How Energy Storage Systems Could Replace Natural Gas Power Plants
One of the reasons natural gas has grown to become the largest energy source for electricity in the U.S. is that it’s a very flexible energy source. It can provide baseload power for the grid, and peaker plants can provide short-duration energy that fills gaps when renewables aren’t producing energy or demand is unusually high.
A lot of times the value of the peaker plants is generated in only a few hours per year. In Southern California, peak summer hours require gas power plants to provide supply when the rest of the grid is overloaded, which leads to higher power prices and makes the economics of these power points work. But energy storage systems can provide similar value to the grid at peak hours while providing additional services 365 days per year. As the cost of storage comes down, it could make natural gas peaker plants obsolete, causing another major shift in energy as we know it.
Energy storage shows its worth
When Tesla (NASDAQ:TSLA) built a 20 megawatt/80 megawatt-hour (MWh) energy storage system in Southern California early last year, it was a critical turning point for the industry. Not only was energy storage going to be the supplier power at peak times for the grid, replacing off-line natural gas facilities, but the project was deployed in a matter of months.
Tesla’s highly publicized 129 MWh project in South Australia was built in less than 100 days and has already proven it can add value to the grid. A day before it was scheduled to be turned on, the energy storage system was called upon to provide 59 MW of power on an extremely hot day. Over time, it’ll help stabilize the grid at times of peak demand, reducing the need for peaker plants.
Tesla isn’t the only one in the energy storage game, either. AES (NYSE:AES) and Siemens (NASDAQOTH:SIEGY) are betting big on energy storage as well with a joint venture called Fluence. The company already has a contract for the world’s largest battery energy storage system at 100 MW/400 MWh and has a total of 500 MW of projects in the pipeline.