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The Energy Storage Industry Needs To Target Four Development Paths
Nov 05, 2018

At present, energy storage technology is accelerating, but there is still much room for development in energy management and commercialization programs. According to the latest energy storage report released by Weikai Law Firm, there are some challenges in the energy storage industry, but the development prospects are broad, and the future energy storage needs to be further developed in four aspects.


Battery storage has long been seen as an aid to the power generation side combination as it provides a solution to the intermittent problems of increased renewable energy penetration and is a means of avoiding the potentially high cost of grid retrofit projects. Although the underlying technology is relatively mature and proven, recent improvements can still bring new opportunities.


Current challenge


Regulators and the entire electricity market have been looking for the most suitable application scenario for battery storage, on the power generation side, on the power supply side, or as part of the transmission and distribution network. In most areas, batteries are considered a form of power generation a backup power source that is used to fill a power outage (such as because the wind stops blowing) or a power gap when a system pressure event occurs.


If we look at past government support for renewable energy, we will find that battery storage has never been as competitive as the on-grid price (FiT) model. The reason is that the cost of renewable energy technology is relatively high compared to its cost. In the traditional FiT model, the stable service provided by battery energy storage or the integration and response of the battery participating in the grid did not receive a response reward.


Until now, battery storage has struggled to attract traditional project financing providers, mainly because it failed to achieve stable revenue.


Improve technology, lower prices, increase installed capacity


In addition to improvements in the field of battery energy storage, the development of the industrial sector has further promoted the downward trend in battery storage prices. In recent years, battery storage prices have dropped significantly. Part of the reason comes from the realization of economies of scale, especially in the field of electric vehicle manufacturers. Moody's currently predicts that by 2020, the cost of lithium-ion batteries will drop from about $10,000 per kilowatt in the early 1990s to about $100 per kilowatt.


Bloomberg expects that by 2021, the annual global installed capacity of batteries will reach 131GWh, while the manufacturing capacity will increase to 400GWh per year, and the capacity will further increase by 1291GWs by 2050. Some critics have speculated that India will become an important manufacturing center.


Development Opportunities


With the advancement of technology, battery energy storage will not only be an aid to power generation, but it can also be used as a power generation end, which indicates that a new era of battery energy storage will be opened. What is worrying, however, is that imposing a disruptive technology into traditional regulatory categories can hamper investment and create obstacles to further development and innovation by providing inappropriate or unhelpful economic signals.


Power assisted service


Battery energy storage providers can provide a range of ancillary services to grid operators, including response services and balancing services. For example, the PCR market in Germany allows battery storage to participate in weekly auctions to provide the ability to handle grid frequency deviations of 0.01 Hz or higher. However, the PCR market is highly competitive, requiring a response time of 30 seconds means that battery energy storage suppliers will compete with natural gas plants, although the response time of lithium-ion batteries can be measured in milliseconds. Therefore, PCR fails to provide sufficient incentives for the power response of battery storage.


project financing


The installed capacity and the revenue from ancillary services are the driving force behind the project, but at present it looks pale and difficult to model. These revenues lack the steady cash flow required for traditional debt, and the result is a problem with battery storage facilities.


Microgrid and consumer market


One of the core opportunities for battery energy storage is the microgrid. Turderstarget customers in the professional market seeking more independent suppliers, and changes in peer-to-peer electricity trading around micro-generators will emerge.


The blockchain opened the micro-trade model, and the UK's first energy blockchain transaction took place between London residential areas in April 2018. By connecting the microgrid, the battery further increases its power supply level, smoothes the grid's electrical load, and exchanges a small fixed fee or charges per use charging mode.


System and technology need to match


Battery and battery energy storage are developing technologies, but their growth is currently driven mainly by demand for electric vehicles. If you want to improve the electricity market, you need to develop management methods for battery energy storage and corresponding financial subsidies. Battery storage needs to be seen not only as a backup power source or as a grid-assisted service, but also as a key player in managing a dynamic market and grid.


Energy storage next development goal


Based on the above points, energy storage needs to be further developed in the following areas:


1. Grid side, improve the participation of energy storage in the field of peer-to-peer transactions, micro-grid, etc.;


2. The power generation side will improve the application of energy storage in renewable energy and natural gas;


3. Institutional reforms require the establishment of subsidy mechanisms and the upgrading of renewable energy matching machines;


4. In terms of project financing, seek new financing channels, establish funds, and blockchain trading models.

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