The market for battery storage, dominated by Li-ion, is growing fast. From grid-located batteries for frequency-response applications (like this one) to behind-the-meter batteries for energy cost management, multiple applications are emerging, on widely different scales and solving many different problems.
Much is being discussed, written (and done) to define and optimise the business cases for developing standalone “battery storage projects”. In effect, the industry is busy retrofitting storage into electricity systems to increase their flexibility, resilience and efficiency of operation in a variety of different ways.
In future, in addition to these standalone projects with their own business cases, we’ll see more and more batteries enter the system as value-enhancing features of other deployed infrastructure. Power system products, particularly electricity generating capacity, will arrive with flexibility built-in.
“…with battery included”
It’s already becoming common to see the words “hybrid” and “integrated” alongside the term “battery storage”.
Here are just a few examples:
SMA’s “Integrated Storage System” (here) is a battery integrated into a smart inverter for home PV systems. At some point, potentially quite soon, I doubt we’ll see home PV systems installed without storage. Even without a clear financial case in terms of energy cost management, policymakers may enforce this in the interests of grid integration. At a utility scale too, we are already seeing PV farms built with storage right from the start (e.g. this one on Australia). At that scale too, I fully expect to see greater integration of batteries at an equipment level.
As an example of the latter and taking integration further, here’s a start-up intent on building battery storage straight into the PV panel itself, for small-scale use: “Solpad“. With innovations such as screen-printing of batteries on the way it’s not hard to imagine how this market might develop further.
In wind generation, GE’s “Brilliant Turbine Platform” offers battery storage built into turbines. As GE indicate, key to such integrations is the software that manages them. So Acciona too are investigating the integration of storage into wind farms, including the vital role of software management systems. Once again I don’t think it’s particularly bold to predict that storage will, quite quickly, become a commonplace value-add feature offered by any of your favourite turbine vendors.
(As an interesting aside, GE are also involved in an innovative turbine-storage integration project which uses not batteries but pumped hydro).
Offshore, Dong Energy are integrating batteries into its Burbo Bank (UK) project. I’m not sure where Dong plan to locate their battery, but bear in mind that offshore wind farms have large substation platforms as part of their design. These seem an obvious piece of real estate that can be used. They are supplied by companies such as ABB and Siemens, who are already active in storage (e.g. here and here). Once again it doesn’t take a great leap of imagination to see vendors offering in-built storage as a future design feature (to substations both off- and on-shore).
And it’s not just renewables that offer a market for the integration of storage directly into existing products to improve their performance, as this gas turbine-battery hybridfrom GE indicates.
Given the many potential benefits storage brings to power systems, I’m sure there are and will be plenty more examples like these, involving other power system components and products. (If you work for or know of a company offering one, I’d love to hear!)
The takeaway isn’t that these particular examples are the best or market-leading ones. They are merely examples I’ve selected to illustrate what we are seeing: an important evolution in the battery storage market and its value chain. It’s one taking place across the full variety of scales and locations where storage exists; from grid-centralised generators to behind-the-meter “prosumer” premises.
Competition with standalone batteries…
Building batteries into products in this way will bring some important changes within the storage market and its value chain.
Current battery projects are typically not on greenfield sites but co-sited with existing power infrastructure, from grid substations to wind farms. That’s helpful, since it reduces development challenges and costs: planning consent for an existing site rather than a new one, existing access to land, an existing grid connection and more. Nevertheless these “retrofits” are still new projects which introduce a whole raft of new development time and paperwork specific to the new battery system (and/or the developer, integrator or other entity contracted to build it): warranties, maintenance contracts, environmental impact statements, PPA amendments and such like.
In future, building – for example – a new wind farm where the battery is a built-in product feature of the turbines will have some significant impacts:
Compared to a battery retrofit project, it will simplify the development process and paperwork for developers. The project’s various consents and contracts will be created from the start around one integrated product, supplied by one equipment supplier, sited in one place at one time, by one EPC. While warranty conditions and provisions will certainly contain clauses specific to the battery feature of the product (its allowed cycling behaviour for example), it should nevertheless be a single contractual relationship, interfacing the purchaser to a single point of responsibility.
Battery-product integration will foster new, direct value chain relationships, enabling existing product vendors to capture value from storage deployment right from the start. Why just sell the power generation part and leave third parties to capture the value of enhancing its performance through add-on battery projects? How to even survive in a market where your competitors all offer built-in storage as a feature within their product range? Expect to see more collaborations, mergers or acquisitions between major product OEMs and battery production and integration partners. Battery access and integration expertise will become a vital capability for big vendors; while the latter’s ever-evolving product pipelines will provide predictable and reliable scale and longevity for battery manufacturers – leading to cost economies and efficiencies.
With more direct value chains and a simplified development process, storage-as-a-feature could prove to be a cheaper way to build storage capacity into power systems (particularly growing ones) than storage-as-a-separate-product. That would help the business case. It would also change where energy storage value is internalised. The various possible benefits of storage could be “revenue-stacked” not just onto each other but onto traditional revenues from energy generation and emissions-avoidance, baked into the financial planning of power generation projects from day one; and competing for contracts such as frequency response with those of 3rd-party or standalone storage businesses.
Standalone or integrated?
None of this is to say that standalone battery storage deployment projects or business cases will go away. After all, there are plenty of existing sites within current power systems where the addition of storage will create value; and plenty of discussions over where battery (or other) storage solutions provide the most system-wide impact.
Nevertheless, these standalone projects will increasingly have to compete with batteries that arrive in the system as value-added features, deployed not as a business case of their own, but as integrated elements of the business cases of other projects within the power system.
For equipment OEMs throughout the system, integrating batteries into their products as a value-added feature will drive new relationships and shifts of power within the value chain. Those who fail to follow the trend risk losing competitiveness relative to their peers; those who innovate can grab a chunk of this fast-growing market, one driven by the irreversible, long-term requirement for increased power system flexibility.