POWER SECTOR

Can Battery Storage take Utilities “Out Of Business”?

YashaswiGyanpuri, Wipro Technologies, Domain Consultant- Utilities (ENU), Global Consulting

Energy storage battery system can be placed both on the grid level and at a specific consumer’s home or business. Economical battery storage will be a challenge for utilities behind the meter (i.e. small scale installations on-site, for example installation in a home or business). But, it is also a prospect for those in front of the meter; large installations used by utilities for grid allied applications. 

Storage prices are dropping much faster than anyone anticipated, due to the growing market. The storage is already cost-effective for many commercial customers to reduce their peak consumption level and playing a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability, providing power-quality services, and supporting renewable integration. Recently, 100 MW largest grid-tied Utility grade battery bank has been operational in South Australia.

Energy storage battery system can be placed both on the grid level and at a specific consumer’s home or business. Economical battery storage will be a challenge for utilities behind the meter (i.e. small scale installations on-site, for example installation in a home or business). But, it is also a prospect for those in front of the meter; large installations used by utilities for grid allied applications.

Combination of economical solar with storage will be even more disruptive. This allow end-user to generate their electricity in house and little dependency on grid related system which leads to partial grid defection, in which end user prefer to stay connected to the grid to have access of 24/7 * 365 days reliability, but end user generates 80% to 90% of their own electricity and use storage to optimize their solar for their own consumption.

According to n SA Power Networks CEO Rob Stobbe predicted that 50 percent of his company’s customers would have home battery storage by 2035, and 30 percent would have electric vehicles” Source: GTM

Utilities can also be benefited through storage to address the challenges of planning and operating the grid in markets where loads are anticipated to be flat or falling. Utilities are also in process and few already procured battery storage systems to address both short term needs and long-term regulatory compliances, such as reliability and building new substation. Falling battery storage cost could lower generating costs and, thus, consumer electricity prices; by putting further pressure on existing coal-generation plants and conventional gas, miserable prices in demand markets and providing load-following services.

According to Elon Musk, Industrial-scale batteries designed for peak shaving will help Utilities in many ways such as shift load, reducing peak demand rather than hurting Utilities.

Utilities must start now to appreciate how cost-effective storage is changing the future. Moreover, utilities need to disrupt themselves else others (likely batter storage with solar and DER) will do it for them. Looking at the current progress in battery storage technologies, utilities and regulator will need to find new approach to recover their investment in the grid related system. The possible way forward for utilities could be:

• Redesign compensation structures and explore new opportunities
• Rethinking grid-system planning

Battery storage is entering a dynamic and uncertain period. There will be winners or losers, and the unique value across lifecycle will constantly evolve depending on: how quickly storage costs drop; how utilities familiarize themselves by improving services, incorporating advanced distributed energy alternatives, and reducing grid-system cost.