In our last article on infrastructure, we discussed the evolution of electricity and how energy storage will play a key role in future power systems. In this article, we will continue with the topic of energy storage and how it is evolving.
The proliferation of renewable energy sources and the retirement of coal generating facilities are amplifying the need for energy storage:
The cost of renewable energy has decreased significantly over the last decade to the point where it is on parity with conventional sources of thermal generation such as coal and natural gas. The decreasing cost of renewable energy has led to its proliferation globally. For instance, the generating capacity of the world’s wind turbines combined has increased exponentially from 47,620 MW in 2004 to 369,553 MW in 2014. Through 2018, global wind capacity is forecasted to reach 596,300 MW. Similarly, solar has grown from 158 MW in 2004 to 177,000 MW in 2014, and is projected to reach 375,000 MW of capacity in 2018.
Though renewable energy is clean and does not require any fossil fuels, it is not practical to have a system of purely renewable sources. Renewable energy is intermittent and does not always generate when power is needed. For instance during the hottest days in the summer, wind is typically at its lowest points and wind farms are not able to generate sufficient amounts of power to meet demand. In these circumstances, it is thermal power such as coal and natural gas that are used to meet this summer time demand. With the passing of emissions regulations many of the aging coal plants are being forced to shutdown, thus decreasing the flexibility of power systems to meet demand when needed. For example in 2012 in the U.S. 10.2 GW or 3.2% of total coal generation was retired. This trend is expected to continue: another 50 GW of capacity will be taken offline by 2020.
The proliferation of intermittent renewable energy coupled with the shutdown of flexible thermal generation has created the need for energy storage. Energy storage allows a power system to store energy when there is excess and then release it during the day time when it is needed. For example, during the middle of the night when the wind is blowing and there is limited demand for power this excess can be stored and released during the day time when demand is at its peak.
Energy storage has historically come in the form of hydro dams which store water when electricity is not needed. During times of peak demand, water is released to generate power. This type of storage is very effective but there are a limited number of sites globally and it requires heavy capital costs. There have been many technological advances in other forms of storage such as large scale batteries and compressed air. This is a space that Kensington is following closely.
Though the technologies are still being developed, there have been huge strides over the past couple of years. Ontario, California, and other states in the U.S. have begun to install large scale storage solutions and we believe that this will continue into the indefinite future. In Ontario, 50 MW of storage was procured in 2014; 1.3 GW of storage has been procured by the California Public Utilities Commission; Texas has plans to install 500 MW; and the Hawaiian Electric Company is seeking 60-200 MW.
It is not a matter of if energy storage will play a significant role in future power systems but when. Kensington is actively involved in this space and is considering potential investments.