Why Battery Energy Storage and EW-DOS Are a Match Made in Heaven
Today is World Energy Storage Day. It is also Tesla Battery Day, and speculation has been running rampant about what the company will unveil at its live-streamed event later today. One thing is certain: battery energy storage — both stationary and the rolling kind found in millions of electric vehicles (EVs) — is growing fast.
Storage is eating the energy sector.
Massive utility-scale batteries have usually been the ones garnering media headlines — from Tesla’s 100 MW / 129 MWh behemoth in Australia (the world’s largest battery installation) to the 62.5 MW / 62.5 MWh Gateway Energy Storage Project near San Diego, California (the largest in North America to date). But it’s actually decentralized batteries that have quietly become the star of the show. For the past two years, distributed behind-the-meter batteries at homes and businesses have accounted for the majority of new installed energy storage capacity globally, according to IEA. Distributed batteries are similarly forecasted to account for a majority of new energy storage capacity through 2030, according to IRENA, with the overall energy storage market growing from 11 GWh in 2017 to a whopping 180–420 GWh by the end of the decade.
Meanwhile, storage paired with renewable energy such as residential and utility solar is on the rise, too. The Solar Energy Industries Association (SEIA) expects that 25% of new residential solar PV systems will be paired with battery energy storage by 2025, up from just 5% in 2019. Already solar+storage combos make up nearly 1 in 5 contracted projects in the U.S. utility-scale pipeline. And if you need any further proof of storage’s growing dominance, there’s this: U.S. residential storage installations continued growing in Q2 2020 (up 10% vs. Q1), despite a contraction in the residential solar market with COVID-19 impacts.
Then there is the EV market (i.e., rolling batteries). Bloomberg New Energy Finance forecasts there will be 500 EV models available globally by 2022. Annual EV sales will jump from 1.7 million this year to 54 million by 2040, accounting for 58% of new car sales. By 2030 — just a decade away from today — that could translate into 550 to 1,000 TWh of annual EV electricity demand, a 5.5x to 11x increase vs. 2019.
Grid services? Batteries can do that.
For years now, batteries have had a reputation as being the ‘Swiss army knife’ of the electricity grid, meaning that they are a single asset that can do many different things and serve across a wide variety of use cases.
As best as I can tell, that reputation really gained traction about five years ago, with the October 2015 publication of Energy Web co-founder Rocky Mountain Institute’s report The Economics of Battery Energy Storage. Co-authored by Energy Web CCO Jesse Morris, it was one of the first seminal papers to definitively lay out the services that batteries could provide to various energy markets and various hierarchies of the electricity grid (i.e., behind-the-meter, distribution, transmission). Morris and his coauthors identified more than a dozen services.
Just within today’s Energy Web ecosystem — let alone in the global energy sector beyond it — we see that perspective becoming reality every day. In northern Germany, sonnen is using a virtual power plant of distributed batteries to absorb surplus wind generation and alleviate grid congestion. In Austria, transmission system operator APG is using DERs (and residential batteries in particular) for frequency regulation. There are numerous other such examples, some of which are not yet public but will come into the light soon.
EW-DOS plays a critical role at a critical time.
So what does the Energy Web Decentralized Operating System (EW-DOS) have to do with all this talk of battery energy storage? In short: a lot. In fact, I am hard-pressed to think of a better use case for EW-DOS. We like to describe EW-DOS as enabling “any customer, and any asset, to participate in any energy market.” If I didn’t know better, I’d think we were talking specifically about batteries.
Among its many features, EW-DOS (and especially its approach to decentralized identifiers and market / application registries) is about answering some fundamentally important questions about DERs like batteries: What are they and where are they located on the power grid? What grid services are they capable of providing? Into which energy markets are they permitted entry to provide and get paid for services?
Because of their inherent ‘Swiss army knife’ qualities, there’s arguably no more complex case than that of battery energy storage.
Let’s consider a real-life example from my time at Panasonic, when I was part of a team working on a hybrid solar+storage microgrid in Denver, Colorado, USA. The project included a 1 MW / 2 MWh lithium-ion battery energy storage system (BESS). Utility Xcel Energy owned and operated the battery. Panasonic hosted the battery at its site and performed maintenance. And the battery itself provided at least 5 different services to 2 different customers in front of and behind the meter, including contracted backup power, frequency regulation, ramp rate control, time-of-demand arbitrage, and solar generation bulk time shifting.
My Panasonic colleague who managed the project joked — through a pained expression — that the 19 contracts and the relational complexities of the project were the primary focus of his daily work.
Now imagine that project breaking ground today, in the era of EW-DOS: The battery gets a single decentralized ID. Various actors — the utility, the manufacturer, the installer, Panasonic — all attest to the battery’s attributes and credentials. Then the battery’s ‘DER Passport’ gets admitted to the necessary registries for it to provide those contracted services in different markets. Settlement happens in near-real-time as the battery goes about its operations over the course of its 10-plus-year initial operational lifespan.
Multiply this scenario by the market forecasts for distributed energy storage globally, and EW-DOS looks more and more like the right solution at the right time. World Energy Storage Day is as good a day as any to shout that message from the rooftops.
