The push for a clean energy transition is widespread, with the shift from fossil fuels being recognizes as essential for the energy sector and for economies across the globe. But doing so means moving away from energy generation systems that have long provided customers with reliable and stable energy. In industrialized nations with well established grids backed by traditional power plants, customers seldom had to wonder whether the lights would come on when they flipped the switch. Some argue, however, that a switch from coal and gas towards renewables like wind and solar threatens that reliability, which is undoubtedly a cornerstone of the energy industry. No one wants to see the sector take a step backwards, and the only way to embrace a clean energy future is in a way that likewise ensures the power will always be on when we need it. To help renewable energy match the reliability of the grid today, energy storage will be necessary.
Energy storage has taken a central focus in the power sector, and what Australia has been doing with the technology recently is raising eyebrows. But before digging into what Australia can do, let’s first take a step back and look at global energy storage as a whole.
WHY DOES ENERGY STORAGE MATTER?
Energy storage is often seen as one of the missing links of the clean energy revolutions, the key that if was economically and efficiently solved could unlock a whole new era of renewable energy. While renewables like solar power and wind energy are increasingly cost competitive with fossil fuels, even beating out the cheapest coal competitors on a cost per kilowatt-hour basis, even the staunchest of green energy advocates recognize and acknowledge the inherent weakness of these energy sources: their intermittency. While coal and natural gas suffer from the massive amount of greenhouse gases they pour into the atmosphere, they have remain entrenched as a key part of the energy mix for, among other characteristics, their ability to reliably and at short notice provide electricity to the grid. Solar and wind energy, on the other hand, are at the mercy of the sun and the wind, so solar farms are hardly useful at night and even the most efficient and large scale wind turbines cannot produce a drop of energy if the wind isn’t blowing.
That’s where energy storage systems come into play. By pairing these intermittent systems with batteries or other forms of energy storage, such as a pumped hydropower facility, electricity that’s generated during peak times of solar or wind generation can then be stored and deployed when needed at a later time. Without energy storage, the entire power grid operates on a delicate balance of always trying to ensure supply meets demand within a narrow range, so all power needs are met and all generators are properly compensated. That means as demand ramps up towards peak demand in accordance with typical daily patterns, the grid typically taps into peaker gas plants to supplement extra needs beyond what’s already available, adding more carbon-intensive energy to the grid. But if grid operators and owners of renewable energy generation facilities have energy storage available, then they can freely allow their equipment to generate when the ‘fuel’ is available (mid-day for peak solar generation and night-time for the most reliable and high speed wind for wind generation) and simply hold onto that energy until it’s most needed (or even most profitable) for the grid.
The idea of using energy storage to shift when renewable energy can be used is not a new idea, with individual sites commonly being found with paired energy storage systems for rooftop solar panels that allows facilities to reduce the amount of power they pull in from the grid. But on a large-scale basis, energy storage has remained a drop in the bucket, stunted from costs that remain high, energy losses from inefficiencies remaining prevalent, and even lack of availability of necessary resources like rare metals or even physical space. But these are issues that scientists, industry players, and government researchers have been hard at work tackling. While they have not yet been solved completely by any stretch, lithium-ion battery costs fell 80% from 2015-2020, new innovative technology solutions are improving the efficiency and effectiveness of energy storage, and the research and development of energy storage technology is one of the few areas actually seeing bipartisan support in federal energy policy.
If these trends continue and energy storage can grow in prominence and efficacy like many experts expect, the results could be game-changing for the energy transition. All of a sudden the economics of building new renewable energy generation facilities would flip, with building a solar power plant or a wind farm that is big enough to outpace the needs of the grid at any given moment would be practical, as the energy could be stored to be used at a different time or location rather than being curtailed and creating economic disincentives.
STATE OF THE GLOBAL ENERGY STORAGE MARKETS TODAY
Energy storage takes many different forms, with the University of Michigan Center for Sustainable Systems citing the deployed and available technologies as pumped hydro, flywheels, compressed air energy storage (CAES), batteries (including sodium-sulfur, lithium-ion, and lead-acid), flow batteries, and molten salt energy storage, while a handful of other energy storage technologies remain emerging.
Looking across the globe, data from the U.S. Department of Energy provides the following snapshot of the global energy storage markets. Across the world, 173.6 gigawatts (GW) of grid-connected energy storage has been installed across 1,355 energy storage projects in total. The United States is home to 23.2 GW and 40% of the of energy storage projects across the globe remain in the United States.
