are more attractive to nancial inves-
tors in particular. Going forward that
will change and we will be going into
the arbitrage opportunity; so in mar-
kets like California where storage and
solar are co-located, it’s a different
investment proposition.
“Solar and storage are a good thing
to co-locate in California, where
there’s peak sun at midday and peak
demand in the evening; it is the per-
fect application for Li-ion batteries.
But it doesn’t work on a lot of projects
yet. The costs coming down will
change that. We see this accelerating
over the next couple of years as evi-
denced by the 2 GW of solar plus
storage PPAs signed in the recent past
in the US.”
The pace of deployment, however,
varies from country to country, ac-
cording to regulatory development
and market structure.
Ghavi said: “Australia has started
well, as has the US. And we are start-
ing to see more in Europe. It’s also
about open markets versus closed
markets. The value of storage as an
asset can vary signicantly, depend-
ing on whether it’s in an open or
closed market.”
Looking to the future, with the
battery still being the biggest cost in
an energy storage solution, ongoing
cost reduction of the battery along
with performance improvement, will
be key. With regards to the entire
system, Ghavi says that further en-
abling cost reduction through opti-
misation will also be important,
adding that “the next thing will be
how to take the system to the next
level through digitalisation”.
She concluded: “It has been an
amazing journey and there’s so much
more we can do from a digitalisation
and system level perspective, from a
practical deployment perspective
and also in terms of business models.
It’s about how we can help our cus-
tomers manage energy more ef-
ciently, enable new business models
and revenue streams, and really help
them to evolve.”
T
he need to integrate renewables
has been one of the main drivers
behind the transformation of
the energy sector and the technologies
associated with enabling that transfor-
mation – the key among them being
battery energy storage systems
(BESS). Without storage, the effective
use of intermittent renewables will be
severely limited.
“Storage is really a key enabler for
maximising renewables, having a
stronger, greener, grid and maximis-
ing the value of physical assets,” said
Maxine Ghavi, Head of Grid Edge
Solutions within ABB. And com-
menting on what she sees as the key
trends in this critical technology,
Ghavi said: “Probably the biggest
single trend in battery storage has
been the cost reduction.”
According to BloombergNEF
(BNEF) the volume weighted aver-
age of an automotive battery pack fell
85 per cent from 2010-18, reaching
an average of $176/kWh. It notes that
currently, lithium ion batteries are
getting 18 per cent cheaper with ev-
ery doubling of cumulative volume.
BNEF’s ‘Energy Storage Outlook
2019’ predicts a further halving of
lithium-ion battery costs per kilowatt-
hour by 2030, as demand takes off in
both the stationary storage and elec-
tric vehicles markets. Based on this
observation, and its battery demand
forecast, it expects the price of an
average EV battery pack to be around
$94/kWh by 2024 and $62/kWh by
2030.
This dramatic reduction fall is also
being reected in the power sector. In
its ‘2H 2019 LCOE Update’, released
at the BNEF Summit in London in
October, the global levelised cost of
capacity benchmark for short dura-
tion battery sits at $112/kW/yr, down
4 per cent from 1H 2019. It said that
for up to 1 hr storage duration, batter-
ies are already cheaper than new
build gas red open cycle plants ev-
erywhere except in the US.
This is increasing the business cases
where storage can be applied. Ghavi
commented: “The cost reduction is
not as much technology related but
really comes from scale and [manu-
facturing] efciencies. This means
we are starting to see them deployed
in distributed networks as well as for
utility scale.”
Beyond the battery itself, she notes
that there are also some interesting
trends with regards to other compo-
nents such as the power conversion
and overall system integration. “The
next main trend we are seeing,” she
says, “is in system integration – from
the integration of cells into modules
and then into large stationary systems
– together with thermal management
and protection equipment etc.”
System integration is a trend that
has seen ABB bring its expertise from
power grids together into its grid edge
business.
“We are looking at how you can
build the most efcient system,” said
Ghavi. “And how we have evolved,
reects how the industry has evolved.
As a grid edge solution provider, we
see that it is increasingly important to
look at storage from a holistic per-
spective – focusing on system inte-
gration and the entire solution includ-
ing automation and control. We will
see more of this, as customers become
more demanding.”
According to ABB, data driven
concepts and services, aggregation
of distributed energy resources, opti-
misation and energy management,
are all becoming part of the bigger
picture.
