Costs and markets to 2030
Electricity storage will play a crucial role in enabling the next phase of the energy transition. Along with boosting
solar and wind power generation, it will allow sharp decarbonisation in key segments of the energy market.
The 2015 United Nations Climate Change Conference in Paris set the framework for a rapid global shift to a sustainable energy system in order to avoid the risk of catastrophic climate change. The challenge for governments has shifted, from discussing what might be achieved to determining how to meet collective goals for a sustainable energy system.
This is a task that demands urgent action. Greenhouse gas emissions must peak in the near future if the world is to steer clear of the costly and dangerous effects of climate change.
Given the sharp, and often rapid, decline in the cost of renewable power generation technologies in recent years,
the electricity sector has made concrete progress on decarbonisation. Renewable power deployment, however,
needs to accelerate. Decarbonisation in the end-use sectors, such as direct energy uses in industry, transport and
residential and commercial buildings, also has to speed up given that progress is lagging in these areas.
All this has brought into sharp relief the significant potential, and the crucial importance, of electricity storage to facilitate deep decarbonisation. Storage based on rapidly improving batteries and other technologies will permit greater system flexibility – a key asset as the share of variable renewable electricity (VRE) increases. More directly, electricity storage makes possible a transport sector dominated by electric vehicles (EVs), enables effective, 24-hour off-grid solar home systems and supports 100% renewable mini-grids.
As variable renewables grow to substantial levels, electricity systems will require greater flexibility. At very high shares of VRE, electricity will need to be stored over days, weeks or months. By providing these essential services, electricity storage can drive serious electricity decarbonisation and help transform the whole energy sector.
Electricity systems already require a range of ancillary services to ensure smooth and reliable operation (Figure ES1).
Supply and demand need to be balanced in real time in order to ensure supply quality (e.g., maintaining constant voltage and frequency), avoid damage to electrical appliances and maintain supply to all users. All electricity systems require a degree of flexibility services, which allow grid operators to react to unexpected changes in demand or to the loss of large chunks of supply (e.g. large stations tripping offline, loss of an interconnection). Flexibility gives operators the tools to rapidly restore system equilibrium.
In today’s power systems, solar and wind power still have limited impact on grid operation. As the share of VRE rises, however, electricity systems will need not only more flexibility services, but potentially a different mix that favours the rapid response capabilities of electricity storage. This key shift in system operation needs to be part of the energy planning process. The International Renewable Energy Agency (IRENA), analysing the effects of the energy transition until 2050 in a recent study for the G20, found that over 80% of the world’s electricity could derive from renewable sources by that date. Solar photovoltaic (PV) and wind power would at that point account for 52% of total electricity generation.
Electricity storage will be at the heart of the energy transition, providing services throughout the electricity system value chain and into the end-use sectors. Electricity storage capacity can reduce constraints on the transmission network and can defer the need for major infrastructure investment. This also applies to distribution, regardless of whether constraints reflect growth in renewables or a change in demand patterns.
Behind-the-meter applications allow consumers to manage their bills, reducing peak demand charges and increasing
“self-consumption” from rooftop PV panels. Along with providing multiple services and user benefits, an electricity
storage project can unlock multiple revenue streams from the provision of a range of services. With the very high
shares of wind and solar PV power expected beyond 2030 (e.g. 70-80% in some cases), the need for long-term energy storage becomes crucial to smooth supply fluctuations over days, weeks or months. Along with high system flexibility, this calls for storage technologies with low energy costs and discharge rates, like pumped hydro systems, or new innovations to store electricity economically over longer periods. Although such challenges extend beyond the time horizon of this report and, hence, the scope of the present analysis, they need to be kept in mind, as foreseeing future needs sheds light on long-term market potential. This, in turn, gives the necessary impetus for storage development today. Research and development in the period to 2030 is therefore vital to ensure future solutions are available, have been demonstrated and are ready to scale up when needed.