A Deluge of Batteries Is About to Rewire the Power Grid

A Deluge of Batteries Is About to Rewire the Power Grid

Bloomberg
August 04, 2019

By 2050 solar and wind will supply almost half the world’s electricity, bringing to an end an energy era dominated by coal and gas, according to forecasts by BloombergNEF, Bloomberg LP’s primary research service on energy transition.

It can’t happen without storage. The switch from an electricity system supplied by large fossil fuel plants that run virtually uninterrupted to a more haphazard mix of smaller, intermittent renewable sources needs energy storage to overcome two key hurdles: using power harvested during the day to supply peak energy demand in the evening and ensuring there’s power available even when the wind drops or the sun goes down.

“We think storage can be the leapfrog technology that’s really needed in a world that’s focused on dramatic climate change,” says Mary Powell, chief executive officer of Green Mountain Power Corp., a utility based in Colchester, Vt., that’s worked with Tesla to deploy more than 2,000 residential storage batteries. “It’s the killer app in a vision to move away from bulk delivery systems to a community-, home-, and business-based energy system.”

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Oil giants are also investing in storage. Through its New Energies division, Royal Dutch Shell Plc is spending about $2 billion a year on these technologies. The company says it wants to become the largest electrical power company in the world by the early 2030s. In addition to acquiring a U.K. electricity provider and a car-charging operator, Shell this year bought Germany’s Sonnen GmbH, a leading supplier of residential storage systems.

In May, Shell announced plans to install industrial-scale batteries at two facilities in Ontario, a crude refinery and a motor oil plant.

In parts of the U.S., storage batteries are already a cheaper option than so-called peaking plants. These typically are environmentally unfriendly fossil-fuel-fired power stations that are needed only for a couple of weeks each summer, when electricity demand spikes, and are idle the rest of the time. As some coal-fired power stations are retired, “there could be a situation where, instead of building that new peaking plant, I am putting more storage on the grid,” says Duke Energy’s Kuznar.

Duke has outlined plans to invest more than $500 million in battery storage projects over the next 15 years. Other utilities from California to China are also considering how battery systems can be added to existing networks, potentially deferring or eliminating the need for some investments in power plants.

Investors probably underestimate the impact falling battery prices will have on the energy sector, as well as the speed at which change will come, says Tom King, chief investment officer at Nanuk Asset Management Pty., a Sydney-based fund that focuses on renewables and energy efficiency. The consequences, he says, “will be profoundly negative for conventional utilities. That’s an almost unstoppable outcome.”

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