Can batteries jump start the transition to renewable energy?
Improvements in battery technology will underpin the world’s transition to renewable energy.
Good news can be scarce these days, so let’s celebrate a remarkable achievement. For the first four months of 2019, the UK generated most of its electricity from renewable energy sources.
Through this period, coal and gas generated just 46.7% of the country’s electricity; non-polluting sources such as hydropower, wind and solar energy represented 47.9%, with nuclear accounting for the balance. It is very likely that other countries will be following the UK’s lead in the near future.
One incentive for the greater adoption of renewables by households will be higher costs of electricity and gas. These costs have in fact already doubled over the past seven years. In that context, it is important to note that the cost of wind and solar energy is now often cheaper than that derived from fossil fuels: wind and solar prices have declined by approximately 69% and 88% respectively since 2009.
Moreover, wind energy in particular can now be deployed in the UK at large scale. Taking as an example the Barrow Offshore Wind Farm, which has 30 turbines generating 90 megawatts, we calculate that one turbine can create power for approximately 1,500 average European households.
Measured in meters
These are all positive developments, but their utility will be limited without one other vital component: better and more extensive battery storage. Improved energy storage can help overcome the short-term intermittency – due to daylight hours or fluctuating weather – of renewable sources. Without an upgraded storage infrastructure, much of the electricity that could potentially be generated by renewables will be lost and coal and gas-fired power stations will remain necessary to cover supply shortfalls.
Encouragingly, storage capacity – both in front of the meter (on the grid) and behind the meter (in premises) – for residential as well as commercial and industrial customers has grown by 49% since 2016 in the European market. In the US, the capacity of residential energy-storage systems installed annually increased from 2.25 megawatt hours (MWh) in 2014 to 185 MWh in 2018. Moreover, customers continue to invest in behind-the-meter energy storage as newer technologies allow them to reduce their electricity bills by doing so.
Australia is an interesting case study. The country started adopting behind-the-meter energy storage early on, with its vast land area and dispersed population making electricity centralisation more difficult.
The falling cost of batteries, which has decreased by approximately 80% since 2010 and is expected to drop by another 50% by 2025, is accelerating these trends. These lower prices are in part the result of the wider interest in electric vehicles driving technological advancement in the battery supply chain, although we should be aware that higher raw material prices could slow progress and increase the likelihood that technological innovations beyond traditional lithium ion will be necessary.
We are still only in the early stages of growth in the market for energy storage for renewable power. Technological progress will sustain this demand: the capacity of wind and solar photovoltaic systems increased by approximately 40% in the first half of 2010s, and even small batteries with a capacity of two to three hours of storage may allow a 10-15% increase in solar and wind’s market share. Indeed, according to a 2018 BNEF report, lower battery prices could help the energy storage market grow from a size of $2.5 billion in 2017 to $27 billion in 2030.