Energy Storage

With variable renewables accounting for more than half of global capacity additions to 2040, utilities and power grid operators increasingly turn to energy storage to cover their flexibility requirements. The International Energy Agency (IEA) expects the cost for four-hour battery systems will fall to $220 per kWh by 2040, spurring a utility-scale deployment of energy storage of close to 220 GW.

ContourGlobal Bonaire, the Caribbean arm of London-based ContourGlobal, has selected Wärtsilä to build a 6-MW energy storage on the island to accommodate greater supply of intermittent wind and solar energy. Works on the EPC project are underway and are due to be completed in April 2019.

The sunny American Southwest is where gas peaking plants are losing out to solar-plus-storage projects, which pitch for tenders at less than $30/MWh. The cost for installing battery storage, based on a 20 MWh system with 4 hours of storage, plunged 40% over the past year to $357/kWh and Bloomberg New Energy Finance (BNEF) anticipates another 52% reduction by 2030.

Falling technology cost and supportive policies are seen pushing up the American grow from currently $400 million to top $4 billion by 2024. According to Global Market Insights, power storage could become a “market disruptor”, having nearly doubled in 2018 by adding yet another 1,000 MWh of capacity.

By 2024, China’s market for flow vanadium energy storage is likely to exceed $3 billion. The new technology is based on domestic resource and offers virtually unlimited storage capacity, long duration, and rapid response time. A 200MW/800MWh vanadium flow battery is under development in Dalian, with the batteries made in a nearby factory of Rongke Power.

Sempra Energy has sealed a deal to divest its non-utility US natural gas storage facilities for $322 million to an affiliate of ArcLight Capital Partners. Once the sale is closed in Q1-2019, ArcLight will own 100% of Mississippi Hub and Bay Gas storage facilities.

Nov 28 – Tokyo-based Toshiba will reinforce its green energy footprint by spending 100 billion yen ($175m) on a new biomass power plant near the thermal Mikawa power station in Omuta, Fukuoka prefecture. Going forward, Toshiba aims to aggregate all its renewable energy sources and storage batteries, creating a Virtual Power Plant (VPP).

Energy storage will play a growing role in the British power mix as the Brexit process is at a critical stage and the country seeks to reduce reliance on importing electricity through from mainland Europe. “Interconnectors are direct competitors in the flexibility marketplace,“ Wood Mackenzie said, suggesting Brexit could be good news for the UK storage market.

Nov 21 – Rebuking warnings of gas supply shortages, the UK government said it will not give any regulatory support for new gas storage facilities. Insisting that “the benefits of more insurance are not worthwhile,” energy secretary Greg Clarke said, insisting the market was already providing sufficient gas security and optionality.

Closure of the large Rough storage has left the UK in a “precarious position” and “vulnerable” to gas supply shortages, Wood Mackenzie finds. Spot LNG cargoes can help cover demand at a short notice – but it would be imprudent to rely on flexible gas imports through the Interconnector, particularly as UK gas demand is bound to increase due to the government’s coal phase-out policy.

Dynamics of the global energy transition are driven by the speed of electrification and the competition between flexible gas power plants and renewables plus energy storage. Margins in the downstream power market are becoming more attractive, as price discrimination allows for better value capture downstream than in the generation business.

French utility ENGIE has deployed a 150 kW/90 kWh energy storage system in Rotterdam that is made up entirely by second-hand batteries from Renault electric vehicles. The E-STOR system, developed by Connected Energy, is supporting the Tennet electricity distribution grid.

Striving to roll-out battery storage, Duke Energy has announced to invest $500 million in several projects spread across North and South Carolina over the next 15 years. In total, the storage projects will have a combined capacity of 300 MW.

Risk of gas supply shortages this winter keeps growing in the U.S. because inventories are at record lows due to a late start of the gas storage refill season and high withdrawals. According to EIA’s Short-Term Energy Outlook (STEO) gas inventories will reach 3,263 billion cubic feet (Bcf) at the end of October – the lowest end-of-October level since 2005.

UK Power Reserve (UKPR) has awarded the second phase of its battery-based energy storage contracts to Fluence, a Siemens and AES company. The 120-MW project is underpinned by capacity contracts secured in 2016, and UKPR is now tapping Fluence technology to enhance grid flexibility with all new storage projects scheduled to be in operation by winter 2020.

Page 4 of 13

News in Brief

Zhonghua’s profits halve

April 1 – Hong Kong-listed Zhonghua Gas Holdings has recorded a staggering 46.7% fall in profit, citing a lower margin for LNG supplies and reduced subsidies, although full-year revenue rose by 7.3%. In December, Zhonghua partnered with Shanghai Shenergy to supply LNG in the Yangtze River Delta region, and also has strong business relationships with Tractebel Engineering and Tianjin Jinre Heat-Supply Group.

Endesa donates $28m to fight coronavirus

March 31 – Endesa has created a 25 million euros ($27.8 million) fund to help fight the coronavirus pandemic in Spain. The Spanish utility, subsidiary of Enel, said the fund will be designated for purchases of protective equipment for health-care workers.

