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Battery Storage Solutions Finally Catch Up to Renewables Boom

While renewables are becoming the new normal, battery storage has largely lagged behind. But a new report from global consulting firm McKinsey and the roll-out of new storage pilot projects across the US, Germany and UK are evidence that storage could finally be catching up.

While renewables are becoming the new normal, battery storage has largely lagged behind. But a new report from global consulting firm McKinsey and the roll-out of new storage pilot projects across the US, Germany and UK are evidence that storage could finally be catching up.

According to a new report from McKinsey, battery storage is slated to become the next disruptive technology to take the energy sector by storm. Increasing demand for electronics and electric vehicles has spurred the scaling up of lithium-ion manufacturing, which in return has allowed battery pack costs to reach an all-time low.

Competitive prices have significant implications for energy markets, expanding storage’s role to include broader uses such as replacing conventional power generators for reliability, providing power quality services and supporting renewables integration.

The research indicates that utility customers, specifically those with solar arrays, stand to benefit the most from low-cost storage solutions. Dropping prices paired with a roll-back of incentives for solar in many markets is likely to see many households combine solar with storage to consume their own power on demand, instead of exporting power to the grid. While an attractive opportunity for consumers, grid defection could ultimately put stress on the utility business model, which is already faced by flat or declining customer demand.

In a low-cost storage environment, traditional rate structures are likely to be ineffective at mitigating load losses, as storage allows customers to shift solar generation away from exports to cover more of their own electricity needs and receive close to the full retail value of their solar generation. This new trend also presents a risk for widespread partial grid defection, in which customers choose to stay connected to the grid in order to have access to around-the-clock reliability, but generate 80 to 90 percent of their own energy and use storage to optimize their solar for their own consumption. This is already beginning to play out in places such as Australia and Hawaii where electricity costs are high and solar is widely available.

McKinsey indicates that utilities must start now to understand how low-cost storage stands to change the energy market and look for unconventional growth opportunities while driving cost out of the existing business to reduce their risk of customer rate revolt and stranded costs. Rethinking the grid and investing in software and advanced analytics will also be essential, but storage can be used as a tool to support the modernization of the grid. Because of the flexibility of storage, utilities will be better able to adapt to uncertain needs at the circuit level and reduce the risk of overbuilding and stranded investments.

Meanwhile, coal might be on the way out, but deserted coal mines could hold the key to a more sustainable future. According to a recent report by the Wall Street Journal, mining companies across the US and Germany are transforming abandoned mining infrastructure into power storage systems to support the electricity grids during periods of bad weather.

The concept addresses two major challenges many post-industrial economies face — providing sufficient storage capacity for their electricity grids and finding a use for decommissioned mines. Currently, the solution sees mines retrofitted with a pump storage technology that requires two pools of water — one at surface level and the other deep underground. On days when solar panels and wind turbines are working at full capacity, excess power would cause water to spurt up from a reservoir underground to a pool at the surface. When there is a shortage of sun or wind, the water is then released, drawn by gravity back down to the underground pool, turning a turbine in the process to generate electricity.

At this stage, retrofitting mines is a relatively expensive enterprise, ringing in at around €500 million. But while capital expenditure is high, the systems can last for upwards of 100 years and are virtually maintenance free, which is turning heads in the global community.

But there’s one major caveat. The low cost of electricity, driven by an abundance of natural gas, renewable power sources and other energy sources — will make it hard for companies to turn a profit. However, the prospect of job creation and economic growth in regions that have been hit hardest by the dying industry may be too hard to resist.

Meanwhile, automaker Renault has teamed up with energy equipment suppliers Powervault and Marks & Spencer (M&S) to trial used electric vehicle batteries in home energy storage units in the UK. If successful, the program could provide a second life for EV batteries, while helping homeowners with solar arrays save money when the weather isn’t cooperating.

As part of the trial, Renault EV batteries will be removed from vehicles, unpacked, graded and integrated into smaller battery packs. The batteries in electric vehicles usually have a lifetime of eight to 10 years. However, there is still plenty of useful life in them for stationary applications; giving the batteries an additional life before they are recycled. Within a Powervault home battery system, Renault batteries are estimated to have up to 10 years of additional useful life.

The Powervault second life trial will start in July 2017 and last 12 months. Fifty home storage units will be installed in homes served by M&S Energy, Hyde, UK residents, social housing tenants and schools in London’s Royal Borough of Greenwich.

Coinciding with the announcement of the second life trial, Powervault launched a crowd-funding campaign on CrowdCube in an effort to raise equity to accelerate the mainstream roll-out of Powervaults across the UK.

The roll-out of smart meters and associated smart energy tariffs will enable a Powervault to make any of the 26 million homes in the UK more efficient and cost-effective, regardless of the presence of solar panels, by storing electricity when it is cheap and using it at times when it is more expensive.