For Mr Guterres, such rapid innovation and deployment is needed because “storing renewable electricity is often cited as the greatest barrier to the clean energy transition.”
Generating renewable power is certainly easier than storing it. But the ability to store the electricity produced by wind and solar facilities – in a variety of ways, and for various durations – is vital, given the inherently intermittent nature of that electricity.
The argument of those opposed to renewables has always been “what happens when the sun doesn’t shine, or the wind doesn’t blow?” At the moment, those gaps in supply are mostly filled by energy derived from fossil fuels. In order to reach a net zero world, these supply gaps need to be filled by drawing on stored renewable power. This imperative has only been heightened by the events of the last year, which have focused the attention of many governments on energy security and the value of local supplies.
In the UK, for example, as the energy storage market matures, we are seeing an extremely strong pipeline of battery storage projects, often at increasing scale. In the past few months alone, we have advised lenders, investors, developers, owners and operators on a large number of significant deals. There is a steady flow of both new entrants to the market and truly innovative projects.
Inevitably, this means the appetite for funding such projects is at an all-time high and looks set to grow even further. The market will present a growing number of opportunities for funders, and in that context, we also expect to see syndicated and multi-funder financings become increasingly common.
Size matters
In many markets, most of the energy storage facilities built so far have been linked to individual renewable projects, often relatively small-scale solar plants. In order to achieve the full potential of renewable power – as well as overcoming distribution and grid issues and ensuring energy reliability across the whole network – many more ambitious developments will be needed.
One particular type of smaller facility is the ‘behind-the-meter’ storage system. Behind-the-meter systems enable consumers to draw energy from the grid and store it for later on-site use or to enable a better use of on-site generation, such as rooftop solar. We expect to see large energy consumers increasingly arranging such bespoke energy storage to avoid peak demand charges.
Legislation and regulation
In many nations, legislation is needed to stimulate the energy storage market by removing obstacles to development, licensing and permitting issues or regulatory problems for particular technologies.
Comprehensive regulatory frameworks for energy storage are rare. One of the prominent barriers for energy storage has been the lack of a legislative or regulatory definition of energy storage, subsequently resulting in a lack of clarity when storage interacts with other legislative and regulatory measures. Many jurisdictions still treat energy storage as ‘generation’ for the purposes of licensing and other regulatory requirements. However, this has often been a temporary stopgap, and as awareness grows of the need to address energy storage within the wider electricity regulatory framework, governments are increasingly coming forward with new legislation in order to define energy storage in its own right.
Our new series on energy storage trends in major EU economies provides more information on the many issues faced by energy storage developers and investors, and on recent regulatory and legislative developments.
Technologies old and new
Batteries are undoubtedly the energy storage technology that has received the most attention recently (pace Mr Guterres). In part this is because of their importance in the development of electric vehicles. But large-scale battery developments – either at grid scale or attached to particular renewable power sources – offer very different technical challenges and considerations from the highly portable, short duration batteries used in electric cars. Indeed, there are many other forms of energy storage, some of which have been around for considerable amount of time.
Pumped-storage hydropower, for example, in which water is pumped to a high-level reservoir, so that it can generate power later as it flows back down through turbines, has been in use for over a century. It is deployed around the world, accounting for over 90% of energy storage capacity. It is tried and tested, and usually has a relatively low cost over the lifetime of the asset. However, it relies on suitable topography, and many of the best sites for large scale storage present engineering challenges and are distant from the end users of power.
Other energy storage techniques range from systems that are, in effect, gigantic hot water bottles to solutions in which air is first compressed, using renewable electricity, and then released at a time when its energy can run turbines. Even the creation of ‘green’ hydrogen with renewable electricity can be viewed as a way of storing energy, if the hydrogen can subsequently be used as a fuel.
The Long Duration Energy Storage Council (the “Council”) – launched last year at COP26 with anchor members such as bp, Microsoft, Siemens Energy and Shell – includes businesses active in developing not only electrochemical technology such as batteries but also mechanical solutions like pumped hydro, chemical solutions such as the manufacture of synthetic gases, and thermal energy storage systems such as molten salt, where energy is stored through heating a solid or liquid for later release.
According to the Council’s calculations, 1.5-2.5 TW and 85-140 TWh of long duration energy storage could be deployed globally to support the decarbonisation of power systems by 2040. However this will require between US $1.5tn and US $3tn of investment. And this investment has to start urgently, with an estimated $50bn needing to be deployed by 2025 to install pilots and commercial plants for early decarbonisation and to enable cost-reduction trajectories.
At COP27 the Council will sign a memorandum of understanding for a Global Renewable Energy Alliance, along with the Global Wind Energy Council, the Global Solar Council, the International Geothermal Association, the International Hydropower Association, and the Green Hydrogen Organisation. This new alliance will support efforts to tackle climate change with a stronger and more aligned voice – one which includes an emphasis on the urgency of developing the energy storage market.
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