Solar and wind power will drive the value of energy storage, remaking the power grid
A much heralded report shows solar and wind will lower wholesale prices, but it also shows a coming evolution in the pricing profile of the grid. These shifts in timing, shape, regularity and length will drive energy storage demand.
Despite a heavy build-out of gas plants over the last two decades, the United States is moving solidly in the direction of an electricity grid dominated by renewable energy. And as we reach higher penetrations, the needs change. Some of the more forward-looking models suggest we’ll need on the order of 12 hours to three weeks worth of energy storage to move to an 80% and then 100% solar- and wind-powered grid.
A recently published report by the U.S. Department of Energy’s (DOE) Lawrence Berkeley National Laboratory (LBNL), Impacts of High Variable Renewable Energy Futures on Whole Electricity Prices, and on Electric-Sector Decision Making (PDF), shows that another affect will be aggressive downward pressure on wholesale electricity prices as solar and wind approach 50% of all electricity.
This top-line observation was heavily picked up by the energy press, and is already happening in a number of regions such as the Plains States and Texas, where wind is sinking wholesale power prices.
However, this is only the beginning of the changes that are explored in the report.
We’re all familiar with the duck curve, and it will come to be across all regions – instead of just California and New England. However, a lot more than just an evening peak will have to be dealt with.
The report suggests a shift from having an evening peak in pricing, to having both a morning and an evening peak – with the evening being more pronounced than it is now. The high wind regions have peak pricing in the early evening also, however its lower than solar’s peak and more of the pricing during the day is steadier.
Also occurring will be an increase in ancillary service prices, as well as an expansion of their needs, as renewables increase. And while these needs aren’t sufficient under current conditions to support a massive energy storage market on their own – note that a single Tesla 100MW/129MWh battery was able to take 55% of revenue in South Australia – they will drive a significantly bigger market than is seen today in the United States (and maybe bigger than the what is projected as becoming viable with recent FERC rulings).