Ghavi noted: “These all impact your
overall economics because they allow
you to provide more value-stacking
from your assets and also reduce costs
through energy management and im-
proving operational performance – by
leveraging things like forecasting,
articial intelligence and machine
learning – over the life of the asset.”
Certainly the life and performance
of a battery is a concern in the indus-
try. One of the major challenges fac-
ing batteries is “absolute safety” at an
acceptable cost. “This is really key,
along with how the risks are mitigated.
It’s a key challenge that all the battery
suppliers are looking at today,” said
Ghavi. “From a systems integrator’s
perspective, you want the batteries to
be safe.”
This, adds Ghavi, is where data ana-
lytics, etc., can help in terms of the
safety, operational performance and
lifetime. Here, automation is a huge
enabler. “The more we are able to in-
corporate data analytics, machine
learning and AI into the automation,
the more we are actually able to look
at things related to reliability, lifetime
and safety.”
Cost, performance, density, safety,
etc., will all drive which battery
technology gains greater acceptance.
Deployment will also be impacted by
collaborations with manufacturers of
car batteries, and the potential for us-
ing second-life batteries.
Although separate industries, the
EV and stationary battery storage
markets are closely intertwined.
“You can’t decouple the stationary
battery storage and EV battery mar-
kets. From the battery suppliers’ per-
spective, they try to leverage from the
same technology. In the stationary
storage business, we’re benetting
from growth in the EV sector. We can
benet from the economies of scale as
the EV production capacity continues
to increase.”
In terms of technology, Ghavi notes
that battery suppliers from both sec-
tors also try to leverage from the same
technology. “They would have a por-
tion of their business that goes to EVs
and a portion that goes to the station-
ary market because it also balances
their portfolio.
“From our perspective, clearly
we’re looking at second-life [EV]
batteries – what it takes to integrate
them, what performance we expect,
etc. There is a lot of discussion around
second-life batteries and of course it
all depends on the cost of integration
and how to maximise their remaining
life, as well as how to mitigate the risk
of integrating these second-life
packs.”
Using second life batteries has the
obvious benet of providing a way
of recycling old EV batteries but
there are also risks. “When we get
the batteries for large stationary
systems, the racks are all tested. But
when you get one based on second
life batteries, you might have 50
batteries from an EV and there’s the
question of how do you put them
together and test them. They will all
be at different levels in terms of ca-
pacity, for example. There are a lot
more variables to deal with.”
She added: “It doesn’t mean the
challenges can’t be overcome; it just
means there has to be a lot more col-
laboration between battery suppliers
and system integrators.”
Another challenge is regulation.
This has a big part to play in recognis-
ing and rewarding the value of storage
in the network. For example a battery
can act as a synchronous generator
but respond much faster. It is therefore
useful for applications such as exible
peaking, frequency control, reserve
capacity, etc, or relieving transmis-
sion congestion. Meanwhile, behind
the meter it enables time-of-use bill
management or demand charge re-
duction; increased self-consumption
or act as an uninterruptible power
supply.
Speaking at the recent BNEF Sum-
mit, Donald Joyce, Chief Financial
Ofcer at RES (Renewable Energy
Systems), the world’s largest inde-
pendent renewable energy company,
said: “From an investor’s point of
view, if storage is structured in the
right way, with the right partners that
understand the contractors, etc., it can
be a star performer.
“A lot of the projects we have done
are more around ancillary services,
such as frequency response. Some of
those have longer-term contracts, so
THE ENERGY INDUSTRY TIMES - NOVEMBER 2019
Energy Outlook
14
The energy industry
is transforming. More
renewables are
coming on to the grid,
electricity consumers
are also generators,
and electric vehicles
will not only consume
energy but will also
feed it back into the
grid. This means
changes in the grid
are needed to allow
electricity to ow both
ways. Junior Isles
speaks to ABB’s
Maxine Ghavi about
battery energy
storage and the key
technologies affecting
utilities in their
transformation.
What’s in store?
Ghavi: the next main trend
we are seeing is in system
integration
Global benchmarks – PV, wind and batteries
Note: The global benchmark is a country-weighted average using the latest
capacity additions. The storage LCOE is reective of a utility-scale Li-ion
battery storage system with four-hour duration running at a daily cycle and
includes charging costs, assumed to be 60 per cent of wholesale average
power price.Source: BNEF Summit in London.