Looking to the Future: How Energy Storage Will Help Future-Proof Electric Grids

Article was was originally published in Energy Global’s Autumn 2022 issue

If electric grids are to meet societal needs and phase out carbon by 2050, they will need to take on a diverse approach to energy storage. That’s according to a study published last month by MIT researchers, who go on to note that integrating those diverse options will enable grids to absorb the burgeoning power generated by renewable sources, many of which deliver variable real-time supply. The researchers add that incorporating diverse storage options can also benefit grid flexibility and resiliency.

Energy storage allows for “cost-effective deep decarbonization of electric power systems that rely heavily on wind and solar generation,” the authors write. And it does so without sacrificing system reliability – which is to say, rolling brownouts when the neighborhood HVAC outstrips prevailing supply.

The world is encountering a Cambrian proliferation of energy storage technologies. On one side are large, centralized energy storage facilities, in particular green hydrogen hubs which will store energy for days, weeks or even seasons. On the other are decentralized forms of storage, namely batteries, which are often colocated with renewables or are located closer to the point of use. Combining the two could promise a future grid that’s robust, stable and resilient, especially as wind and solar integration accelerate.

We’re already seeing that. Projects underway in Southern California and central Utah offer a glimpse into how a combination of centralized and decentralized storage will enable the post-carbon grid of the future.

The Curtailment Conundrum

The rise of renewable energy amid growing electricity demand makes it essential to develop energy storage systems with ever greater size, flexibility and responsiveness. For one, the rise in power generation from wind and solar – two sources whose real-time productivity hinges on weather conditions – greatly amplifies the intermittency challenge for grid operators.

“We’re putting solar everywhere: behind the meter, in front of the meter, on rooftops and available flat land,” says Tom Cornell, Mitsubishi Power senior vice president for energy storage solutions. “That’s going to have a huge, dramatic effect on the grid.”

It’s also going to drive greater curtailment of solar electricity.

“In California, at just 30% renewable integration, there’s so much renewables overproduced in the winter and spring months that we’re shutting down these carbon-free resources in massive quantities,” says Michael Ducker, senior vice president and head of hydrogen infrastructure for Mitsubishi Power. “Meanwhile, we’ve seen energy shortages in the summer and fall months where we’ve had to rely on carbon intensive resources to keep the grid from blackout conditions. The solution to this involves shifting carbon-free overgeneration to seasons where we’re typically relying today on carbon intensive resources to keep a stable grid.”

In 2020 alone, the California Independent System Operator (CAISO) curtailed 1.5 million megawatt-hours of its utility-scale solar production, equivalent to 5% of total utility-scale solar generation. Operators have added renewables at a furious pace since then – and not just in California. Solar and wind accounted for roughly 90% of new electric generating capacity across the U.S. in 2021 and the first quarter of 2022, and the International Energy Agency projects that renewables will account for almost 95% of the increase in global power capacity through 2026. All told, the IEA expects grids to add 50% more renewable capacity between 2021 to 2026 than it did in 2015 to 2020.

Curtailment of renewables is the most obvious manifestation of the intermittency problem. The most compelling solution to manage intermittency while meeting rising electricity demand is to integrate a variety of storage technologies into the grid – and it’s a process that’s already underway.

A New Framework for Thinking About Energy Storage

Storage options often are categorized as short duration (for example, batteries) or long duration (such as, green hydrogen). Batteries today generally offer four to six hours of electricity at maximum draw, although technological advances are likely to increase their duration rapidly in the coming years. By contrast, hydrogen’s ability to continue producing electricity is limited only by the volumes of the storage facilities that hold it.

Duration is a key consideration but characterizing storage options based primarily on that characteristic obscures important, potentially complementary distinctions. Storage technologies differ in other critical ways as well: reaction time, location, infrastructure, investment required, degradation, digital automation capability, security and more.

It may be more useful to characterize storage as centralized or decentralized rather than long or short duration. This distinction better captures the range of characteristics available among storage technologies and relevant for grid operators as they weave centralized and decentralized energy sources into cohesive networks that are resilient, flexible, responsive and valuable.

Centralized Energy Storage

Hydrogen, for example, can be used as a primary centralized storage option for renewable energy. Global demand for green hydrogen — hydrogen produced using electrolysis powered by renewables — is projected to grow 50% over the next decade.

