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In This List

Energy storage seen as 'third tipping point' for renewables

Essential Energy Insights - September, 2020

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Energy storage seen as 'third tipping point' for renewables

The emergence of lithium-ion batteries and other new energy storage technologies represents a "third tipping point" for wind and solar energy that is needed to transform renewables into the world's largest source of power, a veteran energy venture investor and technology entrepreneur said.

"Storage is really everything. It will change everything if we dramatically ramp up the amount of storage that we have," Bill Gross, founder and chairman of Idealab, a Pasadena, Calif., venture capital firm and startup incubator, said Oct. 17 at a sustainability conference in Oakland, Calif.

The "first tipping point" for renewable energy came in recent years, "when building wind and solar became cheaper than building new anything else," Gross said. The second tipping point is occurring now, because "building new wind and solar are cheaper than existing power plants." Recent analyses by S&P Global Market Intelligence, Lazard Ltd. and Bloomberg NEF have reached similar conclusions, which are being validated in energy markets.

Until energy storage advances, however, the variability of wind and solar power will limit renewables' further ascent, Gross said. "It can't replace baseload. It can't replace a gas power plant yet."

Though pumped hydroelectric storage is a proven, cost-effective source of long-duration energy storage, accounting for 96% of energy storage in the United States, the best locations are developed, Gross said. While that is driving investment into alternatives, primarily electrochemical batteries, emerging energy storage technologies remain too expensive, he said, adding, "We need research in all areas to get to that third tipping point." Gross sees great potential for a gravity-based storage technology that Swiss startup Energy Vault, an Idealab portfolio company, is developing.

'A model for clean peakers'

NextEra Energy Resources LLC, a subsidiary of NextEra Energy Inc., is working on solutions that could advance Gross' envisioned "third tipping point," relying on lithium-ion batteries that are dominating U.S. energy storage additions.

"What we see is storage is really the means of enabling the renewable industry to keep growing," Chelle Izzi, executive director of distributed generation at NextEra Energy Resources, said in a panel discussion at the Verge conference in Oakland. "That means all of the wind and solar you want to build, but it also means creating a model for clean peakers."

The largest provider of battery-based storage in the United States, NextEra has 140 MW of batteries in operation and another 260 MW of announced projects, including systems in Nevada that pair solar with storage. Thousands of megawatts of solar-plus-storage projects are planned across the U.S., primarily in the West, according to S&P Global Market Intelligence research.

Such hybrid solar-battery plants will be "25% cheaper" than gas peaker plants in the U.S. Southwest, including tax incentives, by 2021 and "undercut" gas peakers without subsidies by 2023, Bloomberg NEF analyst Hugh Bromley said in a recent interview. "I don't see solar-plus-storage displacing all gas," he added, in part because risk-averse utilities still view battery-backed solar as a new resource and "will exercise caution."

Barbara Lockwood, vice president of regulation for Pinnacle West Capital Corp. subsidiary Arizona Public Service Co., agreed. "As a utility, we look at tried-and-true technology, and that's what we deploy for reliability purposes. Having said that, batteries just are an amazing technology ... They very much are going to be part of the future."

In addition to contracting with First Solar Inc. for a 65-MW solar array coupled with 50 MW of batteries that is expected online in 2021, Arizona Public Service is considering energy storage offers to two requests issued this year, one for new installations and one to add storage at existing solar facilities. "We are amazed at how the prices are coming down," Lockwood said.