California May Need to Spend Over US$360 Billion on Energy Storage to Achieve 100% Renewable Energy Generation

published: 2018-08-09 9:37 | editor: | category: News

California is currently leading the charge in the development of the renewable energy industries in the US, and the state has already set the ambitious target of using renewable energies to generate 50% of its electricity by 2020. However, there are environmental groups pressuring the state’s legislature to bring in a new bill that would require the state to use renewable generation to supply 100% of its grid electricity by 2045. This proposal appears just as the state’s last nuclear power plant has been slated for decommissioning in 2025. While the bill is getting some support in the legislature, experts in the energy sector are doubtful that the state has the resources to wholly revamp its power infrastructure. A recent report by the Clean Air Task Force (CATF), a US-based energy policy think tank, estimates that California will need to spend more than US$360 billion on energy storage systems to balance electricity supply and load if the state decides to totally rely on renewable generation.

The two main sources of renewable energy are solar and wind power. However, their electricity production is intermittent and volatile because weathers and seasons can affect the performance of photovoltaic (PV) systems and wind turbines. There are periods when wind farms and PV power plants do not supply enough electricity to the grid, and there are also periods when they supply too much due to favorable weather conditions. In the latter case, the electricity that is in excess of the consumption level would be abandoned or go to waste.

To address this challenge, the government of California is working with utility companies to set up energy storage systems to support local grids. For example, the Pacific Gas and Electric Co. (PG&E), which is a major provider of the electricity and natural gas to homes in California, is seeking approvals to build energy storage projects across the state. One of these is a 300MW battery energy storage system (BESS) located in Moss Landing. Comprised of large lithium-ion battery packs, the BESS in Moss Landing is expected to meet the monthly electricity demand of 2,700 homes. With utility-scale energy storage systems, local grids depending on renewable generation can deal with sudden shortages and surges of electricity supply.

Many utility companies and developers of renewable energy projects have deployed energy storage systems in the recent years to help balance the supply and load on the grid. A well-known example is the 100MW/129MWh energy storage facility built by Tesla Inc. in South Australia. Marco Ferrara, cofounder of an energy storage startup called Form Energy, said that renewable generation together with energy storage systems made of lithium-ion batteries could compete with natural gas firing within the next five years. Ferrara added that by that time the use of natural gas for electricity production could start wane. It is also worth noting that Form Energy is a spinout from the Massachusetts Institute of Technology (MIT).

However, not everyone has a rosy view on the future growth of renewable generation that will go hand in hand with the increased deployment of energy storage systems. The aforementioned report by CATF projects that California will need to store 9.6 million MWh of surplus electricity during the summer months if 80% of the state’s energy mix is based on renewable sources. CATF further estimates that the total cost of California’s energy storage infrastructure could run up to US$363 billion if the state wants to achieve the goal of using renewable energies for 100% of its power generation.

CATF’s research also indicates that the cost of building the energy storage infrastructure might make electricity unaffordable for the majority of the state’s population. Even if the average cost of lithium-ion batteries has been reduced by two-thirds, CATF has calculated that the price per MWh of generation can reach US$49 if the California sources 50% its electricity production to green energy projects. If the state chooses to make a full transition to renewable generation, the price per MWh can soar to a whopping US$1,612.

Although BESS can help quickly adjust electricity supply and do not release carbon emissions, it will prioritize its own electricity need over the grid. Therefore, the overall generation capacity from PV power plants and wind farms has to be higher than the consumption level in order to first charge the energy storage systems before meeting the demand from consumers. Moreover, lithium-ion batteries have limited lifespans, and their capability will fade over the long term. Hence, the maintenance of energy storage systems may become very expensive. Another factor that makes energy storage systems cost prohibitive in California is some parts of the state receive limited amounts of sunlight and wind power during the autumn and winter.

Steve Brick, a senior advisor for CATF, said that energy storage equipment will constitute a huge portion of the cost of the entire renewable generation system in the future if the conventional lithium-ion battery remains mainstream. As the drive to set up renewable generation and energy storage projects will likely raise the electricity bills for consumers, Brick contends that the government of California should slow down and ask itself if the public would accept higher utility fees to pay for green energy investments. At the same time, the state should also consider other solutions that can reduce the overall level of carbon emissions.

On other hand, the challenge of tuning the grid is not an impossible hurdle to achieving the goal of using 100% renewable energies for generation. In the recent years, numerous battery technologies that are alternative to the lithium-ion battery have emerged and are making rapid advances. A case in point would be the various types of flow batteries that are under development. Also, the scientific community continues to explore other energy sources that are clean and carbon neutral. MIT, for instance, has reported significant progress being made in its research of nuclear fusion.

While alternative battery technologies have yet to reach commercialization stage, they are demonstrating enormous market potentials. Furthermore, the future is still uncertain for lithium-ion batteries with regard to the changes in their production costs. Given that the average selling price of lithium-ion batteries is around US$1.50 per kWh, building a utility-scale energy storage facility for now is still a costly affair.

 (The above article is an English translation of a Chinese article written by Daisy Chuang. The credit of the top image goes to Pixabay.)

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