With new energy supplies and demand growing rapidly worldwide, companies in the United States, Europe and across the developing world are spending billions of dollars each year on new power plants, wind turbines and solar panels. Now the focus is increasingly on how to store the bonanza, so that electricity generated from the likes of renewables can be quickly pumped into a country’s energy network as demand skyrockets – say, when people return home from work.
To meet global climate change commitments, the International Energy Agency recently called on the United States, the European Union, China and India to invest a combined $380 billion in energy storage by the middle of the century. That would fund a total of 310 gigawatts of new projects, or more than 28 times what is currently expected to be built by the end of the decade.
Electric utilities, technology start-ups and research institutes worldwide are beginning to rise to the challenge.
“For many companies, energy storage is seen as the holy grail,” said Logan Goldie-Scot, an analyst at the data provider Bloomberg New Energy Finance, who expects worldwide storage capacity to rise from the current 1.2 gigawatt to 11.3 gigawatts by 2020, or the equivalent of roughly 10 traditional power plants.
Despite the lofty goals, energy storage must overcome significant hurdles before it goes mainstream. Or, as Mr. Goldie-Scot put it, “A lot of the technologies still need to move beyond the proof-of-concept stage.”
Just as in the early days of renewables, when high manufacturing costs made it difficult for companies to fund solar and wind farms, many of the latest energy storage advances, including highly efficient flywheels whose stored energy can be released to produce electricity, remain up to 10 times more expensive than generating electricity from fossil fuels.
Start-ups, industrial giants like General Electric and governments are placing bets on different types of technology. That includes so-called power-to-gas storage that uses excess electricity generated from solar and wind farms to split water into hydrogen and oxygen molecules in a process that – when combined with carbon dioxide – eventually creates natural gas, which can then be used in a country’s energy network.
German energy researchers and Etogas, a Stuttgart-based start-up, recently tested a successful pilot project using the technology. And Audi opened a power-to-gas plant last year that now produces enough fuel to power 1,500 of the German automaker’s cars for the consumer market that were retrofitted to run on natural gas.
In contrast, a consortium of large industrial companies, including the German utility RWE, has spent millions of dollars over the last three years to develop a different approach that instead relies on stockpiling compressed air in vast storage tanks. When demand spikes, the air is released through turbines to generate electricity. The consortium, called Adele, expects to complete a demonstration plant in Germany as early as 2016 that will have a capacity of 90 megawatts, or roughly the equivalent of a small wind farm.
In the United States, a group of energy companies announced plans last month to spend a combined $8 billion on an energy project that would link a large wind farm in Wyoming with a compressed-air energy storage plant in Utah. The project, which is awaiting regulatory approval, would be one of the world’s largest for energy storage, and would send power through the electricity grid to customers in Southern California.
LightSail Energy, a California start-up that has received funding from Bill Gates, also is developing similar technology, though analysts say companies must still improve the efficiency of how they store energy to compete against fossil fuels.
“The key to making energy storage work is to improve the efficiency rate,” said Paul Davies, an infrastructure partner at the consulting firm PricewaterhouseCoopers in London, who says new projects, although still more expensive than traditional energy generation, can retain up to 70 percent of the stored energy compared with less than 50 percent for many existing options. “There’s a real prospect that we will achieve mass energy storage within the next decade.”
More than 95 percent of the world’s energy storage capacity is based on decades-old hydropower plants in countries like Germany, Japan and Brazil. These systems pump water uphill into large reservoirs when electricity prices are cheap, and then release the water through turbines when extra power is needed.
Yet since few locations exist to build new dams, particularly in the Western world, governments are pushing companies toward new forms of technology.
California, for example, passed laws last year demanding that energy companies build up to 1.3 gigawatts of energy storage – roughly the equivalent of a new natural gas power plant – by the end of the decade. And Germany, which is already one of the world’s most developed renewable energy markets, has budgeted 200 million euros (about $258 million) for up to 60 energy storage pilot projects.
Countries like Japan and Britain and cities like New York also are providing subsidies to jump-start interest in energy storage. That includes financial support for small-scale projects in homes where energy storage can be connected to solar panels on roofs.
Analysts say the biggest opportunity, at least in the long run, could be a technology that has been around for decades: batteries. Asian manufacturers like Samsung and Panasonic have spent years improving the efficiency of so-called lithium-ion batteries that already power smartphones, laptops and other wireless devices. Tesla Motors – considered a pioneer in electric cars – announced last month that it would build the world’s largest lithium-ion battery factory in Nevada, which would produce enough batteries to fuel 500,000 cars annually by the end of the decade.
Analysts say electricity from battery storage still costs at least double that of power from traditional energy sources. But firms are looking for opportunities.
Utilities hope that as more energy-efficient batteries flood the market, costs will fall. That is what happened when increased competition from solar panel suppliers cut the cost of producing energy from the sun by roughly two-thirds since 2008. And companies see opportunities in combining battery technology with existing renewable resources. Duke Energy, for example, added battery storage to a large wind farm in Texas last year; utilities like Enel of Italy and Hokkaido Electric Power of Japan have announced plans to use batteries in conjunction with existing renewable energy projects.
“Batteries make the most sense. They are cheap, safe and efficient,” said Sam Jaffe, an energy storage analyst at the consulting firm Navigant Research in Boulder, Colo. “And it’s a lot easier to get approval to build a warehouse full of batteries than anything that involves a smokestack.”
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