Best storage for grid applications – The EV factor
Since the mid-2000s, around the time I launched utility-scale storage projects in US, people have asked me: “What’s the best energy storage technology for grid applications?” My answer then is the same as it is now—and in fact, over these last ten years or so I have become even more confident that it is “whatever the electric car industry will hand down to us.”
After my experience in deploying a few large-scale storage devices and observing how utilities reacted to them, it became very clear to me that grid applications of energy storage have a large variety and diverse requirements that standardization of applications and mass production of storage units would be a far-fetched dream. Consequently, I recommended the community energy storage (CES) solution to help utilities move towards what could potentially become a modular storage unit that could be mass produced at low cost. However, they were so slow in adopting it that the market is now taken over by behind-the-meter storage options.
Unlike grid applications, the electric vehicle (EV) industry has a relatively well-defined application for energy storage, and their technology options are much fewer than what is available for grid applications. Thus, they order very large volumes of the same battery package and, therefore, are getting a much better price for it. I keep hearing from suppliers (who are selling the same battery to both markets) that the car industry is purchasing the same battery cells for half of what we pay for grid applications.
In other words, the EV industry is becoming an increasingly large force pushing the price of batteries down and forcing vendors to give them a safer and more reliable product. But who on the grid side has the comparable clout to shape the energy storage industry to conform to the grid’s needs and offer storage at lower price? Despite such differences in the ability to influence the storage manufacturers, transportation and stationary applications of energy storage have a few synergetic storage requirements:
- Both want low-cost storage, especially in transportation, which is very cost sensitive
- Both want safe energy storage, because it will be located very close to people and needs to survive accidents
- Both want reliable storage that people can count on
- Both want compact storage (even for stationary applications where storage size and weight correspond to higher manufacturing, transportation and installation costs)
- EV battery size is very close to what is needed for residential applications, which is one of the fastest growing segments of stationary storage applications.
These synergy factors—especially the fifth factor—have encouraged EV manufacturers, like Tesla and Mercedes, to leap frog ahead of their battery vendors and offer their batteries directly to the stationary applications market.
For now, Lithium ion (li-ion) batteries are the preferred type of EV battery, and will be until a better technology replaces them. According to the storage database of the Department of Energy, one third of all storage projects installed in the world are Li-ion. According to GTM Research, 70% of all US storage installations in 2014 (measured by capacity) were li-ion.
Of course, li-ion is not going to be the only feasible storage option for stationary applications as, unlike EVs, they have a very diverse set of requirements that li-ion would be very challenged to meet. However, li-ion has already become the “yardstick” to measure the feasibility of its competitors. You may have noted that very recently a giant global company wrapped up (or suspended) its newly started battery manufacturing operations simply because it kept losing to li-ion in essentially every project it bid on. Li-ion is putting pressure on all storage technologies to meet its cost and performance characteristics.
Allow me to play the devil’s advocate to address some of the reasons people used to feel safe from the transformational impact of EV batteries on stationary applications:
“Flow batteries are less expensive and can discharge for much longer time than li-ion.”
- For now, these claims are correct, but li-ion is being used in a 4-hour application at California. The EV giants who offer li-ion for stationary applications will certainly push it to handle longer discharge time. However, flow batteries have a lower efficiency and larger size (lower energy density) compared to li-ion batteries.
“Bulk storage, such as pumped hydro and compressed air, are too large to be threatened by li-ion.”
- With the availability of modern communications and control, it is a matter of time before an aggregation of small distributed storage units could functionally surpass pumped hydro and compressed air units. We must also keep in mind that it takes several years to build a large bulk storage at a capacity that li-ion factories can deliver in less than a year (see Distributed Bulk Storage: Is This the New Shape of the Grid?)
All things considered, I believe li-ion—or “whatever the electric car industry will hand down to us” —will continue to be the most preferred storage technology for stationary applications, but there will certainly be a share of the market for other storage technologies. Li-ion will continue to exercise higher pressure on other storage technologies, and only the fittest competitors will survive.