Solving the energy storage problem for a clean energy system

The global energy transition will be driven by two key factors: energy efficiency measures that reduce consumption, and the deployment of renewables – electricity-based but also renewable fuels and heat.

Multiple studies confirm that 100% renewable systems are feasible in the long run, as the Intergovernmental Panel on Climate Change’s (IPCC’s) 6th Assessment Report indicates. However, most renewable sources are intermittent – they vary in time, and production cannot be perfectly predicted. Sources that are both renewable and controllable do exist, but their potential varies per country and is limited by technical, economic, environmental, and social factors.

This means we will increasingly require flexibility solutions to manage this intermittency, from the short run (milliseconds to weeks) to the long run (weeks to multiple years). Energy storage is one such flexibility solution (along with others), as the IPCC highlights. Storing energy allows us to integrate renewables at a lower cost and reduces price volatility in energy markets. Developing energy storage is therefore highly attractive for policymakers – it not only offers opportunities for decarbonization, technology leadership, and economic growth, but also increases energy security (an aspect particularly relevant given the ongoing energy crisis).

Storage varies per technology (electrochemical, mechanical, thermal, and others) but also according to the energy carrier it helps to store (electricity, gas, thermal energy) and application – for example, in large power systems (whether directly connected or on-site within a building or renewable energy installation) or off-grid. The suitability of the different storage technologies for each application will depend on:

• investment and operational costs
• efficiencies (for charging, storing, and discharging)
• design lifetime of the asset
• other aspects, such as the potential revenues that the storage operator can obtain

Many storage technologies are commercially proven and increasing in competitiveness. There is already some electricity storage deployed globally, particularly in the form of hydropower reservoirs and, increasingly, batteries. BloombergNEF indicates that global electricity storage capacity will reach almost 2 terrawatt hours (TWh) by the end of 2023. But gas storage capacity is already much higher (over 4,000 TWh globally in 2022 according to Cedigaz), as is thermal energy storage capacity. 

Barriers to energy storage persist

Our economy is therefore highly dependent on energy storage, and current power systems can already integrate a significant amount of renewables. But further storage capacity will be necessary. When storage and other flexible resources are not available, measures such as curtailing renewable generation or, even worse, limiting electricity consumption become necessary. This can lead to significant economic inefficiencies. 

And yet, important barriers remain to reaching the capacity we will need. In the realm of short-term storage, while notable progress has been made, there is still limited storage capacity and insufficient system flexibility overall. Looking to the future, the ability to store energy over extended periods becomes crucial if we are to rely primarily on intermittent renewable sources. Developing effective, cost-efficient, long-term storage solutions is therefore vital, but many such technologies are not yet commercially mature. 

Regulatory barriers pose big challenges to storage deployment. Policies and regulations must be adapted and streamlined to encourage the widespread adoption of energy storage technologies. In many regions, market design issues as well as outdated network planning, connection, and permitting procedures contribute to delays in the deployment of energy storage systems. 

Economic and financial barriers further complicate the deployment of energy storage. The impact of the ongoing uncertainty over renewable projects and energy markets more broadly often makes investments unattractive for companies. Energy markets often fail to adequately provide the price signals that would allow developers of energy storage to make returns by taking up excess electricity when prices are low, and selling it back to the market when prices are high. Challenges such as the opening up of capacity remuneration mechanisms to storage and other non-conventional flexibility solutions, critical for incentivizing investments in long-term energy storage technology, prevail. Bottlenecks in manufacturing, as well as inflation, the high cost of capital, and prolonged payback periods contribute to the economic complexities of energy storage implementation.

Considering the social and environmental impacts is also paramount when relying on large deployment of storage in the future. The most notable example is reservoir-based hydropower. As mentioned, this is the most widely deployed form of electricity storage, but its significant social and environmental disruptions need to be considered. Additionally, the mining and manufacturing processes needed to produce batteries, a growing form of energy storage, pose challenges around potential negative impacts. With batteries targeted to reach production levels of 965 gigawatt hours a year in Europe by 2030, the mineral demand for storage-related materials will increase drastically. 

In navigating the path to widespread energy storage adoption, it is also essential to recognize that storage is part of a broader discussion on flexibility needs. Flexibility solutions, including those still in their infancy such as demand response of low-voltage assets, should not be pursued in isolation. Rather, we need them to be integral components of a sustainable energy ecosystem. 

Expanding proven solutions 

Achieving a fully modernized and decarbonized energy system undoubtedly hinges on expanded storage capacity. Yet we can also reduce the need for flexibility solutions through measures such as:

• improved energy efficiency
• higher connectivity
• so-called “dispatchable” renewables that can be deployed quickly to compensate for intermittent sources such as wind and solar
• demand response (using technical and policy measures to shift demand to times when power is more plentiful)

These solutions are complementary to energy storage, and should be pursued whenever cost-efficient.

The challenge of advancing storage involves both short and long-term strategies. In the long term, a regulatory and economic framework must support research, development, and deployment of seasonal storage technologies. Some thermal energy solutions, like aquifer and pit thermal energy storage, are already mature, but others can be incentivized. 

For electricity storage, several technologies are still in development, such as utility-scale, zinc-bromide batteries. This emphasizes the crucial role of increased research and innovation activity and the need to avoid focusing on only a few solutions. As different technologies are necessary for different contexts, their potential can be limited in certain locations, and it is still uncertain which technologies will be most appropriate where. It is crucial, then, that when advancing these technologies we must also consider the environmental and social hazards they pose. Otherwise, negative impacts might simply be shifted, rather than reduced.

In terms of short-term solutions, given the urgent need for storage in the drive to achieve net zero, we must rapidly increase the deployment of commercially available technologies. Such innovative technologies that can boost energy efficiency and reduce costs include:

• smart charging of electric vehicles (EVs), allowing vehicles to charge at times of low demand and even supply power back to other appliances when needed
• giving discarded EV batteries a “second life” by assembling them in battery packs to store energy to power stationary applications
• flexible operation of thermal energy storage, including boilers or even new technologies such as thermal batteries

Rolling out technologies like these will empower citizens to engage in the energy transition, and will also therefore foster broader support for climate action. However, policymakers must also address fairness issues – for example, ensuring that support is provided to consumers who do not have the financial means to switch to these new technologies themselves.

In conclusion, advancing toward a modern and decarbonized energy system requires expanding storage capacities and fostering innovation. While short-term deployment of available technologies is essential, it should not impede the development of promising, long-term solutions. Staying open to various approaches, accumulating experience, and balancing short-term and long-term strategies with attention to the environmental and social impacts will significantly accelerate our progress toward a sustainable energy future.