Since the second half of 2020, major economies around the world have proposed long-term carbon neutrality targets, and emission reduction has become a global consensus.
How can we reduce emissions specifically?
According to statistics from the International Energy Agency (IEA), in 2019, traditional fossil energy such as oil, coal, and natural gas still accounted for 85% of global primary energy consumption, and renewable energy accounted for only 10%. Therefore, to well achieve long-term carbon emissions and reduction targets, energy transition is the only way for all economies.
How to realize the energy transition?
Use less coal and less gas, but more renewable energy which means more electricity.
In this process, with the gradual increase in global electrification, energy storage will play a crucial role in the power system. Unlike traditional fossil energy sources such as oil and coal, electricity production and consumption need to be carried out at the same time, and energy cannot be stored directly in the form of electrical energy. Therefore, when the output of the power generation does not match the electricity load, the stability of the power system will face challenges. At this time, the energy storage system (ESS) needs to adjust the power system by charging or discharging.
Power System (Source: Essence Securities)
I. Definition And Classification Of Energy Storage
Energy storage refers to the storage of electrical energy, which is related technology and measure that uses chemical or physical means to store electrical energy and release it when needed.
According to the storage method, energy storage can be divided into mechanical, electromagnetic, electrochemical, thermal, and chemical energy storage.
Among them, pumped storage of mechanical energy storage is the most mature system in current commercial applications which is generally used in thermal power and nuclear power. The working principle of pumped storage is very simple. It is to pump water from a low place to a high place and store it and then release the water to generate electricity when needed.
Pumped Storage (Image: Drax)
Electrochemical energy storage represented by lithium-ion batteries (LIBs) and lead-acid batteries is in the demonstration and deployment stage. However, electrochemical energy storage has great potential for its high applicability for photovoltaic (PV) and wind power generation.
Other ESSs are still in research and development and have not yet been industrialized, such as compressed-air and flywheel energy storage of mechanical, superconducting, and supercapacitor energy storage of electromagnetic, and chemical energy storage.
II.Data For The Energy Storage Market In 2020
Pumped storage accounted for the largest proportion while electrochemical energy storage rapidly caught up
According to China Energy Storage Alliance (CNESA), by the end of 2020, the accumulative installed capacity of global energy storage reached 191.1GW with an increase of 3.4% year on year.
In the global energy storage market, the accumulative installed capacity of pumped storage is the largest, accounting for 90.3%, followed by electrochemical energy storage which accounts for 7.5%. The installed capacity of molten salt heat storage accounts for 1.8% while compressed-air energy storage and flywheel energy storage both account for less than 1%.
Electrochemical energy storage is the most widely used technology with the greatest development potential. Therefore, the current global energy storage technology development is mainly concentrated in the field of electrochemical energy storage. As of the end of 2020, the accumulative installed capacity of electrochemical energy storage reached 14.2GW with a year-on-year growth of 49.6%. Among them, the cumulative installed capacity of lithium-ion batteries is the largest, reaching 13.1GW.
Cumulative Installed Capacity of Global Energy Storage Market (Source: CNESA)
As shown in the above data, pumped storage currently occupies the majority of the market, and LIB energy storage ranks second. Other energy storage technologies account for a small share in the energy storage market due to various reasons, such as high cost, low efficiency, limited application scenarios, large self-discharge losses. Therefore, the following will focus on comparing the advantages and disadvantages between pumped storage and LIB energy storage, and explain why LIB energy storage has great potential in the future.
III. LIB Energy Storage — Great Potential
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Pumped storage has many incomparable advantages over other energy storage technologies. As a 100-year-old technology, pumped storage has developed very maturely compared to other energy storage technologies. In addition, pumped storage has a service life of 80 or even 100 years. Today’s pumped storage also has extremely high storage efficiency, which can achieve an overall efficiency of up to 80%. Besides the energy loss during charge and discharge, the self-discharge loss is very low.