That said, quantity does not necessarily equal quality, and in many ways, Australia is known as the country that is stepping up to providing a vision of what the future of energy storage can and will look like. Despite only being home to 53 operational grid-tied energy storage projects (2.7 GW), according to the Department of Energy data, the Smart Electric Power Alliance has noted that the United States has a lot to learn about energy storage from the Land Down Under:
Australia is home to a battery energy storage system (BESS) that is demonstrating how to optimize a BESS asset to monetize value streams for multiple parties. In operation for one and one-half years, the project is exceeding expectations for both regulated and deregulated revenues. If trends continue, the revenue from the project will surpass the total cost of the project in another 6 months—about 2 years after project commissioning.
This energy storage installation, the ElectraNet Dalrymple Project in South Australia, is just the latest of projects that are making waves in the world of energy storage and demonstrating the market and policy forces that can be used to further incentivize and make profitable these important grid-scale battery investments. But many will notably remember Elon Musk and a Twitter bet as what really kicked off the energy storage revolution in Australia.
HOW TESLA IS LEVELING UP ENERGY STORAGE IN SOUTH AUSTRALIA
In 2017, Tesla installed the world’s largest lithium-ion battery in the world in South Australia, which served as a record-setting level of grid-tied energy storage. At 100 megawatts (MW) of power and 129 megawatt-hours (MWh) of total capacity, the Hornsdale Power Reserve rightfully earned its colloquial nickname of the ‘Tesla Big Battery.’ While this story would be an interesting one on its own for breaking new technological and clean energy ground, the story behind the Tesla Big Battery is one of those that would sound like a bad movie script if you didn’t know better, thanks to Tesla’s eccentric and driven leader Elon Musk.
Tesla’s Big Battery became an idea in the wake of storms in Australia that caused mass power loss and blackout events for 1.7 million citizens across South Australia. In modern society, that many people and businesses suddenly without electricity isn’t just an inconvenience, but it’s a serious health, safety, and economic concern. Musk, like many others who are invested in and knowledgeable about the world of clean energy, posited that such resiliency issues would not be so prevalent if massive grid-scale batteries were installed. While skeptics rightfully note that capacity of energy storage would need to increase leaps and bounds to be able to power any country or region for an extended period of time in a black out or even to enable 100% renewable grids (nearly 300 GW would be needed in the United States alone), Musk bet that installing large-scale batteries would still help harden the grid and make it more resilient even without reaching such astronomical capacities. By filling in when needed, limiting interruptions on the grid, and being available for unexpected outages at power plants, a massive grid-tied battery could provide value to the grid and Australians alike.
While that all sounded great in concept, getting energy storage projects of massive scale off the ground has long been a challenge. Never one to back down from doubters, though, Musk said he could get the world’s largest battery installed in the South Australia region that had been hit with the blackouts and he could do so in just 100 days. And when pressed on whether he was serious, Musk doubled down in a Tweet, saying:
Tesla will get the system installed and working in 100 days from contract signature or it is free. Is that serious enough for you?
And as he so often does, Musk and Tesla delivered. Not only did the battery get installed and tied to the grid within the 100 days, but in the several years since the Tesla Big Battery is already credited with helping prevent widespread blackouts from three major system outages, while consistently bringing stability to the Australian power markets and reducing costs to customers across the region.
The success of Tesla and the Big Battery in South Australia has been so great, in fact, that the Australian and South Australian governments have funded an expansion of the Big Battery by 50% to reach 150 MW of power and 193.5 MWh of capacity. While the Prime Minister in 2017 scoffed at Musk’s battery proposal, claiming that the world’s largest battery was more publicity stunt than actual solution, the present day Energy Minister of Australia has seen Tesla’s results and taken a quite different tone, noting that:
Projects like this, combined with the gas and pumped hydro projects that are coming online, are extremely important to the future integration of renewable energy to the South Australian grid.
Perhaps he saw that the Tesla Big Battery paid for itself in 2.5 years, even better than expected, or perhaps it was just the lack of widespread blackouts that created worldwide headlines like in 2017 before the energy storage solutions were fully embraced. Whatever the reason, though, South Australians are benefitting widely, and energy storage is looking even brighter on the global scale than it already has.
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