Why is Wind + Storage getting short?


Chandu Visweswariah is founding president and CEO of Utopus Insights, a New York-based energy analysis company acquired last year by Vestas.


Competitive markets are wonderful crucibles for innovation. With decades of manufacturing experience accumulated for use in portable electronics, lithium-ion battery prices have steadily declined. As a result, larger battery products for electric cars and buses have emerged, making them more affordable and paving the way for network applications.

The first versions of energy storage systems were relatively small. With the decline in battery prices, their size and volumes have increased, opening up new markets. A few now store enough energy to handle the varying nature of wind and solar power over the course of a day. Even larger systems are being planned and developed, but progress is still limited by battery costs.

In a few years, our scientists at Utopus Insights investigated the characteristics of hybrid power plants that combine wind and / or solar power with battery storage.1 While the industry has focused almost exclusively on pairing solar power with batteries, we have found, to our surprise, that wind pairing offers some unique benefits.

With solar coupling, there are many days when it is not possible to meet a target power commitment during peak hours. In most of the cases we have studied, pairing the winds results in significantly fewer missed days.

With hindsight, these results make sense. Rush hours usually start when the sun goes down, but the wind can continue to blow. Thus, solar requires more “lift and shift” because a greater proportion of the energy supplied during peak hours must be supplied by the storage of landfills.

Significantly, we have found that for a given battery capacity, the combination of wind and solar further improves the ability to meet peak demand. Reliability is improved because the two energy sources complement each other over time.

Just as choosing the right mix of stocks and bonds can reduce the volatility of our financial investments, diversifying renewable energy sources and pairing them with the right amount of storage battery is a good way to ensure to have enough energy during peak hours.

The optimum mix of wind and sun, of course, depends on the local climate and the timing of the peaks.

As a wholly owned energy analysis subsidiary of Vestas Wind Systems, the world’s largest wind turbine manufacturer, the production forecasting and storage optimization that we develop will be crucial in enabling these hybrid power plants to operate. ‘reach their maximum value. Hybrid plants can provide electricity reliably during peak demand hours, eliminating the need for expensive gas-fired power plants. It would be the beginning of the end of the production of electricity from fossil fuels.

The timing of this upcoming transition is directly related to how quickly battery costs will drop. The cost of batteries for electric vehicles, as tracked by Bloomberg New Energy Finance, has declined at an annual rate of around 20% since 2010. While most observers predict that this rapid decline must slow soon, we believe that the conditions are right for a rapid and continuous reduction in costs.

We evaluated the available data on cumulative build volume versus cost (the experience curve) for various lithium-ion battery applications. Batteries for portable electronics exhibit a high learning rate (defined as the percentage cost reduction for each doubling of build volume) of approximately 30 percent.

Supporting data dates back to the mid-1990s. New applications, such as batteries for electric vehicles and battery systems for large-scale storage, are believed to have much lower learning rates, in the order of from 18 to 20 percent. However, we believe the data shows a convergence of these learning rates to the long-established electronics learning rate of around 30% as manufacturing volumes have become large.

In fact, electric vehicle battery packs now dominate the annual global demand for all lithium-ion batteries, which many analysts say will lead to lower prices for batteries for large-scale storage. If our learning rate analysis is correct, and with manufacturing volumes driven by the booming and increasingly competitive electric vehicle market, we expect continued reductions in battery costs at a compound rate of approximately 20% per year for a few years.

Utility-scale energy storage will benefit from associated cost reductions and improvements in battery technology. And the fall in costs will make battery storage ubiquitous in our power supply networks, especially at the source: the power plant.

So where are the wind and storage power plants?

This brings us back to this question: why do so many newly announced power plants combine solar power with battery storage, excluding wind?

We are concerned that in many parts of the world, current government incentives to invest in renewable energy, established long before the emergence of large-scale battery storage, could distort this growing market. For example, in the United States, the solar energy investment tax credit includes investment in battery storage, unlike the wind energy production tax credit.

In addition, the ITC will increase to 10% of the project cost by 2022 and then remain at that level, while the PTC will expire in 2020. Recently, the US wind industry, represented by the American Wind Energy Association, has been advocating including wind power in the ITC tax code, in search of greater parity in the way in which wind and solar power are encouraged.

Globally, we need to make sure that subsidies and credits do not introduce perversities or obstacles to real progress; they should encourage investment in the application of storage but not favor a specific technology or design choices. Regulations must also be carefully considered. For example, storage is classified as generation in many markets, preventing transmission and distribution operators from owning or operating storage assets at points in the power system where they could be of most use.

Policymakers, legislators and regulators can promote these welcome changes by rethinking market design and investment incentives to encourage the integration of new energy storage technologies and allow market forces to establish their own. true value.

As the benefits of the clean energy transition become more evident, we urge to explore broader policy changes. These could include, for example, a phase-out of subsidies for fossil fuels, a gradual increase in the carbon tax or price, and increased funding for research and development of energy storage technologies that expand or complement the capabilities of lithium-ion batteries.

Clean, fuel-free energy sources are starting to replace fossil fuels to power our electricity grid. Increasingly affordable lithium-ion batteries are accelerating this trend, turning the sun and wind into reliable power sources. Indeed, these versatile batteries can store electrical energy any source when it is abundant and release it when it is scarce. They can be strategically located to reduce congestion on transmission lines. In addition, they provide ancillary services that improve the quality and reliability of power. These multiple benefits can be monetized and combined, adding to the attractiveness of the investment.

These developments herald the powerful economic forces that will drive the energy transition to come. Based on our forecast for rapid and continued reduction in battery costs, we expect remarkable progress over the next few years. New wind and solar power plants will be regularly paired with battery energy storage, and older plants will be modernized.

Planners and managers in the industry should anticipate rapid changes in the production and distribution of electric power, as well as faster electrification of transportation, heating and industrial processes, which still today depend on fossil fuels. An electrified energy sector, powered largely by the sun and wind, will be a big step towards a cleaner world with more abundant and sustainable energy, thus meeting an urgent environmental imperative.

1: For geographic locations in different climates, we modeled the capacity of the wind + battery; solar + battery; and solar + wind + battery systems to generate various fractions of nominal power during 4 hours of peak demand. For each case, we have assumed a battery capable of discharging at several fractions of nominal power for durations of 2, 4 and 6 hours.


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