The Pluses and Minuses of Battery Technology

One of the biggest impediments to the current energy transition has been an inability to cheaply and effectively store energy from renewable sources. While renewable energy projects have proliferated over the last twenty years, effective battery solutions have lagged due to their high costs. But that is changing rapidly. Often called the “holy grail,” batteries are becoming more affordable, reliable, and pervasive as a means of integrating larger amounts of renewable energy onto the grid. In fact, the battery storage market is poised to be one of the energy sector’s largest investment opportunities going forward.

However, recent research shows that increased use of large-scale battery technology may be doing more harm than good. Unsustainable mining and market practices in developing countries and higher greenhouse gas emissions overall have been on the rise too. Without guidelines or policy to align battery implementation with forward-thinking infrastructure and environmental goals, battery technology may be exacerbating some of the very problems the energy transition hopes to eliminate.

A Brief History

Since their earliest days in the late 18th century, the core of battery technology has involved converting the energy of a chemical reaction into useable power. In this reaction, electrons move from one point (anode) to another (cathode), creating current to generate power that, sustained over a period time, provides energy. However, batteries faced perpetual challenges of a shot life span, fast depletion, and a low energy density relative to other sources like fossil fuels. The advent of rechargeable batteries in the latter part of the 20th century began to address some of these shortcomings. Now they are ubiquitous, powering the myriad devices in our lives.

Basic battery operation. (Source: Visual Capitalist)

It has long been believed that batteries will unlock the fullest measure of renewable energy potential. Over the last two decades, the share of renewable energy comprising the world’s electricity generation has burgeoned, now comprising approximately 30 percent of installed generating capacity. In fact, in 2017 the world installed more new solar power generation than fossil fuel capacity. Here in the United States renewable energy is up to 18 percent of the country’s generation matrix. And the country is getting creative, proposing solutions such as using the Hoover Dam, Lake Meade, the Colorado River, and wind and solar generating assets to create a continuous hydropower loop to offset local fossil fuel-fired generation.

Despite that progress, renewable energy’s intermittency slowed the current – and necessary – energy transition. Reliance on carbon-based electricity generation persists. Where possible, energy storage solutions like pumped hydropower storage, hydrogen from chemical reactions, compressed air, or flywheels attempted to resolve this challenged but were rarely scalable to the level of power grid application. Now, cutting edge energy storage solutions are proliferating around the world, marking a dramatic shift in the pace of transforming the world’s electricity systems.

Anode (i.e., Pluses)

Battery technology has helped energy consumers of all types benefit from renewable energy. This is especially true in developing countries whose populations lacked access to electricity. In the last decade, myriad home battery solutions have come to market, many of which can be adjusted to fit varying levels of consumption at the residential level, also known as “behind the meter” solutions.

In front of the meter, large grid operators are also taking charge, installing battery storage solutions to meet demand and as an alternative to more costly infrastructure overhauls. In fact, the pipeline of front-of-the-meter projects has skyrocketed in recent years.

Batteries are following a declining cost curve similar to that of renewable energy due to increased deployment. This has led to batteries of varying types and sizes serving an array of grid needs and providing new value to grid operators and increased revenue streams to developers. Depending on the market, a battery solution may help regulate grid voltage or frequency ad a particular node. They can inject energy instantaneously, thereby reducing the physical strains and higher prices associated with peak demand.

Many municipalities in New England are implementing grid-tied battery solutions. The region is home to some of the nation’s highest retail electricity prices due to constrained fuel supply, a problem that is exacerbated during times of peak use. Internationally, some of the fastest growing markets are betting big on battery storage. India, for example, is investing heavily in battery installation and manufacturing to meet challenges of grid reliability.

Various ancillary services batteries offer grid operators.

The uptake of these new technologies has led to a smarter grid that is able to react more quickly to sudden spikes (or drops) in demand and positively impact eventual demand charges for consumers. Further, they can be deployed to areas with constrained space and alleviate the need for more costly infrastructure upgrades. But storage solutions do not have to be stationary. The rapid uptake in electric vehicles has created “batteries on wheels,” mobile assets that can be charged in one location and discharged in another. New businesses utilizing technology like blockchain can harness this flexibility to properly compensate consumers for their role in a more dynamic electricity grid.

Indeed, battery solutions are disrupting many facets of the energy market. Their smaller size and lower capital expenditure allow them to be placed close to injection points on the grid. Further, they can respond in milliseconds to demand fluctuations, congestion, and other balancing needs. Natural gas “peaker” plants, designed to alleviate these same challenges, are larger, more costly, further from key grid nodes, and react less quickly. There is now very real concern that peaker plants built in the last 10 to 15 years will become obsolete, unprofitable, and possibly stranded due to rapid deployment of batteries in grid systems.

Cathode (i.e., Minuses)

But of course, there are downsides. Proliferation of batteries means more rare earth materials to make them. Lithium and cobalt are among some of the most sought-after resources, but the largest deposits tend to be in countries with almost no oversight. Because of the high cost of mining in the United States due to environmental protections laws, it is more cost effective for manufacturers to secure resources from abroad. Environmental degradation, poor working conditions, and unfair pricing have emerged as significant externalities in places ill-equipped to deal with them.

In addition, and almost counter-intuitively, increased battery storage use can lead to increased greenhouse gas emissions from fossil fuel-fired generation. Project owners, particularly ones that also own assets like coal fired power plants, take advantage of energy arbitrage. That is, companies will operate coal plants more heavily at night – when demand and prices are low – to recharge batteries, and then sell it once daytime prices are high enough. Therefore, coal-fired generation, struggling to compete against natural gas and renewable energy, is operating more than it otherwise might, increasing carbon emissions and requiring even higher levels of renewable energy to offset them.

So What?

Recent advances in battery technology are propelling the much-needed energy transition. Prior to recent breakthroughs, the transition appeared to hit a ceiling. However, it is not enough to simply graft new technology onto old systems, especially if it exacerbates existing challenges the transition is meant to resolve. Energy frameworks must be updated to reflect the times. Therefore, going forward, energy generation and consumption – from grid scale to home use – should be paired with smart policy and regulation to:

  • Foster further renewable energy installations paired with battery storage technology

  • Reduce negative externalities of environmental degradation and greenhouse gas emissions

  • Increase efficiency and/or reduce energy demand at peak hours

  • Accurately capture various revenue streams and services new technologies provide, to include providing energy resilience against increased storm damage due to climate change

Robust and creative policy solutions will also consider the role of consumers. Effective remuneration for using their home assets or vehicles for energy storage during the day and deployment at peak times will help advance smarter use of energy resources. Here, technology like blockchain is helping implement and track these nascent and sophisticated transactions.

Battery storage is only beginning to realize the potential many have foreseen. However, effective deployment must simultaneously achieve goals of energy generation, environmental rehabilitation, increased efficiency, and affordability. Then will energy’s “holy grail” finally be discovered.

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© 2020 by Mark Konold