The world is struggling with simultaneous energy and climate crises. To solve the first may require undoing progress made toward greener power and cleaner air. But it doesn’t have to be that way. Euphoria over electric cars—and the powerpacks that run them—has obscured a more immediate need: batteries to run homes and businesses as countries across the world deal with the repercussions of a power crisis. Despite the worsening state of energy and rising prices, existing technologies aren’t being put to use. Instead, everyone is just thinking about the steepening cost of generation, paralysed by the thought of escalating bills and blackouts.
There’s a simple solution: Store energy and use it when the need arises. As the market for EV batteries expands and evolves, large industrial-scale powerpacks—energy storage systems (ESS)—are being overlooked as a potential solution to this power crunch. The EV battery market is expected to grow to $500 billion over the next two decades, while ESS won’t even make it past $100 billion, by Morgan Stanley estimates. The latter is what we need more urgently.
EV excitement has pushed development of battery technology overall and helped ESS along as well. However, it hasn’t been driven by active concerns about our energy needs. ESS are typically large stationary powerpacks that can store excess energy from grids and other sources for later use, or when demand peaks. As renewable power supply increases, the ability to store it for later use will become more important.
What’s underappreciated about these systems is that they benefit from EV battery developments like better energy density and safety, but don’t have the same problems or constraints. One issue is size, for instance. Electric car batteries need to be small, high-energy and safe. Its been difficult to get all three factors operational at the same time. But for ESS, size isn’t an issue since they don’t need to be housed under a vehicle’s hood. That reduces one variable.
In addition, factors that worry EV buyers about smaller batteries are different: Energy density doesn’t matter as much. That’s key: this issue has driven manufacturers to push for other formulations that are expensive and tough to deploy commercially. What matters is charging cycles, battery life and frequency.
Viable options like lithium iron phosphate (LFP) powerpacks are underestimated. Life cycles and other metrics for stationary battery use are improving. Most materials used for it are abundant, although prices have risen in recent months. They can operate for several thousand cycles of charging and discharging. All this means that existing technologies have come far enough to make ESS a reality—even for a few hours a day. Several manufacturers are already investing billions in building these energy storage systems.
The world’s largest battery company, China’s Contemporary Amperex Technology, has been actively expanding its work in this area. It’s sold these products at six projects in Texas to a power producer.
The looming issue is upfront costs. Analysts often talk about how unviable these systems are, but in reality, there are too many unknowns to make accurate estimates on how steep industrial-scale energy storage projects will be. The running expenses will depend on improvements including the quality of products and the life cycle of powerpacks—and these have both come a long way. The bottom line is, the status quo isn’t sustainable. It’s cracking, and it’s time to look for solutions.
But are governments and companies willing to put ESS to use and boost adoption? The smart move would be to provide incentives, tax cuts, or consumer awareness programs to push things along. Ultimately, the upfront costs need to be brought down and that requires talking about something less exciting than electric cars.
China, for instance, has been widely deploying LFP chemistry. As part of its goals to have 30 gigawatts of energy storage systems over the next three years, it plans to slash costs to help businesses adopt and deploy these systems. Notably, it will ensure energy security to maintain its global supply chain heft. That’s not been a consideration for many others.
A recent MIT study on energy storage noted that the current policy focus on short-term decarbonization goals has encouraged both public and private attention toward “relatively mature technologies.” That means markets and money haven’t pushed hard enough on new uses of storage and more effective energy utilization, since they continue to fly under the radar, set apart from mainstream policy.
Until they focus on the future, we should start worrying more about more blackouts and power shortages as climate change and extreme weather combine to put energy supplies at risk.
