Solar-Plus-Storage Systems Are ‘Match Made in Heaven’: Q&As

The business of energy storage is growing surprisingly fast as battery systems get cheaper and utilities and other businesses find new ways to use them, said Andrew Oliver, chief technology officer for Renewable Energy Systems Americas Inc.

RES, the world’s largest independent renewable energy company, works in onshore and offshore wind, solar, storage and transmission.

Oliver answered questions from BNEF (Bloomberg New Energy Finance) about where storage is going and RES is responding to the rising demand in a telephone interview in mid-January.  He said he expects lithium-ion batteries to remain the dominant storage technology for the next few years.

Q: What’s the future for energy storage?
A: There’s two very hot areas right now.  The first one is solar-plus-storage, the second is peaker plant replacement.  Nearly every solar independent power producer is adding an energy storage option to their plans.  In certain markets they can get a capacity payment and it certainly provides a hedge to the people writing the PPAs, usually the utility, against future lower wholesale pricing as that penetration of solar increases on the grid.

Q: What are the issues with combining solar and storage?
A: Finding the optimal cost solution is really quite impractical without throwing a massive amount of computing power at the problem — AC-coupled systems versus DC-coupled, the ratio of DC panels to the AC grid connections, the orientation of the panels, trackers or fixed-tilt, the ratio of storage to solar, the number of hours of storage, and then the overbuild strategy — lithium-ion technology degrades over time and so how much extra do you need to build to get to the end of your power purchase agreement.

Q: What about peaker plant replacement?
A: More and more utilities and IPPs are realizing that storage can compete head-to-head with traditional thermal peaker plants on an installed-cost basis, if the run time’s around two hours, and that’s only going to increase.  I don’t think we’re going to be building many traditional gas peaker plants five years from now.

Q: BNEF reported that the rise of solar in Texas is going to be very tough on peaker plants there.
A: It’s already happening in California.  As you start putting solar systems into a grid, the peak has generally been in the afternoon and the solar does help there.  As you continue to add solar, the peak tends to move toward the evening because the generation has offset the load during the peak of the day, so now the new peak is when the sun has gone down and the air conditioning has come on, and of course the solar isn’t available at that time.  So that’s where adding storage to a solar system really can benefit the network.  They are kind of a match made in heaven, solar plus storage.
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Q: Is lithium-ion going to remain the dominant technology over the next decade or two?  Are there any potential competitors on the horizon?
A: There’s nothing that we think will worry the dominance of lithium within the next two or three years.  The challenge of any competing technology is to achieve similar performance metrics at a better price.

Q: What about the different kinds of lithium batteries?
A: Even within the lithium family there’s a few different main types of chemistry — two of them being NCM, or nickel-cobalt-manganese, and LFP, lithium-iron-phosphate.  NCM is more energy-dense but commodity prices, particularly cobalt, which has gone from $15 to $35, have moved that technology’s price up relative to lithium-iron-phosphate.  But again LFP is less energy-dense.  By the time you’ve done all the calculations of integrating, the two technologies have quite similar costs at the end of the day.

Q: Do you see rising commodity prices as a temporary or lasting issue for storage manufacturers?
A: We haven’t really gone into too much of the geopolitical stuff.  What we have done is built pricing models from the bottom up based on what we know about the amount of cobalt and nickel and manganese in these cells and we then projected how we see the balance of system costs evolving over time.  Right now it’s about a wash.  The next step is to see what we think happens to cobalt to determine what we’re looking at two or three years from now in terms of the type of chemistry we’re going to be installing.

Q: Is the primary use of batteries going to be in solar plus storage?  How big do you see electric vehicles getting?
A: EVs are really what’s given stationary storage the opportunity to grow.  They’ve driven the scale of manufacturing to enable us to lower our costs.  At a solar farm we’d supplement the storage over time.  You might use a different vendor to supplement the original system. That’s an interesting subtopic, how you augment a system that degrades over time.

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