There's a missing storage link lowering the ceiling for renewable penetration.

By Aaron Foyer
VP, Orennia

The word “typhoon” can be traced back to the 12th century where it’s thought to be derived from Chinese characters, which can be read as “wind which long last.” This is apropos, as these Pacific tropical storms are both powerful and tend to linger.

The famed Mongol leader Kublai Khan saw not one, but both of his 13th century naval invasions of Japan drowned by separate typhoons. The incredible timing of the storms led the pair of typhoons to be collectively referred to as the “divine winds,” or “kamikaze” in Japanese This is the first known use of the term.

The Mongol Invasion, by Tsomonbayar. Image courtesy of Deviant Art

Today, typhoons and other storms represent a new type of challenge, with weather often restricting wind and solar generation for days or even weeks at a time. Without solving how to store and distribute power over long periods, there is a natural ceiling for the growth of both wind and solar. While current lithium-based systems work well with daily storage cycling, they’re challenged when it comes to long-term duties.

So, what storage solutions could work when the next divine winds show up (or disappears)?

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BACKGROUND ON STORAGE

Our current suite of energy storage technologies runs the gamut from those that can discharge power in seconds to those that can discharge for months. Lithium-based batteries account for almost all storage projects currently being built across the US and Canada. These work best with multi-hour discharging, making them ideal for daily load shifting – capturing energy in the day and discharging at night.

California provides an excellent example of this. Batteries now routinely charge during the day by taking in excess solar, then discharge later in the evening.

CAISO Daily Electricity Mix (April 16, 2024)

Note: In the evening of April 16, 2024, batteries were briefly the top supplier of electricity in CAISO
Source: Orennia, CAISO

But these batteries require almost daily cycling to make the economics work. This means lithium-ion batteries are not the likely tech to hold electricity for occasional long periods of time. To bridge the gap between short-term batteries and long-term renewable ambitions, long-duration energy storage (LDES) is needed cheaply and at scale.

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WHAT’S CONSIDERED “LONG-DURATION?”

Depends on whom you ask. While it would come as no surprise an astronomer and Tommy Lee would disagree on what defines “long-term,” it’s more surprising no consensus exists in the energy world, either. CAISO defines LDES as a system that can deliver power for 8 hours or more, the US Department of Energy pegs it closer to 10+ hours, while the US Long Duration Storage Council has it at 24 hours or more.

Regardless of the exact length, the key is technologies that can store and deliver energy economically for tens to hundreds of hours at a time.

Why it matters: We are unknowingly accustomed to cheap long-term energy storage: fossil fuels store energy magnificently. A mound of coal is pretty much the apex of cheap, efficient energy storage. But coal isn’t the future.

Comparison of Different LDES Technologies

Note: Nominal duration is how long a battery can discharge at its maximum power rating *Sensible heat is energy stored in a material without a phase change (ex. concrete blocks), latent heat is energy stored with a phase change (ex. solid to liquid) Sources: Orennia, US Department of Energy

Vying for the future instead is an array of emerging solutions meant to address long-duration storage needs. There’s a wide range of both duration and maturity among the various technologies.

Overview of key technologies:

  • Pumped storage hydropower (PSH): Water is pumped up into a reservoir when electricity is cheap and then flowed back down through a turbine when it’s not. PSH currently accounts for 96% of all installed LDES capacity globally.
  • Vanadium redox flow batteries (VRB): Two vanadium-based electrolytes are separated by a membrane. When the electrolytes are pumped through a fuel cell stack, a redox reaction takes place, driving a current.
  • Compressed air energy storage (CAES): Electricity is used to pump air into large subterranean caverns, where the air becomes compressed. During times of higher electricity demand, air is released back to the surface where it’s harnessed to spin a turbine and generate power.
  • Iron-air batteries: In this reversable rusting battery, iron metal discharges electricity, which causes it to rust. As it’s recharged, the electrical current converts the rust back to iron, creating the battery most likely to excite high school chemistry teachers.
  • Other technologies: Earlier-stage LDES solutions include gravity-based systems, zinc batteries, hydrogen energy storage, sodium-ion batteries and thermal

Hydrogen, which stores energy chemically in a similar way to fossil fuels, can be stored multiple ways including in giant caves underground. Accessing this giant reservoir makes hydrogen one of the only mature technologies that can store energy over several months.

