As the 2020 wildfire season continues to inflict massive amounts of damage across the American West, a key question will be how much, and how fast, the battery storage sector can mobilize to reinforce the power grid in California and elsewhere.
Companies deployed 168 MW of energy storage capacity in the second quarter, an increase of 72% compared to the prior year and the second-highest quarterly total reported from the growing sector, according to a recent report from the U.S. Energy Storage Association. In its latest episode, S&P Global Market Intelligence's Energy Evolution podcast spoke to several experts about the growth prospects for battery storage and the implications for the grid.
Dan Finn-Foley, head of energy storage with consultancy Wood Mackenzie's energy transition practice, noted that California added approximately 100 MW of battery storage in about eight months to help address capacity shortfall concerns following the Aliso Canyon gas leak, like San Diego Gas & Electric Co.'s accelerated procurement in 2017 of the Escondido Battery Storage Project.
Finn-Foley said in 2020 the market for energy storage installed in the United States is expected to double before accelerating even further in 2021. Developers are planning "massive amounts" of storage and major utilities are procuring their services, often either paired with existing solar or targeted at congested areas of the grid where the services are most needed, he added.
"Now we're talking about a whole other scale, where energy storage is coming online at the gigawatt scale as opposed to the megawatt scale. That's going to require an acceleration in the market but we have suppliers who are definitely already looking at doing that," Finn-Foley said. "The interconnection queue in [the California ISO] is flush with energy storage and solar-paired energy storage systems."
One of the suppliers looking to provide energy storage solutions to the grid is Fluence Energy LLC, a partnership between Siemens AG and AES Corp. The company is expected to generate $500 million in revenue in 2020 and $3 billion annually by 2025, according to comments in August by AES President and CEO Andrés Gluski.
Fluence COO John Zahurancik told Energy Evolution the company is doing energy storage projects utilizing batteries in more than 20 countries around the world.
"It's a pervasive technology that's on an upswing. Costs are coming down, the sophistication of the systems are going up," Zahurancik said. "It's just going to appear all throughout the power system to a point where a few years from now we're going to look back and say, 'how did they operate the electric power grid for over 100 years without having an effective form of energy storage?' Incredible."
California state officials are still assessing the factors behind heatwave-triggered power shortfalls that hit the state in August, with new details continuing to emerge. While some say it highlights the challenges of operating a grid with a lot of intermittent renewable energy resources, others have highlighted that the grid relied heavily on battery storage capacity and could have used even more.
"The energy storage industry, in many respects, is champing at the bit to get in there once again in California and prove that energy storage is a viable solution to the grid issues that the state is facing," Finn-Foley said.
Other factors behind the blackouts are also being examined, including a lack of electricity imports, the unexpected loss of two gas plants, a sudden drop in wind power, energy demand forecasts that failed to incorporate intensifying climate change. CAISO officials on Sept. 11 identified the two gas plants in question, one of which was erroneously ordered to reduce its supply by Pacific Gas and Electric Co.
But Finn-Foley is confident energy storage developers and their supply chain are ready to meet the challenges of increasing renewable resources on the U.S. grid, and these companies are prepared to rise to the occasion.
"If you think the energy transition is exciting, then buckle your seat belt for the energy transformation," Finn-Foley said of the coming wave of energy storage. "It's going to be a remarkable time for the energy industry."