By Hugh McDermott, SVP of business development and sales, ESS Inc.
In November of last year, the U.S. Infrastructure Investment and Jobs Act was signed into law. It calls for $355 million in funding for utility-scale, long-duration energy storage projects. Just two months earlier, the Dept. of Energy launched its “Long Duration Storage Shot,” setting a target to reduce the cost of utility-scale energy storage by 90% for systems that deliver 10+ hours of duration within this decade.
These initiatives put a high-profile spotlight on the value of long-duration energy storage (LDES) for utilities, amid a flurry of state-level funding announcements, major procurements and bullish industry forecasts. This growing wave of market activity, coupled with grid-ready LDES systems being delivered and commissioned, is capturing the attention of grid operators and utility planners around the world.
According to the DOE: “Energy storage has the potential to accelerate full decarbonization of the electric grid. While shorter-duration storage is currently being installed to support today’s level of renewable energy generation, longer-duration storage technologies are needed as more renewables are deployed on the grid. Cheaper and more efficient storage will make it easier to capture and store renewable clean energy for use when energy generation is unavailable or lower than demand — for instance, so renewable sources generated during the daytime like solar-generated power can be used at night.”
While there are various types of LDES technologies — electrochemical, mechanical, thermal — and more will be developed in the coming years, not all are grid-ready today. Leading LDES contenders thus far have been advanced (non-lithium) batteries, including flow batteries, compressed air and variations on decades-old, pumped hydro storage.
State of play: 10 set targets; California leads in long-duration
As of Q1 2022, 10 U.S. states have set energy storage targets, each with differing mechanisms and incentive policies. Two-thirds are on the East Coast, including Maine, Massachusetts, Connecticut, New York, North Carolina, New Jersey and Virginia. As these targets are mapped out, a percentage will likely be designated for LDES resources, given the added economic and performance value they bring to renewables.
One state has already done so — and placed its money where its mandates are. Last May, the California Public Utilities Commission called for a 1 GW LDES procurement for 2026, which it defined as “technologies offering between eight and 100 hours of duration.” Earlier this year, Gov. Gavin Newsom announced the state’s budget for 2022-23, including $380 million in LDES funding over two years as part of an overall $2 billion Clean Energy Investment Plan.
California is the state frontrunner, with over 3 GW of storage in operation out of a total of 7 GW nationwide. Nearly all of it is short-duration lithium-ion batteries — resources that helped the state’s grid operator, CAISO, avoid power shortages last year. But CAISO has acknowledged that four-hour batteries cannot meet all statewide needs. The higher the share of renewable energy reached, the more long-duration storage will be required.
In North Carolina, Duke Energy must supply 45% of new solar generation through power purchase agreements with companies within North and South Carolina, in accordance with North Carolina’s carbon reduction law, H.B. 951. In order to achieve baseload solar, LDES will inevitably be incorporated into this new solar fleet.
What LDES does best
Intermittent renewable resources now dominate new power generation coming online. According to the U.S. Energy Information Administration, 46 GW of new generating capacity will start operation in 2022. Intermittent solar and wind power will comprise an eye-opening 29 GW, or 63%, of this total.
Long-duration storage can help utilities smoothly integrate increasing amounts of renewables as they make progress toward decarbonizing the power grid. Some of the strongest utility use cases for LDES are:
Time shifting solar and wind power: LDES can store excess renewables production and shift energy to when it has greater economic and resilience value. Storage also helps avoid curtailments to maximize the benefits of clean energy assets.
Smoothing renewable intermittency: The fast-response capability of LDES enables it to instantly react to changes in renewable generation output with fast, unlimited charge-discharge capacity.
Augmenting or replacing high-emission peaker plants: Fossil-powered peaker plants are the last-resort generators that utilities activate when grid energy demand is at its highest. LDES can enable a firm power source from intermittent renewables with the duration, capacity and cyclic flexibility to help utilities avoid (or at least mitigate) use of polluting peaker plants.
Supporting market participation: LDES is also a multi-purpose asset that can provide frequency regulation and other ancillary services. As markets evolve, LDES can offer spinning reserve and even energy capacity. Commercially available long-duration storage can meet grid operator PJM’s “10-hour rule,” which requires duration-limited non-generation resources, such as batteries, to provide stated capacity for as long as 10 continuous hours.
Deferring transmission and distribution system upgrades: LDES alleviates congestion on T&D routes by storing power when lines are at capacity and delivering it later. This service can defer or entirely avoid costly, long-term asset upgrades.
Stabilizing microgrids and supporting virtual power plants: LDES boosts the reliability and flexibility of distributed energy resources, greatly reducing or eliminating reliance on diesel-powered generators for backup.
A solar + storage microgrid
California utility San Diego Gas & Electric recognizes the unique ability of LDES to provide extended backup power and resilience to communities that are vulnerable to extreme weather events and wildfires. As part of its efforts to reduce risk and the impact of public safety power shutoffs (PSPS) during adverse weather conditions, the utility is installing a solar + storage microgrid in Cameron Corners (Campo, California), a rural community about 50 miles east of San Diego.
The microgrid, which will be in service in 2022, consists of 875 MW of solar PV and 540 kW/2 MWh of iron-flow batteries that are now being commissioned. Once completed, the microgrid will enable important facilities, including a middle school, library, health clinic, telecommunications hub and fire station, to remain powered during PSPS events, avoiding use of diesel generators. When not supporting a PSPS event, the microgrid will deliver stored renewable energy back to the grid as the sun goes down.
A global need for massive amounts of LDES
As the energy storage market matures and diversifies, innovations like LDES will proliferate. Their complementary value and ability to deliver multiple use-cases when combined with renewables is clear. The use of clean, earth-abundant raw materials (such as iron, salt and water) and off-the-shelf, domestically sourced industrial components, reinforce their inherent safety and sustainability. Greater production volumes will further drive cost reductions, all of which will lead to widespread global deployment. On this point, industry analysts seem to agree.
According to a recent forecast from BloombergNEF, global energy storage deployments (all durations) will reach 358 GW/1,028 GWh by the end of the decade — a 20-fold increase over 2020 figures. This surge in installations will undoubtedly include a high percentage of LDES.
For an LDES-specific data point, the LDES Council predicts that between 25 GW and 35 GW of LDES will be installed globally by 2025, amounting to about 1 terawatt-hour (TWh) and $50 billion of investment.
The long view
Regardless of which forecast we place our bets on, or how quickly states will join California to take up the charge, it’s fair to say that the market upside for LDES is enormous — as will be the associated grid benefits.
Utilities bear a great responsibility in generating and delivering sufficient power to keep the lights on. They are also facing increased scrutiny from regulators and stakeholders to decarbonize. Solar and wind power are long-proven solutions that are essential to our clean energy future, and their low costs make them economically compelling.
Long-duration energy storage in all iterations — with its range of benefits, services and commercial systems now available — is the key for utilities to unlock clean energy’s greatest value.
Hugh McDermott is senior vice president of business development and sales for ESS Inc., an Oregon-based developer and manufacturer of long-duration iron-flow battery solutions.