“Renewable energy is variable; we can’t predict when the sun shines or the wind blows,” Ducker says. “At very large penetrations of renewables, this variability moves beyond daily imbalances into seasonal imbalances. When we use hydrogen to help store that energy, we can shift it over greater time horizons.”

With the increase in variable production from renewables, generation will exceed demand more frequently and by greater amounts. Rather than curtailing the excess, power systems can use it to produce hydrogen at virtually no incremental cost, transforming curtailment from underutilized to an opportunity.

Moreover, centralized hydrogen storage can capitalize on existing energy infrastructure to store, use and transport the gas, helping manage the cost of scaling up. Consider the Advanced Clean Energy Storage hub currently under construction in Delta, Utah. This joint venture by Mitsubishi Power and Magnum Development will produce green hydrogen and store it in enormous salt caverns.

The hub is designed initially to use 220 megawatts of electrolyzers that convert renewable energy into 100 metric tons of green hydrogen per day. With capacity to scale up to 100 salt caverns, the initial two-cavern facility will initially store the equivalent of more than 9 million barrels of hydrogen, or roughly 300 gigawatt-hours of storage capacity, making it the world’s largest single storage site for hydrogen.

Adjacent to the hub is the Intermountain Power Agency’s IPP Renewed Project, a retiring coal plant that is being replaced with an 840-megawatt, combined-cycle power plant with two M501JAC gas turbines which will run on a blend of 30% green hydrogen and 70% natural gas starting in 2025 and 100% green hydrogen by 2045.

Centralized storage with hydrogen offers a range of benefits:

• Volume: The quantity of storage possible with hydrogen is unmatched by other options.
• Economies of scale: Centralized hubs’ large size creates efficiencies that can bring down costs. For example, one facility with 100 megawatts of electrolyzers would produce the same amount of hydrogen using one transformer as five facilities at 20 megawatts apiece, but the latter group would need five transformers. Mitsubishi Power’s Ducker notes that the Advanced Clean Energy Storage hub is expected to help cities in the Western United States achieve 100% carbon-free targets at 20% lower cost for the overall system than if they didn’t have centralized energy storage.
• Long-term viability: Hydrogen stored in salt caverns has minimal losses and does not degrade over time, enabling long duration, seasonal storage.
• Sector Coupling: Storing, using, and transporting hydrogen at scale will enable progress in other hard-to-decarbonize industries, such as transportation, cement and steel. Ducker notes that hydrogen is needed “not just to decarbonize power, but to decarbonize the hard-to-abate sectors.”
• Flexibility: Scaled integration of storage, transport, generation and transmission systems gives operators the latitude to use hydrogen in ways that deliver the greatest value with the greatest impact.

Decentralized energy storage

Solar and wind power are proliferating. Fifteen states have 1,500 or more solar installations, with Florida (9,000), Texas (14,000) and California (more than 35,000) leading the way. New solar installations increasingly come with batteries: Nearly 1 in 3 behind-the-meter solar systems are expected to pair with battery storage by 2025, compared to fewer than 1 in 9 in 2021. For their part, utilities have commissioned or announced combined solar and storage projects representing more than 50 gigawatt-hours of storage capacity.

Bloomberg reports that battery power now makes up 6% of California’s maximum on-peak capacity, or 60 times what it did 2017. Batteries’ contribution to maximum on-peak capacity now exceeds both wind’s and nuclear’s.

“Last year was a breakout year for the sector, to prove that on a utility-scale basis, battery storage is a viable, resilient and dependable source of energy,” Mitsubishi Power’s Cornell recently told Energy Storage News. “If you look at the transmission queues in all regions of the U.S., they’re getting saturated with battery energy storage projects.” For example, Texas’ battery installations could rise from about 2,300 megawatts to more than 7,000 megawatts by next June, according to Bloomberg.

Cornell added that Mitsubishi Power also is seeing increasing demand for such projects in Latin America, Europe, Southeast Asia and Japan, and expects the utility-scale battery market to double in 2022 and again in 2023.

These decentralized options offer distinct, complementary qualities relative to centralized storage. They have smaller footprints and fewer constraints on their locations, so they can often reside near end users to reduce transmission and infrastructure costs. Moreover, geographic dispersion can bolster resilience by enabling grid operators to overcome problems in a subset of locations.

Batteries offer reaction time that’s measurable in milliseconds. That quality, combined with the ability to locate near end-users, makes them ideal for fast-frequency response. Indeed, Mitsubishi Power has installed several battery systems for just that reason for Electric Reliability Council of Texas. Alternatively, batteries can be geared for peak applications, time shifting and energy arbitrage. They can maximize value by managing charging and discharging in increasingly sophisticated ways.

