While the growth curve for battery storage for major energy systems in the U.S. isn’t quite straight up, it’s more vertical in the last few years than ever. And that has huge positive implications for all forms of renewable energy, with operators looking for new ways to integrate and optimize storage in their projects.
The data on storage growth are loud and clear. The U.S. Energy Information Agency (EIA) last month reported that new utility-scale battery storage capacity more than tripled last year, from 1.4GW of new capacity added in 2020 to 4.6GW of new capacity in 2021. And that growth could have been even greater, but multiple respondents to the agency’s survey said supply chain difficulties kept them from adding even more capacity. Also, a recent Wood Mackenzie report suggests that annual battery storage capacity growth will hit 10GW in 2023 and stay at that level through at least 2026, with more growth possible if new state or federal laws are passed that encourage or require storage as a component of utility-level energy projects.
All this capacity will massively transform the market and models for electricity use throughout the U.S., even beyond the ongoing adoption of electric vehicles at the consumer and commercial levels.
With battery storage taking on more of the load that for years has been dominated by pumped-hydro systems—which accounted for 96% of all installed storage capacity as recently as 2017—there are a myriad of new options and uses that will help with the world’s transition to sustainable energy. Among the transition services batteries can provide, market watchers are interested in options such as providing frequency response and reserve capacity, black-start capability, and other grid services, not to mention storing power in electric vehicles, upgrading mini-grids, and supporting “self-consumption” of rooftop solar power.
Batteries bring flexibility and profitability
For solar and wind projects, batteries bring a wealth of difference-making benefits, including helping to manage demand and pricing optimization to increase the profitability of costly and resource-intensive assets. The EIA study showed that most storage is used to store electricity when prices are low so that operators can discharge when prices climb, providing arbitrage options on top of steadying supply to keep grids stable. Data from California, where battery storage growth far exceeded that of second-place Texas and all other states, showed more than 80% of new battery capacity was used for arbitrage purposes.
Steadying out fluctuations in supply and demand is even more critical in the renewables space, where excess wind or sunlight adds availability that would otherwise go wasted. With batteries either included from the initial construction or added later in a project’s life span, they provide more flexibility to help stem the negative effects of falling PPA pricing due to the growth of more renewable energy sources feeding into grids on top of baseload supply from natural gas and other legacy energy sources.
In fact, the growing issue of curtailment—the deliberate reduction of power to balance supply and demand in real-time, instituted at the discretion of grid managers—makes battery storage an almost mandatory derisking mechanism to limit the amount of time that wind and solar assets sit without being productive. While there is variance in all systems, recent data from the Electric Reliability Council of Texas (ERCOT) showed solar projects are subjected to twice as much curtailment as wind projects, which makes battery storage an even greater need in that sector. Also, in Texas, as of May 2022, more than 300 of the roughly 900 projects seeking ERCOT approval involved battery technology in some way, showing just how big a priority storage is becoming at the utility level.
The vital role AI will play for renewable energy and storage
As storage becomes a more commonplace and necessary feature of the growing renewable energy marketplace, its integration provides more opportunities for artificial intelligence (AI) technology to find efficiencies in marketplace pricing and management of physical assets. Because of the tremendous amount of structured, regularly updated data generated by all energy assets, renewable energy and battery storage are areas where AI can produce valuable insights quickly.
On their own, batteries can’t control when they are charged or discharged, but production and demand forecasting created by AI models can find optimal time periods for both activities. AI can also identify the best charging cycles and practices to maximize battery life. And AI tools can conduct constant analysis and forecasts to detect anomalies across an array of electrical, electro-mechanical, chemical, and thermal subsystems, preventing thermal runaways or other degradation-inducing events. These capabilities ensure that costly, vital storage assets aren’t compromised or destroyed altogether.
Operators in renewable energy are increasingly looking toward AI technology solutions to get the most out of the growing availability and opportunity of battery storage, in addition to optimizing energy production. AI-powered platforms such as SparkCognition Renewable Suite can find efficiencies at fleet level that would easily go overlooked while enabling alerts for potential failure or degradation of vital components.
Capabilities like this will enhance profitability for new renewable energy projects or even extend the productive lifespan of current projects long enough to be part of the next evolution of how the world meets its energy needs.