As governments around the world grapple with the urgent conundrum of how simultaneously to make their supplies more secure, greener and cheaper, energy storage stalwart Alan Greenshields is worried that what he terms the “missing piece” of the puzzle isn’t drowned out by the buzz around other transition technologies – wind, solar, lithium-ion batteries, and loudest of all, hydrogen.
The weapon in the energy transition arsenal Greenshields is referring to is long-duration energy storage (LDES), a suite of technologies set to fill a crucial role in an increasingly complex, renewables-led power system (see panel) sitting between shorter-duration lithium-ion systems and massive deployments based around hydrogen or hydropower.
“Renewables have become the cheapest form of generation. Lithium-ion has done a fantastic job for mostly regulation functions in the grid, but we need cheap, bulk storage – that’s the missing piece.”
Greenshields – a long-time veteran of the energy storage sector and other high-tech industries, who is now director of Europe at US-based iron-flow battery pioneer ESS – claims the fact that “hydrogen for a long time was basically cited as a solution to everything” created a shortfall in policy awareness and action over the potential of LDES that has only recently started to be addressed.
For example, the “EU has a lot of programmes for supporting new technologies – vast amounts of it have gone into hydrogen, almost nothing has gone into LDES”.
He adds: “The belief that hydrogen was the universal solution led for a significant period of time to LDES not being really taken seriously.”
Greenshields – who took part on a panel on the future of storage at Recharge’s recent Energy Transition Forum – says making the right choices from now on is crucial, because you don’t have to look too hard to see the cost of unintended policy consequences in the current global energy landscape.
Analysts at McKinsey in a report on LDES defined it as “a group of conventional and novel technologies, including mechanical, thermal, electrochemical, and chemical storage, that can be deployed competitively to store energy for prolonged periods and scaled up economically to sustain electricity provision, for days or even weeks”.
Sitting between lithium-ion batteries and huge options such as hydro, the McKinsey report – commissioned by the industry’s own body the LDES Council – reckons it will play a crucial role in a sector that will need to scale up to between 85-140TWh by 2040 to hit decarbonisation goals.
McKinsey said LDES’ attributes of rapid deployability and scalability “makes it competitive with other forms of energy storage such as lithium-ion batteries, dispatchable-hydrogen assets, and pumped-storage hydropower, and economically preferable to expensive and protracted grid upgrades.
“Indeed, the evidence shows that in many applications, it is likely to be the most cost-competitive solution for energy storage beyond a duration of six to eight hours.”
Take Germany, whose Energiewende has been impressive on many fronts, but which Greenshields says has been left “laggards in energy storage because of policy” after in 2014 conducting an analysis concluding that “LDES was too expensive. “Which in 2014 was correct. But in 2014 you had the iphone 5, lithium-ion batteries were very expensive, solar was very expensive”, and LDES is, albeit later, following those examples down the cost-reduction path.
In fact, the country did not until recently have a legal definition at all of what constituted energy storage on the German power grid, leaving battery storage lumped in as a generation asset.
The German approach, says Greenshields, was to go “very fast into feed-in tariffs for solar, for wind, phase out coal, phase out nuclear and replace it with natural gas – and basically walked right into a trap laid by Vladimir Putin”.
Now Germany is racing to end that dependency on gas and replace it “with cheap, plentiful green hydrogen, when it’s available”.
Like others, Greenshields notes the dilemma for European economies such as Germany that the cheapest places to make green H2 are far away, and while “it may well be possible to get green H2 [production] down to less than $2 per kg, the bigger challenge is how do you get the transportation costs down from $5/kg to maybe $1”.
The bottom line, in Greenshields view, is that while hydrogen will have a major role to play in the energy transition – not least for decarbonising heavy industry and helping energy systems cope with multi-week periods of low wind and solar output – “there’s still not really high awareness that long duration storage can be deployed much faster and more cheaply than green hydrogen”.
So, is Germany now looking more seriously at LDES? Greenshields says the new coalition government has finally added a policy ‘bucket’ for storage, although “they haven’t defined what that means”.
Everyone says we’d like LDES – the question is how do you establish a monetisation system.
If Germany is playing catch-up, when asked which governments around the world are best getting to grips with the policy challenges of LDES, the energy storage executive admits that the field is a slim one.
UK 'trying to work out right way'
The UK is singled out by Greenshields as “a good example of a government trying to work out the right way to do it… they have actually reached out to industry players asking what we need to do” and has produced a study via the Department of Business Energy and Industrial strategy that he recommends as one of the best recent overviews of options for the sector.
Encouragingly, the UK is looking at the possible use in LDES of tools such as contracts-for-difference that have proved successful in stimulating other energy technologies.
Greenshields says enthusiasm around the world for LDES is growing, with jurisdictions from Australia to California looking at how to make the technologies part of their ambitious energy storage plans.
“The problem has always been, how do you make sure the people funding the assets are getting the financial benefit?
“Everyone says we’d like LDES – the question is how do you [establish] a monetisation system.”
Key, according to Greenshields, is getting LDES to scale and making it profitable on a non-subsidy basis.
“What we want is to get to the situation where the business models are such that it sucks in private capital.”
And if policymaking over LDES is immature, the industry veteran is encouraged by moves by “forward-thinking” corporations such as RWE. “We need them to be our champions,” he says.
He also flags the benefits of an alliance between the EU and Breakthrough Energy Ventures – the Bill Gates-supported energy investor that has backed ESS – in looking to help mobilise the scale-up of LDES.
“Hydrogen grabbed everyone’s attention [but] just as the prices of solar and wind and lithium-ion have plummeted, the cost of LDES has also now plummeted – it’s just happened later.
“There’s an awareness issue that things that were too expensive in 2014 are absolutely now competitive. It’s not rocket science, it’s the same sort of volume driven, technology driven improvement curves these other technologies have been through,” Greenshields concludes.
Global energy storage markets will together grow 15-fold to 411GW (1.19TWh) by the end of the decade boosted by recent policy shifts in the US and Europe, although supply chain constraints might slow additions, according to the latest forecast from BloombergNEF (BNEF).
The research house sees 13% more capacity – 46GW (145GWh) – than previously estimated being built, given extra drive by the US Inflation Reduction Act (IRA), which has earmarked $369bn for clean technologies, and the EU’s REPowerEU plan, which has raised ambitions to cut reliance on gas from Russia.
BNEF’s 2H 2022 Energy Storage Market Outlook estimates roughly 30GW (111GWh) of energy storage will be built through to 2030, although supply chain bottlenecks “cloud deployment expectations until 2024”.
In the utility-scale sector, significant storage additions expected from 2025 onwards align with raised renewable targets outlined in the REPowerEU plan and a renewed focus on energy security in the UK, according to BNEF, which has more than doubled its estimates for deployments in the second half of this decade across Europe.