It is true that the drawbacks of pumped storage are obvious. The construction of pumped storage has great geographical restrictions. Because upper and lower reservoirs are required to exist within a relatively short distance and have a high height difference. And under the condition of limited height difference, the energy density achieved by pumped storage is also very finite. In addition, the biggest limitation to the development of this technology is its extremely low economy. Pumped storage has high investment costs and a long payback period, often more than 30 years, and some are not profitable at all.
Pumped Storage (Image: iStock)
Compared with pumped storage, LIB energy storage has more outstanding features, such as mature technology, long cycle life, high energy density, environmental protection. More importantly, LIB energy storage is very suitable for PV and wind power generation.
International Renewable Energy Agency’s (IRENA) “Renewable Energy Statistics for 2021” annual report shows that renewables’ share of all new generation capacity has risen sharply for two consecutive years. More than 80% of all new generation capacity added in 2020 will be renewables, with solar and wind accounting for 91% of new renewables. According to the IEA report, as of the end of 2020, the global cumulative installed PV capacity was 760.4GW. Twenty countries added more than 1GW of new PV capacity. Among them, China, the European Union, and the United States ranked the top three in the world with the scale of 48.2GW, 19.6GW, and 19.2GW respectively. The cumulative installed capacity of wind power is 743GW.
However, due to the volatility, intermittence, and randomness of PV and wind, the power is unstable, which intensifies the phenomenon of abandoning wind and light, and brings challenges to the stable operation of the power grid.
Pumped storage, as the most widely used energy storage system at present, is only suitable for large-scale monthly cycle energy storage demand, but is difficult to meet the daily cycle energy storage needs. Moreover, it is restricted by the geographical environment and cannot be constructed and operated in non-water areas.
On the contrary, LIB energy storage has a fast response time, which can adapt to the multiple fluctuations of wind and PV power generation within a day. It can provide a certain degree of buffer for new energy access to the power grid, and play a role in smoothing fluctuations, peak cutting and valley filling, and energy scheduling. Also, LIB energy storage is not restricted by topography and has a wide range of applications.
LIBs (Image: Drax)
LIB energy storage combined with PV and wind power can rapidly promote global energy transformation. However, it is also accompanied by an important problem-the high cost of LIBs.
Ⅳ.Cost Trend For LIBs
The energy storage system consists of many components. The most basic is the cell, which is composed of positive and negative electrode materials, isolation film, electrolyte, and metal foil. After a large number of cells are connected in series and parallel, and then added to the BMS, they form the battery pack. Several Battery packs are connected with Battery management systems such as BOS and EMS through power supplies, and then convert DC into AC through transformers and PCS to form a complete energy storage system, which can be connected to the grid for operation. Take the box-type energy storage system using lithium iron phosphate batteries (lifepo4) as an example. In a complete energy storage system, the cost of lifepo4 accounts for about 58.6%, PCS 15.5%, BMS 12.6%, EMS 5.0% and other equipment 8.3%.
LIB Storage System (Image: InfoLink)
LIBs were limited in some markets because of their high cost and poor cycle life. But in the past two years, LIBs have benefited from the rapid rise of the electric vehicle market. After LIBs are retired from electric vehicles, they can be used in the field of energy storage in cascades, which greatly reduces the cost of LIBs and opens a door to energy storage. The price trend of LIBs can be divided into two stages by 2020. The cost of battery cells fell sharply in the past decade, and industry concentration increased while the subsequent ten-year cost decline will slow down and global competition will intensify. According to Bloomberg New Energy Finance, the cost of energy storage systems is expected to drop to $165/kWh by 2030.
LIBs Cost Trend (Source: InfoLink)
In order to realize the energy transition, energy storage technology is the key to the development of new energy. However, whether energy storage can become the last piece of the puzzle in the future energy system not only depends on technological innovation but also requires a proactive policy environment, market, and careful planning.
Reference
[1] Energy Storage, Wikipedia
[2] Hongbo Tang, Overview of China’s Electrochemical Energy Storage Industry in 2020, Lead Leo Research Institute, 2020
[3] Lithium Battery Prices Have Slowed Down, But There Is Still About 50% Room Under The Leadership Of Major Manufacturers, InfoLink, 2021
[4] Report On 2020 Global Photovoltaic, International Energy Agency, 2021