The energy transition is accelerating and irreversible

As the world marches towards a net zero carbon emissions target by 2050, you would have to be sleeping under a proverbial rock to be missing the once in a century transformation in the way energy is generated and consumed. While some of this transition is responding to shifting community expectations; economics, aging infrastructure, and technical innovation is seeing the transformation accelerate and appear irreversible. However, while much is changing, the underling need is not – to provide clean, reliable, secure, and affordable energy to consumers.

Electricity demand is expanding while baseload coal generation is declining

An increasing electrification of transport, industry, offices, and homes is increasing electricity demand significantly with Australia’s Energy Market Operator (AEMO) predicting a doubling of electricity demand (to 320 TWh) by 2050. This increase doesn’t include the parallel growth in off-grid distributed energy solutions, continuous improvements in energy efficiency and the electrification needs should Australia lead the world as a green hydrogen superpower. At the same time, 60% of the 23GW of baseload coal generating assets are forecast to transition to retirement by 2030.

Interrelated investment required in generation, distribution and dispatchable storage

To meet forecast demand growth with a changing supply profile, significant investment is required in three areas:

  • Utility scale VRE – Australia needs to continue installing the current record rate of VRE capacity every year to triple VRE capacity by 2030, then double it again by 2040, and again by 2050. This utility VRE growth needs to be matched by distributed rooftop solar PV growth with energy generation increasing four-fold and contribute to circa 20% of underlying demand;
  • Expanding distribution networks – by efficiently installing more than 10,000 km of new transmission, to connect geographically and technologically diverse, low-cost generation and firming with consumers who rely on it; and
  • Firm dispatchable storage – Treble the firming capacity from alternative sources to coal that can respond to a dispatch signal, including utility-scale batteries, hydro storage, gas-fired generation, and smart behind-the-meter “virtual power plants” (VPPs).

These investment areas are interrelated but highly dependent upon the availability and capability of energy storage solutions to supply some 46 GW/640 GWh of dispatchable power by 2050. The more capable and economic storage solutions are, the closer generating and distribution capacity can be matched to demand. The less capable and economic storage solutions are, the more overbuild in generation and distribution networks is required to provide system reliability and stability. This overbuild is material for a couple of reasons: it is an inefficient use of limited resources and redirects investment from other important use cases (such as education, healthcare, aged care etc); and it is further impacting on the natural environment with more valuable arable land covered with wind and solar farms and high voltage distribution infrastructure.

Existing storage options have constraints and inefficiencies

While storage solutions are available today and can mostly persist over time, they have constraints and inefficiencies that are driving the search for alternatives. Gas peaking plants and fossil fuel baseload plants are the obvious fall-back options, albeit carbon emitting ones and/or requiring capital intensive carbon capture and storage (CCS) technology. Expansion of transmission grids is both expensive and comes with long lead times that can constrain and slow the transition. Scalable demand side response management tends to come with high coordination costs and lost productivity. The loss of renewable capacity due to curtailments and feed-in management is wasteful and inefficient. Finally, solutions such as large-scale hydro solutions are physically and locationally constrained.

Lithium ion-based batteries dominate short term storage applications

At lower levels of RE penetration into the network, the storage needs are predominantly short-term ones. Storage solutions support frequency stability (FCAS) on the network and short-term inter-day load shifting between excess daytime generation and morning and evening peaks in demand.  In Australia today, short term (<2 hour) utility scale lithium-based batteries are dominating the development and project pipeline. However, as renewable generation increases its share in the generating mix, the demand for longer duration energy storage (>6 hours) is increasing rapidly.

Long duration storage markets are immense and lithium is unlikely to dominate

According to a recent energy report, to achieve net carbon neutrality, the world’s electricity grids will need to deploy 85-140 TWh of long duration energy storage by 2040 requiring an investment of between USD 1.5 – 3 trillion. This is an exceptionally large and rapidly evolving market where a range of technologies are vying for a piece of the action. While lithium-ion batteries dominate (and are likely to retain dominance of) short duration storage, there are good reasons why they are unlikely to be the solution for Long Duration Energy Storage (LDES) applications.

LDES solutions share some common characteristics

LDES encompasses a range of technologies that can store electrical energy in various forms for prolonged periods at a competitive cost and at scale. Energy storage can be achieved through very different approaches, including mechanical, thermal, electrochemical, or chemical storage. These technologies can then discharge electrical energy when needed—over hours, days, or even weeks—to fulfill long-duration system flexibility needs beyond short-duration solutions such as Li-ion batteries. The various LDES technologies are at different levels of maturity and market readiness. While the underlying approach to storing energy varies, LDES technologies share some common characteristics that differentiate them from alternative storage solutions (including lithium-ion batteries);

  • The marginal costs of storing additional energy are low (i.e., each additional kWh of energy stored does not increase cost significantly),
  • There is decoupling of the quantity of energy an LDES technology can store and the rate at which an LDES can uptake and release energy (i.e., LDES can create a very large store of energy output with a small stream of energy input),
  • They are widely deployable and scalable as they have few geographical requirements, are modular and do not depend on rare-earth-elements, and
  • They have relatively low lead-times compared to transmission and distribution (T&D) grid upgrade and expansion.

The iron slurry flow battery and its advantages

Guberno is supporting an entrepreneurial and innovative Australian company to develop and commercialise one of these LDES technologies – an electrochemical iron slurry flow battery. The battery is targeted at commercial and industrial markets to enable consumers to increase self-consumption of their renewable energy generation and/or facilitate shifting to off -grid solutions. Over time, the battery will play an increasing role in the energy utility markets helping to improve the robustness and flexibility of the energy network.

While flow batteries lower energy and power density relative to lithium batteries and make their application in mobility applications unlikely, they have several attractive characteristics that make them appealing in larger scale stationary batteries targeted at long duration storage applications:

  • Energy is stored in a charged electrolyte liquid made from a low cost and abundant metal iron that can be easily and cheaply expanded independently of the power module to increase the duration of energy storage;
  • The electrolyte is environmentally friendly as it is non-toxic, easily recyclable, and safe from overheating and causing a fire; and
  • The battery has a much longer useful life and is not subject to degradation due to repeated cycling and/or deep discharging and can be renewed by replacing the electrolyte rather than the battery itself.

Exploiting learning and scale curves to improve economic attractiveness and abundant deployment

The long duration energy storage market is at the core of an energy network transitioning towards net zero. It is a large and rapidly growing market that is essential to unlocking a higher share of renewable energy generation while retaining network stability and reliability. Multiple technology solutions are evolving to meet the need and are unlikely to be based on lithium-ion based technologies that are more suited to shorter duration solutions.  Electrochemical flow will be part of the solution, and they are well on the journey to exploiting the well-worn learning and scale curves to improve their economic attractiveness and abundant deployment.