The rise of energy storage markets
Energy storage is a concept that many of you probably had not given a second thought just a few years ago. Yet today the word pops up everywhere. In this article we will explain why this suddenly has become such a buzzword and why any respectable company discussing energy now must include storage in their reporting conversations. We will also explain how storage will be transformed in to a $660+ billion industry before 2040 and why pumped hydro storage has an obvious role to play in this ecosystem.
In the end of this text, sources and articles/reports will be listed for those of you who are interested.
The imperative energy transition
Since the discovery of fossil fuels, they have been a huge part of our power systems. They are essentially a compact mass of energy, stored in the form of carbon chains. However, as the problems with adding additional CO2 into the atmosphere emerge, the need to transition into a low carbon energy production is becoming more and more pressing.
This energy transition has come a long way by reducing the cost of producing solar and wind energy by 88% and 68% respectively. At the same time, the production from these resources have increased more than 620%. However, there is an inherited problem with this weather dependent production – you cannot decide when you want to produce power from it. This is where storage enters becomes an essential part of the picture. Electricity must be produced and used at the same time. We will therefore need to be able to store energy if we want the energy production to be more reliable on fossil-free sources such as wind and solar.
The race for storage
As the world is kicking off post Covid, the green transition is in focus for many countries; especially the energy transition. These Countries wants to have larger shares of renewables in their system and are now realizing they will need more storage and flexible production. This will lead to a massive development of the storage market and marks the beginning of the next investment boom.
From being virtually non-existing, new deployments in storage will massivly pick up speed in the coming years and see a global installed additional capacity of almost 800 GWh already by 2030. According to Bloomberg NEF, the total investments in this market will surpass $660 billion until 2040.
What will this market consist of?
There are a lot of talks of which different technologies will take over this market with proposals ranging from flywheels and liquid batteries to hydrogen and compressed air. The difference in characteristics are as many as there are technologies (see table below). The technologies therefore have different advantages and will provide other types of stability to the system in different situations. For instance, the loss of inertia in the system that comes from the decommissioning of large generators, such as coal fired and nuclear plants, can be helped by adding flywheels or batteries that can response within milliseconds to signals from the grid. These technologies, however, often have a limited amount of stored energy.
With a larger share of weather dependent energy production, the system will need more long-term energy storage in order to be able to provide energy when the weather conditions are less favorable. As the storage in fossil carbon chains must be reduced, other technologies must be used. In recent years there have been a lot of talk about hydrogen and batteries.
These are most likely going to play an important role in future systems, as they are both scalable and mobile. This makes them especially interesting for the decarbonization of the transport sector. There are, however, some major drawbacks considering these technologies when it comes to grid scale storage, in other words energy storage that is used on the power grid.
Lithium-ion batteries have seen a fascinating development during the last years, both in energy density (energy stored per kg) and price. One of the major issues with them is that they are composed of rare earth metals such as cobalt and lithium. Both of these are dirty in production and also limited as resources. The resources that we do have should therefore be used where they have the most benefit. Other battery technologies, such as flow batteries, can be composed of more common materials. The problem is, however, that they have yet only been built in lab scale and any large-scale production of these have not yet been proven. And we cannot wait for the solutions of tomorrow to solve the problems of today.
Hydrogen has gained a lot of momentum in the last year and is very energy dense. One of the major drawbacks is its low efficiency. If you store energy, the losses from grid back to grid are more than 50%. It is also still a very expensive technology, both in the production of hydrogen and in the fuel cells that transforms hydrogen into electricity.
Why pumped hydro storage will be a vital part of a sustainable future
Pumped hydro storage (commonly referred to as PSH) is the most mature storage technology on the market with a very low technology risk. It has been used for more than 100 years and stands for more than 94% of the installed storage capacity today. PSH can be used to store massive amounts of energy and pure water is the element used to store it. Furthermore, with modern technology, a PSH-facility can be used, not only to store large quantities of energy, but also for grid stability services such as frequency control and energy balancing by responding its production to signals from the grid within a minute.
The problem is that it is difficult to obtain the necessary permits to construct a facility as it can have large impacts on waterways and ecosystems. It is then of essence to construct it in a way that limits such impacts. Also, the system requires large height differences in the landscape as it needs energy of position for the storage.
At Pumped Hydro Storage Sweden AB, we are therefore focusing on developing PSH in ways that have much reduced effects on the local environments. We are currently in the beginning of construction of our pilot facility at Åland which is going to be the first PSH-facility in the world to be constructed in an abandoned mine. This way, we can use the drifts and mine dams as reservoirs which minimizes the local impacts and will also have great height differences inherently in the system. This makes it possible to construct PSH in flat areas, where it has not been possible before.
In order to solve the massive challenge that is climate change, we will need every solution possible. It is therefore important to understand that there is not one solution that will solve all problems. The storage market is just in the beginning of an enormous growth and different solutions will find different roles. Pumped hydro storage is ready to be a sustainable and proven part of this ecosystem with its mixture of flexibility, resource efficiency and storage capacity.
Sources and further information for you who are interested: