3 theories about the future of energy storage and peaker plants
January 6, 2016
Renewable energy technologies, especially solar and wind, have become a major focus for grid operators all over the world over the past few years, despite the fact that intermittency of generation, the major barrier preventing renewables from supplanting fossil fuels completely, has yet to be completely resolved. At the same time, growing concerns regarding peaker plants and the large volumes of emissions they produce has encouraged greater interest in using renewables as a means of offsetting this source of pollution.
"Energy storage has risen up to fill in the gaps left by solar and peaker plants."
Various energy storage technologies have risen up to fill in the gaps of functionality left by solar and peaker plants. In terms of cost-effectiveness, energy storage may already be up to the task of replacing peaker plants. According to Greentech Media, an analysis performed by the news source compared the cost of energy storage to that of a 10-megawatt (MW), 4-hour-duration peaking plant. The data found that deploying energy storage to account for the same capacity cost over $100 less per megawatt-hour than relying on peaker plants.
Though energy storage technologies are now cost-competitive with fossil fuels-dependent installations like peaker plants, a side-by-side price comparison is not the only factor determining the successful displacing of peaker plants with energy storage and renewables. Multiple economic and legislative pressures will play a large role in determining exactly when the age of energy storage for peak demand is expected to begin.
1. NextEra Energy CEO sees storage surpassing peakers over the next decade
Jim Robo, CEO and chairman of Florida-based utility NextEra Energy, spoke optimistically about the future of energy storage and its chances of overtaking peaker plants at the Power & Gas Leaders Conference in New York, according to PV Tech Storage. He expressed confidence that energy storage will continue to facilitate new growth for the utilities as conversations regarding renewable adoption increasingly overlap with discussions of storage.
Robo also noted that there had "never been a better time to be in the renewable business than today," citing newly available government tax credits and a market that is friendly to renewable energy and other forms of alternative generation. Robo is so confident in the projected growth of storage that he expressed belief that the technology could replace peaker plants as soon as the 2020s.
2. Conservative estimates see storage phasing in as supplementary technology
Mark MacCracken, CEO CALMAC sees storage slowly phasing in.
"There's not going to one silver bullet. Natural gas is going to be around for awhile."
MacCracken predicts that costs associated with energy will swing towards higher demand (kW) charges. Utilities will sell less energy (kWh) but have the same costs to meeting energy demand (kW).
Dr. Pratima Rangarajan, a general manager for GE specializing in energy storage, expressed measured expectations regarding the near future relationship between energy storage and peaker plants, according to Utility Dive.
"Peakers are here, they're all over our ecosystem, and they're going to be here for a while," she said. "I don't see anyone pulling peakers out of the ground."
However, Rangarajan did theorize that energy storage is currently priced to compete with 20 percent of the country's peaker fleet, facilities operating at the lowest tiers of utilization. She argued that this level of cost-competitiveness puts the technology in an ideal spot to enhance peaker plants rather than replace them completely. Even if Rangarajan's projections are not as confident as Robo's, the scenario she describes would still put energy storage in an ideal spot to demonstrate the technology's advantages over emission-heavy peakers.
3. Legislative pressure to reduce emissions and renewables will guide this shift
Regardless of how quickly energy storage is adopted to replace peaker plants, there's no question that the passing of the Clean Power Plan by President Barack Obama and the Environmental Protection Agency will have a large impact on this development. The new mandate's requirement that each state achieve a major reduction in CO2 emissions will inevitably result in even greater pressure to replace peaking plants or put a halt on the construction of new ones.
Additionally, the Clean Power Plan will free up millions of dollars in resources to supply the technology and infrastructure necessary to minimize pollution generated from fossil fuels. The language of the legislation is flexible, meaning that energy storage installations designed to supplement renewables and offset peaking plants would fit well under the umbrella of the legislation's criteria. Even if energy storage technologies are not completely prepared to replace peaker plants over the next ten years, today's energy environment is certainly prepared to usher in the technology as a replacement to peaker plants sooner than later.