Much as centralized storage offers cross-pollination with heavy industry, decentralized storage benefits from synergies with the electric-vehicle market. EV batteries are replaced after they lose 20% of their original peak capacity. These batteries can be repurposed for usage on the grid, where modest degradations in peak storage are more manageable. Likewise, automakers’ intense focus on improving battery technology has tripled the rated energy for mass-market EVs in roughly a decade. Those breakthroughs, in turn, stand to benefit utility-scale battery users.

And grid storage is not constrained by some of the limitations that challenge EV battery technology, particularly the need to minimize weight and size. As a result, grids may be able to employ battery technologies that are not suitable for electric vehicles. This point of distinction may prove valuable if certain components of EV batteries, such as cobalt, become scarce due to product demand or geopolitics.

Decentralized storage with batteries offers a range of benefits:

• Renewables Integration. Batteries, due to the smaller size, can be colocated with renewable energy to reduce curtailments and located where the storage is needed.
• Grid resiliency. Able to provide electricity quickly at the point needed preventing supply disruption or congestion in transmission
• Fast Response. Sub-zero second response time to respond to fluctuations in grid frequency
• Microgrids. Allows for the islanding or to disconnect from the larger network grid as needed and powering a smaller network using storage reserves. Often in the event of an unplanned outage for critical infrastructure systems.
• Flexibility. Batteries can provide peak shaving to offset energy demand during peak periods and shift energy loads by charging when electricity costs are low and discharging when costs are high

For example, San Diego Gas & Electric used to employ a distributed backup system of turbines that ran on simple-cycle gas, quick-start natural gas or oil. The company has replaced such generation with five battery energy storage systems, making it a leader in battery usage among U.S. utilities. San Diego’s sunny climate — with 266 sunny days per year, 30% above the U.S. average — contributes to relatively high levels of solar curtailment. SDG&E now uses this excess electricity to charge its batteries, which it charges and discharges strategically to maximize their value and manage interruptions of up to four to six hours. As battery storage proliferates, SDG&E will be able to adapt to a hitch in the distribution or transmission system by switching in real-time from one battery to another nearby.

“Once we start storing energy at a massive scale, you’re going to have the ability to move power in a lot of different directions,” Cornell says.

Integrating Complementary Storage Technologies into the Grid of the Future

The integration of centralized and decentralized storage is starting to take shape in California. Battery systems are mushrooming around the state, piggybacking on the rise of solar power and EVs, and utilities such as SDG&E are using curtailed generation to charge a distributed network of battery-energy storage. Meanwhile, the Utah hydrogen facility is beginning to create longer-term green storage to decarbonize the majority of the Western United States.

This evolution will accelerate over time in California and elsewhere as batteries become ubiquitous, green hydrogen production ramps up and power turbines are converted to run on the zero carbon fuel that’s stored. Such conversions are already underway: Mitsubishi Power, Georgia Power and the Electric Power Research Institute recently validated blending 20% (by volume) hydrogen fuel with natural gas to power an advanced class gas turbine in Smyrna, Georgia, at both full and partial load. Importantly, they were the first partners to do this on an advanced-class turbine.

The rise in complementary storage systems will present a continuous stream of opportunities for energy arbitrage. With options tailored to the situation, grid operators will be able to store energy to discharge at high-value times that may last seconds, minutes, hours, days or even seasons.

“Hydrogen can store green energy over longer time frames than lithium-ion batteries, which can do that more effectively on shorter time horizons,” Ducker notes. “The two of these technologies together are a perfect match to help more widely integrate renewable energy onto the grid.”

The Challenge Remaining

Integration remains the biggest challenge. It could well become a decades-long endeavor between public and private partnerships to incorporate this diversity of storage with the transmission infrastructure. But the resulting overhaul could create a cohesive, smoothly functioning grid that can respond to demand in real time, maximize efficiency and guarantee resilience.

“System operations has the most difficult challenge,” Cornell says. “That’s where the rubber hits the road.”

Stakeholders throughout the power industry will need to collaborate more vigorously than ever to build a smooth-functioning system.

Ultimately, the resulting grid will look very different than it does today. It will be more resilient, adaptive and consistent. It will be more reliable and efficient, too. Most importantly, it will be carbon-free.