Huge battery arrays are undermining peakers—the gas-fired power plants deployed during peak demand—and could in the future completely change the face of the power market.
Batteries are hot right now. Energy storage was referred to as the Holy Grail of renewables by one industry executive, as it would solve its main problem: intermittency. No wonder then that everyone is working hard on storage.
They are working so hard, it seems, that prices, which used to be a major obstacle along the path toward renewable energy storage gaining ground, have fallen much lower than the price of traditionally generated and stored energy, the Wall Street Journal notes in a recent story on giant batteries.
One Minnesota utility, Xcel Energy, not long ago, carried out a tender for the construction of a solar + storage installation, receiving 87 bids whose average price per megawatt hour was just US$36. This compares with US$87 for electricity generated by peakers, with the price including the cost of construction and fuel purchases for the plant.
But peakers are not regular power plants. They only work for a few hours a day when demand is at its highest, and this makes them less cost-efficient than regular power plants. Yet the fact that big batteries are beginning to make the construction of new peakers uneconomical could be a sign of what is to come: more and cheaper installations that use renewable energy to power tens of thousands of households.
The biggest such project to date is the Alamitos Energy Center in Long Beach, California, being built by AES/Siemens joint venture, Fluence. The 100 MW/400 MWh lithium-ion battery array will have the capacity to supply 60,000 households with power for up to four hours and will be the biggest lithium-ion battery in the world, beating Tesla’s 100 MW/129 MWhPowerpack system in Australia.
Smaller installations are also being built, challenging costly peakers. Tucson Electric Power is building a 30-MW battery array in addition to a 100-MW solar installation in Arizona. The system will store solar power generated in the morning, when consumption is low, the WSJ writes, and use it during peak demand in the afternoon.
According to Xcel Energy’s chief executive, Ben Fowke, batteries could replace up to 30 percent of peakers in 10-15 years. This may seem like a long time, but the truth is that these battery arrays are still expensive to build and maintain. To date, analysts from SSR LLC have calculated, extra power from battery storage facilities is 35 percent costlier than peaker power. Yet costs will certainly continue to fall as the technology develops and there is also a 30-percent federal investment tax credit for storage projects, along with state support.
For now, the battery arrays seem better suited for the warmer states, when peak demand rarely lasts more than four hours. But the technology is evolving fast, driven by often ambitious renewable targets in the different states, and despite the headwinds from the oil and gas industry. At some point in the future, batteries could take over for gas-fired plants as the standard response to peak demand.