Energy storage plays a central role in the decarbonization of our economies and future energy needs.
Wind and solar energy production, which do not emit carbon dioxide, have seen their costs drop considerably. Deployed on a large scale around the world, these energies have the potential to provide a large share of global energy production. Electricity storage can play a critical role in balancing electricity supply and demand and can help make energy systems decarbonized, reliable and cost-effective.
There are currently four types of energy storage at different levels of technological advancement: mechanical, chemical, thermal and electrochemical.
- Some forms of mechanical energy lend themselves to large-scale, long-term energy storage. These systems tend to have a large footprint and are therefore not suitable for small-scale facilities. Hydropower uses the potential energy of water pumped upstream. Compressed air power systems store air under pressure in underground cavities or surface reservoirs. Some also store the heat generated by the compression of the compressed air.
- The role of hydrogen as a form of chemical energy storage for the power sector will depend on the future costs of producing, transporting and storing hydrogen, as well as the pace of innovation in its end use.
- Among the electro-chemical energy storage options, the development of electric vehicle batteries has significantly improved near-term electricity storage opportunities. Long-term storage technologies (>12 hours) have not generated the same excitement. However, these technologies are becoming more attractive as governments introduce decarbonization requirements or as dependence on renewable energy increases.
- Thermal energy storage has attributes suitable for long-term storage, including the ability to efficiently store heat in materials.
These different technologies all have the primary function of returning renewable energy generated during periods of abundance to the power grid at times when its production is scarce and prices are relatively high. Variable (VRE) or intermittent (IRES) renewables are not reliably dispatchable due to their fluctuating nature (e.g., wind and solar) as opposed to controllable (e.g., dammed hydro or biomass) or constant (e.g., geothermal) renewable energy sources.
Many companies, in a wide variety of sectors, are investing in energy storage.
Options for absorbing large shares of variable energy into the grid include the use of storage, improved interconnection between different variable sources to smooth supply, the use of dispatchable energy sources, and overcapacity so that sufficient energy is produced even when the weather is unfavorable. Energy storage capabilities are keeping pace with the expansion of renewable energy generation capabilities.
Many companies in a wide variety of industries are investing in energy storage. Tesla is one of the best examples, as the company markets energy storage solutions for large-scale projects such as power plants with the “Megapack” or solutions for private homes with the “PowerWall”. Some leaders are forming alliances. For example, Samsung has signed a memorandum of understanding with ABB for the joint development and sale of ESS (Energy Storage System) solutions for microgrids. This will use Samsung’s lithium-ion battery technology and ABB’s electrical components.
Among energy storage solutions, batteries for electric vehicles are benefiting from continuous innovation. Indeed, car manufacturers are aware that the race for market share is driven by the need to reduce the price of batteries. Lithium-ion batteries dominate this market, but competing technologies are emerging that could reduce reliance on lithium, whose price has soared. Sodium-ion batteries could help reduce the price of batteries significantly. They don’t have the same energy density and don’t last as long on each charge, but they are cheaper and have less environmental impact. Lithium-ion batteries will continue to be the preferred option for many applications. However, the scarcity of lithium and the environmental damage caused by its extraction will need to be addressed.
In the United States, President Biden has pledged to accelerate the energy transition to renewables with the goal of having them account for 80% of energy produced by 2030. The Inflation Reduction Act passed in late 2022 includes $369 billion in assistance for the transition to renewable energy. In Europe, various programs have been set up to support investments in renewable energy and storage, especially long-term storage. The Long Duration Energy Storage Council (LDES Council), launched at COP26, estimates that by 2040, long-term storage capacity must increase by a factor of 8 or even 15 times its current level to enable a net zero energy system. The investment required would be between 1.5 and 3 trillion dollars.
More and more countries and companies are planning and developing storage projects, which remain an essential element to enable the integration of renewable energy. Currently, the most widely used technology is hydropower, but this has many drawbacks. Future technologies must be simple, reliable, efficient and adaptable on a large scale without geographical limitations and while respecting the environment.
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Source: Allnews | 23 Mar 2023 | Stéphanie Rheinboldt, Atlantic Financial Group.
Stéphanie Rheinboldt started her career twenty years ago as an equity analyst at Standard Life Investment in Canada and then worked for various private banks in Geneva: Lombard Odier, Banque Heritage and Union Bancaire Privée. In 2021, she joins the research team of Atlantic Financial Group to bring her expertise on global equities
Atlantic Financial Group is an international financial services provider. We operate as a one-stop-shop offering tailored advice and services to a demanding clientele of institutional investors, financial professionals and large private assets. Our team is composed of a large number of internationally recognized experts exclusively dedicated to our clients.