The energy sector is in transition. The recent debate as to whether electricity storage is required to integrate increasing amounts of renewable energy is misleading, as it mainly focuses on arbitrage application. Energy storage is and should be competing with other options to increase grid flexibility – such as traditional peak generation, network upgrades and demand response. Each comes with specific benefits and limitations. The real question is:
What is the timeline for removing current barriers?
- Business cases are now emerging – for some applications such as own- consumption or primary reserve. Some smart utility providers are already examining the advanced services to provide to their industrial customers.
- Cost are set to decrease – Tesla’s gigafactory will provide enough capacity to cover about 60% of the 10x capacity increase predicted from 2013-2020. This also implies cost reductions of over 50%.
- Market design is adapting to storage –market distortions that favour traditional solutions are being identified and gradually removed. By 2020 market design could remunerate benefits that are not provided by traditional flexibility options.
The market is at a turning point; its new direction will be determined in the next few years.
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