- September 12, 2017
- Posted by: Admin
- Category: Utilities
Storage predictions in the late spring and mid-2017 show strong future growth based on expected economics. Selected NREL, University of Minnesota, Greentech Media, US Federal Regulatory Commission, and Bloomberg New Energy Finance mid-2017 storage reports support robust storage growth in the upcoming decade.
Recent NREL Reports
After a detailed review of utility tariffs, Clean Energy Group and NREL announced August 24, 2017 that demand charges for many commercial customers may be at levels that support storage on the basis of reducing peaks in 15 minute utility demand rate ratchets. They found that 25% of commercial customers in the US or about 5 million commercial customers pay demand charges that range from 30-70% of their electric bills and pass the $15/KW threshold that GTM and others believes justifies behind the meter storage at currently anticipated price levels. They state that they reviewed 10,000 utility tariffs, reportedly available to about 70% of the commercial buildings in the US. This supports the current growth of storage.
ETL July Report–Future Energy Storage Economics in Minnesota
University of Minnesota Energy Transition Lab (ETL) in connection with Strategen Consulting and Vibrant Clean Energy published a July 11, 2017 report on the projected future economics of energy storage based on several workshops and their modelling of MISO. Among the key findings was that, “Compared to a simple-cycle gas-fired peaking plant, storage was more cost-effective at meeting Minnesota’s capacity needs beyond 2022.” The group used 4 hour duration lithium-ion batteries, a detailed capacity and production cost model in conjunction with analyzing the net present value benefits and costs of 100 MWs of storage (20 year life), storage (3 hour duration) plus (50 MW) PV solar and 100 MW combustion turbine natural gas-fired generation in various timeframes. A natural gas price of $4.93/mmbtu for cases in 2023 with a 2% per annum escalator was used along with multiple assumptions on other key factors. Ancillary benefits for intra-day non-peak periods were realized by the storage resources, along with capacity and energy revenues. The authors indicated that their finding was particularly relevant due to the calculated 1,800 MWs of simple cycle natural gas-fired units being considered by MISO in the MTEP17 planning case.
The group also cites that Connexus, an electric cooperative utility, has also confirmed that a 20 MW (40 MWh) plus a 10 MW PV solar project at a selected distribution level site is projected to be cost-effective and a good learning experience for the coop and the distribution grid. Taken together, this type of information provides support for the potential growth of storage in states other than California and PJM.
In related news, the US Federal Energy Regulatory Commission has recent filings for 565 MW of operating grid level storage (end of Q2 2017) by 22 operators of 45 projects (including 2 flywheel projects) in 12 states. Greentech Media (GTM) has cited in a May 2017 US storage forecast, that the combined US market for energy storage will grow to a projected 2,562 MWs in 2022 worth an estimated value of $3.297 billion, recent revisions appear to be relatively consistent with these numbers and predict that 52% by 2022 will be behind the meter storage and the combined US market will be 591 MWs. They also cite that 81% of the current 8 GW pipeline is the California market.
Bloomberg New Energy Finance (BNEF) published a July 2017 report on the worldwide electric vehicle market that projects 54% of new vehicle sales by 2040 will be electric. They also project an inflection point in the 2025 timeframe where electric vehicles on an unsubsidized basis will be less expensive than the internal combustion engines. All of the above is reportedly driven by a 70% decline in Lithium Ion battery prices from today’s levels projected by the second half of the 2020s, which changes the economics of oil used in transportation and is expected by BNEF to increase electric demand by 5% while reducing transportation fuel by 8 million barrels a day. Projected lithium ion battery production is expected by BNEF to grow from 21 GWh in 2016 to 1,300 GWh by 2030 with 270 GWh of production on-line by 2021.
The car market for batteries is expected to be a major driver of the economics of grid level storage. While natural gas prices are difficult to project, the level of auto related battery production is likely to put downward pressure on the cost of grid level batteries and fundamentally change the economics of storage versus gas-fired alternatives. A critical question remains on the timing of when the economics will change. And in a declining cost market on the timing of when is the best time to buy storage.