Energy storage economically viable within five years
Energy storage systems such as batteries and fuel cells have long been regarded as a means of more effectively managing grids that rely on large amounts of renewable energy from unreliable intermittent sources such as wind and solar farms.
To date, large-scale energy storage systems have proved too expensive to be deployed at a commercial scale and have been largely confined to niche applications and pilot projects.
However, analyst firm Bloomberg New Energy Finance (BNEF) is now predicting that substantial penetration of energy storage technologies into national grids is likely to be led by an expected drop in battery prices over the next few years.
According to a new report from the firm, grid-scale lithium-ion battery projects today cost more than $1,000/kWh, but with battery manufacturing capacity likely to outstrip supply in the short term, BNEF forecast prices will drop over the next 36 months and reach $600/kWh by 2015.
The report argues that falling prices mean using storage systems to manage energy prices, buying energy at periods of low demand and then storing it for use during peak periods could make economic sense for large power consumers within the next year and for smaller consumers by 2016.
Significant growth is also expected for pumped hydro and flywheel energy storage systems, meaning that by 2020 energy storage could be in widespread use in the UK across the transmission and distribution systems, and even co-located with wind farms and solar parks.
However, BNEF warns that changes in government policy, such as allowing transmission and distribution utilities to sell stored electricity to National Grid, will be needed to realise the benefits of bringing more renewable energy online and allowing commercial users to avoid having to purchase power at the most expensive times of day.
“The prize may be within sight, but there are obstacles that need to be cleared before the UK can attain it,” said Shu Sun, energy storage analyst at BNEF.
“For widespread adoption of storage… appropriate mechanisms need to be built into RIIO (revenue equals incentives plus innovation and outputs), the new regulatory model that aims to promote innovation and the use of new technologies within the UK power networks.”