FCH-JU report on Commercialisation of Energy Storage in Europe available

13 mei 2015

The FCH-JU report was released on 18th March, and focuses on the question to what extent current and new storage technologies can contribute to the effective integration of intermittent renewable generation such as wind and photovoltaic into Europe’s rapidly evolving energy systems. This report was created to ensure a deeper understanding of the role and commercial viability of energy storage in enabling increasing levels of intermittent renewable power generation. It was specifically written to inform thought leaders and decision-makers about the potential contribution of storage in order to integrate renewable energy sources (RES) and about the actions required to ensure that storage is allowed to compete with the other flexibility options on a level playing field.

The share of RES in the European electric power generation mix is expected to grow considerably, constituting a significant contribution to the European Commission’s challenging targets to reduce greenhouse gas emissions. The share of RES production in electricity demand should reach about 36% by 2020, 45-60% by 2030 and over 80% in 2050. In some scenarios, up to 65% of EU power generation will be covered by solar photovoltaics (PV) as well as on- and offshore wind (variable renewable energy (VRE) sources), whose production is subject to both seasonal as well as hourly weather variability. This is a situation the power system has not coped with before. System flexibility needs, which have historically been driven by variable demand patterns, will increasingly be driven by supply variability as VRE penetration increases to levels of 50% and more.

Significant amounts of excess renewable energy (in the order of TWh) will start to emerge in countries across the EU, with surpluses characterized by periods of high power output (GW) far in excess of demand. These periods will alternate with times when solar PV and wind are only generating at a fraction of their capacity, and non-renewable generation capacity will be required. In addition, the large intermittent power flows will put strain on the transmission and distribution network and make it more challenging to ensure that the electricity supply matches demand at all times. New systems and tools are required to ensure that this renewable energy is integrated into the power system effectively. There are four main options for providing the required flexibility to the power system: dispatchable generation, transmission and distribution expansion, demand side management, and energy storage. All of these options have limitations and costs, and none of them can solve the RES integration challenge alone.  This report focuses on the question to what extent current and new storage technologies can contribute to integrate renewables in the long run and play additional roles in the short term.

While there are many reports covering individual aspects of energy storage (e.g., technology cost improvements, integration of home PV solar), this report covers the topic end-to-end, considering the development of the electric power system, advances in storage technologies, business cases for storage deployment and the regulation of storage. In addition, the study does not only consider the electric power sector but also examines the conversion of electricity to other carriers and the role it can play in the integration of different parts of the broader energy sector (electric power, heating, gas grid).

Key findings of the study on Commercialisation of Energy Storage in Europe include :

1.       Demand for Power-to-Power storage will grow up to 10 times. In the high-RES scenario (60% and more VRE penetration by 2050), there will be economic potential for very large amounts (up to 10 times the currently installed capacity, or about 400 GW in the EU) of P2P storage for the integration of intermittent renewable energy. Storage demand in the 2030 horizon will depend on country-specific characteristics, in particular on the level of interconnectivity.

2.       Limited ability of Power-to-Power storage to integrate VRE. P2P storage will neither fully eliminate the need for non-RES generation nor be able to utilise all excess renewable electricity Even with a tenfold increase in installed P2P storage capacities, a significant amount of backup non-renewable generation and large installed non-RES power plant capacity would still be required for prolonged periods (several days) with low wind and sunshine. At the same time, in the high-RES scenario, there would still be periods with large amounts of excess renewable energy that could not be used in the electric power system directly or through P2P storage.

3.       Demand for storage is largest in island systems and smallest in countries with large reservoir hydro capacity. Demand for storage differs significantly between countries with different generation profiles. In particular, large reservoir hydro capacity such as in Sweden is a carbon-free option to integrate renewables and eliminate the need for further storage. By contrast, non-interconnected islands, or markets that behave as such, are a suitable early market for storage driven by emerging renewables curtailment and very high fossil generation costs. Depending on the island characteristics, there already may be economic demand for storage reaching tens of percent of installed power generation capacity.

4.       Use of Power-to-Heat to integrate VRE will be limited by heating-related electricity demand. Conversion of electricity to heat and heat storage is a proven and relatively low-cost option for providing flexibility to the power system. As increasing VRE penetration and higher fuel and CO2 costs will drive higher volatility in electricity prices, the business case for and penetration of heat storage will improve further. Conversion to heat and heat storage will be able to utilise a part of the excess renewable energy and reduce the required non-RES generation. However, the potential of conversion to heat to integrate VRE is limited by the share of electricity demand used for heating and by its seasonality.

5.       Conversion to hydrogen has potential to integrate VRE. Conversion of electricity to hydrogen for use outside the power sector has the potential to productively utilise nearly all excess renewable electricity that would be curtailed. Conversion of electricity to hydrogen through water electrolysis and use of this hydrogen in the gas grid (P2G), mobility or industry can productively utilise nearly all excess renewable energy in the high-RES scenario, contributing to the decarbonisation of these sectors. European potential for installed electrolyser capacity in 2050 high-RES scenarios would be in the hundreds of GWs. This requires that there either is local demand for hydrogen at the production site or that the hydrogen can be economically transported to a demand centre.

6.       Energy storage can create value in the short run, but reviewing regulation is key to unlocking this opportunity. Proven and emerging storage technologies have economically viable uses in the short run and can contribute to meeting the flexibility needs of the power system while creating value for society. These applications include time shift in island systems, deferral of T&D upgrades, provision of frequency reserve and home storage coupled with PV. Accessing these markets will require a review of the regulation that currently prevents storage from participating in the market on a level playing field with the other flexibility options. The overall impact of storage with large energy capacities substituting non-RES generation in VRE-based energy systems needs to be assessed in more depth in further studies.

7.       Key regulatory obstacles to energy storage can be lifted by fair consideration of the role of storage in the electric power value chain. There is a low degree of regulatory acknowledgement of storage as a specific component of the electric power value chain – and hence a lack of storage-specific rules and insufficient consideration of the impact of regulation on storage. The key obstacles to storage identified by the study are the lack of clarity on the rules under which storage can access markets, the application of final consumption fees to storage (including P2G), even though storage does not constitute final use of the energy, and payments for curtailment to RES producers, removing an incentive for productive use of the curtailed electricity.

 

This ‘Commercialisation of Energy Storage in Europe’ study shows that both Power-to-Power (P2P) storage and conversion to other carriers have the potential to play an important role in providing flexibility to the power system. They will make it possible to ensure that large amounts of renewable energy are not wasted, but are rather used to reduce the amount of required non-RES generation and decarbonise heating, transportation and the gas grid. However, in order for storage technologies to develop, regulators need to create a level playing field on which storage can compete with other flexibility options.

 

Link to the FCH-JU report ‘Commercialisation of Energy Storage in Europe’: http://www.fch-ju.eu/sites/default/files/CommercializationofEnergyStorageFinal_3.pdf