Grid scale storage refers to energy storage systems that are used by electric utilities. Technologies for grid scale storage range from pumped hydroelectricity to flywheels to large-scale lithium-ion batteries.
Effectively and widely deploying grid scale storage is a crucial part of grid decarbonization. Grid scale storage can help solve the problem of solar and wind power intermittency, allowing for greater deployment of renewable resources. By improving the reliability of solar and wind, grid scale storage can replace the need for fossil fuel powered peaker plants. Grid scale storage also increases the profitability of renewables by allowing utilities to shift renewable energy supply to better match demand.
Deployment of grid scale storage has been on the rise in the US, with capacity quadrupling in the US between 2014 and March 2019. In 2020, the US installed 1.2 gigawatts of battery storage, set to come online in 2021. Most of this capacity is in California, which is also home to the world’s largest battery energy storage system — the 300MW Moss Landing Energy Storage Facility, which began operating in December 2020.
While grid scale storage growth is on a promising upwards trend, it is still in the early stage of its adoption curve. As of now, there appear to be three main challenges to further deployment growth.
The first challenge is regulatory uncertainty. Given the nascency of the market, there is still a lack of clarity in some markets as to whether energy transmission and distribution operators can own grid scale storage, or whether only power generators can own storage. In geographies such as the UK, there are debates on whether grid scale storage should be classified as a subset of power generation, or as its own category, which has implications for the rules and regulations that apply to grid scale storage. This regulatory uncertainty discourages investment in grid scale storage and can make it more difficult to monetize.
Grid scale storage safety is the second challenge, though likely one that is solvable from a technological perspective. In particular, there are concerns about the flammability of lithium ion batteries. Safety incidents, such as an explosion in 2019 at the Arizona Public Service storage facility, can lead to heightened regulatory scrutiny. Ensuring that grid scale storage is provably safe will be key to expanded adoption.
The third challenge to adoption is cost. The cost for grid scale storage has already fallen dramatically in the US, decreasing ~70% between 2015 and 2018. Lithium-ion battery cost affordability has been helped by demand for cost effective batteries from the growing EV market, which has spurred efficiency gains in battery chemistry. As battery costs continue to fall, adoption of grid scale storage is likely to increase.
Overall, the pathway to wide-spread deployment of grid scale storage appears highly achievable. The regulatory, safety, and cost barriers to adoption will take work to overcome, but appear to be relatively solvable issues. This is good news for our path to deep decarbonization.
