be acknowledged that energy storage has the opportunity to change the industrial structure both physically and economically, which defined the electricity market in the last century or more.
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