 

MAN develops liquid methane terminal in Swedish port

March 30 – OxGas has commissioned MAN Energy Solutions to act as ‘owners engineer’ to develop and build a liquefied methane-based fuels terminal in the Swedish Port of Oxelösund. The terminal will feed both LNG and green methane derived from bio gas to SSAB ’s local steel production, and to re-distribute it via train and trailers to other parts of Sweden for use in the steel industry and decentralized power generation.

American ISOs to delay grid investments

March 27 – North America’s independent system operators (ISO) are considering delaying investments in grid upgrades and enhancement as electricity demand weakens due to industry shutdowns to contain the coronavirus pandemic. PJM Interconnection, the largest U.S. bulk power market which spans 13 Mid-Atlantic and Midwestern states, revised its daily forecast of about 100,000 MW of load but actual demand came in at 95,500 MW.

Wärtsilä starts combustion trials using ammonia

March 26 – The Finish technology group Wärtsilä has initiated combustion trials using ammonia in an effort to reduce emissions. Based on initial results, the tests will be continued on both dual-fuel and spark-ignited gas engines, followed by field tests in collaboration with ship owners from 2022, and potentially also with energy customers.

Xodus sees growth in cable services

March 25 – Xodus Group has stepped up services related to subsea power cables over the last twelve months. The number of new consulting assignments grew by more than 50%, resulting in more than 70 active work streams that are handled by more 30 permanent staff.

Electricity “more indispensible than ever”

March 24 – Disruptions caused by the coronavirus crisis lay bare how much modern societies rely on electricity, according to the International Energy Agency (IAE). Millions of people are mandated to stay home, causing a surge in teleworking, e-commerce and video streaming which pushes up domestic electricity use.

U.S. frackers cut Capex

March 23 – Sharp cuts in capital spending among Appalachian gas producers are now being replicated in other U.S. basis, with Energy Aspects anticipating the deepest impact on production and earnings to take place starting from the second half of 2020. So far, E&P companies just hedged 52% of this year’s expected production even though some Appalachian producers are seen “lock in some pure gas volumes at prices above the curve.”

EV makers face bankrupcy

March 20 – Electric vehicles (EVs) remain particularly exposed to the corona effect of supply-side constraints and demand erosion. Gigafactory facilities are likely to be delayed and fledging EV manufacturers could face bankruptcy, Wood Mackenzie warns. On the flip side, declines in EV sector demand may be gains for the stationary energy storage segment.

Manufacturing rebounds in Asia

March 19 – Asian-dominant supply chains for solar and energy storage are gradually rebounding after contractions in February. Moving forward, Wood Mackenzie expects near-term development activity and local logistics in leading European and North American markets will outweigh lingering supply issues.

Italy’s gas demand plunges

March 18 – Corona-struck Italy has seen demand for natural gas plunge 8% from the previous week, with similar declines likely in other EU countries as national governments impose lockdowns to contain the virus. Industrial demand is “particularly volatile,” while gas generators will bear the brunt of demand loss, Wood Mackenzie says, as a carbon price decline is bolstering thermal coal.

Nexif raises funds for Rayong CHP

March 17 – Nexif Energy, a joint venture between Singapore-based Nexif and Denham Capital, has raised project financing for the Rayong gas-fired cogeneration project in Thailand. The 92 MW plant is being developed project with Ratch Group, based on 25-year power purchase agreement with Electricity Generating Authority of Thailand (EGAT).

ADB provides $10m loan for Afghan IPP

March 16 – The Asian Development Bank (ADB) has agreed to provide $10 million in debt financing for a gas-fired power unit in Mazari Sharif with a capacity of nearly 60 MW. Phase-1 of the Independent Power Project (IPP) will get another $10 million loan from the Leading Asia's Private Sector Infrastructure Fund (LEAP).

IEA models 50% Carbon-Free Generation

March 13 – Analysts at the U.S. Energy Information Administration (EIA) have drawn up the 50% Carbon-Free Generation case - assuming a stark shift in state-level policies. In this event, the U.S. would have 19% more nuclear power generation, 10% more wind power and 17% more solar PV contribution than in its Annual Energy Outlook 2020 (AEO2020) reference case.

E-charging market to top $15bn by 2030

March 12 – By 2030, the U.S. market for energy-optimisation in support of charging electric-vehicles could be worth $15 billion per year, McKinsey finds. The consultancy expects high demand for home-charging appliances as residential power tariffs are comparatively cheap and most charging can happen overnight when off-peak electricity prices are lower.

Oversupply builds up

March 10 – Energy Aspects’ end-March forecast has added on another 100+ billion cubic feet of natural gas supply while demand remains subdued. In the U.S., the seasonal decline in heating degree days nearly halved the natural gas withdrawal rate. Gas-burn in the power sector and residential/commercial demand are forecast to fall by 1.7 billion cubic feet per day (bcf/d) and 4.0 bcf/d, respectively.

Small-scale LNG cuts cost for power plants

March 10 – Decentralized gas power plants in remote locations can source cheaper fuel from small-scale LNG regas terminals than from trucking the super-chilled gas across long distances. “Trucking LNG further inland would entail additional costs as well as logistical challenges,” IEA analysts noted. For example, a 100 MW baseload power plant would require, on average, around 20 daily deliveries from tanker trucks.