LDES Funding by Technology Type, 2020-2024YTD

Companies included: Asylum, Antora, AquaBattery, CMBlu, Corre, Energy Dome, Eos, ESS, e-Zinc, Form, Fourth Power, H2GO Power, Hydrostor, Hyme, Invinity, LINA, Primus Power, RayGen, Sinergy, Storelectric and Vflow
Funding includes everything from early-stage crowdfunding to post-IPO debt financing
Source: Orennia, Crunchbase

The catch: Despite the market need for LDES, lithium-based batteries accounted for 96% of all installed storage capacity between 2020 and 2023 in the US and Canada.

So, what’s holding back long-duration storage?

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LDES WILL NOT BE COMMERCIAL WITHOUT A MARKET REDESIGN

There are some markets where a small subset of technologies work with today’s prices. Orennia has run the economics of multiple technologies in various power markets across North America. In our analysis, compressed air systems already work in many parts of both CASIO and the Southwest Power Pool (Orennia report here), where geology allows. But for most technologies, a redesign of the market is needed to incentivize storage with durations beyond 24 to 48 hours.

While day-ahead pricing has been excellent at fostering daily cycling storage, more is needed for LDES where longer periods of low wind and sun are more difficult to forecast.

State Capacities of Operating LDES Projects

Note: Operating LDES projects include all storage projects with nominal durations longer than 12 hours
Source: Orennia

Some options: There are several different approaches market designers could take to attract LDES developers. The key is to design market mechanisms that explicitly value flexibility and reliability. For carrots, a market could use capacity payments to cover fixed and operating costs for storage projects that maintain a certain available capacity charged up. For extra incentive, projects may receive performance bonuses after supplying power when it’s needed most. On the flip side, projects not delivering when needed get hit with a penalty.

To be more prescriptive, charge-discharge price collars could be set: mandating LDES projects charge when power prices drop below a certain price and discharge when above another. Markets may also require utilities to include long-duration storage as part of their resource planning process.

And more data: Additional information can also help in derisking projects. Storage operators can be more accurate with their price predictions with better weather forecasting and 7-day expectations for both wind and solar production in a region.

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LOOKING AHEAD

There are some encouraging signs for long-duration storage, including pilot and demonstration projects across the US.

  • Form Energy is moving forward using its iron-air battery in several projects, including in New York and Minnesota. In California, the company is looking to build the state’s largest long-duration storage project. Form claims its battery has a duration of 100 hours.
  • Eos Energy Enterprises’ zinc-power storage technology will be used in the $500 million, 8 gigawatt-hour Project AMAZE, largely funded by the DOE’s Loan Programs Office. The company says it can operate for durations of 12+ hours.
  • And Invinity Energy Systems has been funded, also by the DOE, for 84 MWh worth of projects using its vanadium flow battery. Invinity states its discharge duration is in the 2 to 12 hour range.

And pumped hydro isn’t giving up its crown anytime soon, showing signs of growth. The storage technology’s capacity has been roughly flat since the 1990s, hovering around 20 gigawatts installed. But the US now has 12 gigawatts of new pumped hydro projects in the interconnection queue and a total development pipeline of nearly 50 gigawatts.

Bottom line: Without long-duration energy storage, there is a ceiling to wind and solar penetration. Luckily, as the market share of wind and solar grows, so does the value of LDES. The US Department of Energy estimates the price arbitrage for LDES will be twice that of lithium-ion batteries by 2050.


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SPARKED THOUGHTS
  • Missing storage link? The ceiling for renewable penetration will be significantly lower without an ability to economically store and discharge energy over multiple days and weeks. Presently, almost all storage projects being built will be used for daily load shifting rather than for long-duration storage.
  • Markets in need of a redesign? As it stands, power markets aren’t setup to incentivize long-duration storage projects. Mechanisms are needed that reward projects for storing energy and being available to discharge when needed or, conversely, penalizing projects for not being available. Little commentary exists on the need for a market redesign, but regulators will have to be proactive to make the appropriate changes.
  • Could natural gas be storage? Fossil fuels are excellent stores of energy. Natural gas peakers may ultimately end up as the solution for managing days or weeks without significant wind or sun.

 

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