Although battery energy storage is both economically and technically the best way to leverage the use of renew- ables, its adoption is being held back by an unfortunate combination of adverse factors. Three cases illustrate how intelligent storage can enable cheap renewable power, and thus clean growth – and what policy and business leaders must do to unlock this potential.
How storage helps?
Most islands are particularly well suited for using renewable energy, because they are blessed with example amounts of both wind and sunlight. At the same time, electricity typically has to be generated using expensive imported fossil fuels made even more expensive by high transportation cost.
Although there are abundant renewable resources available, unfortunately, there’s a catch: Wind and solar energy produce clean, but intermittent power. Conventional plants must remain online all the time to balance fluctuations in overall demand and supply of power. This so-called “must-run” requirement is so high that it typically prevents an island from using more than 15 to 30 percent of renewables on an annual basis.
Thankfully, batteries can smooth out short-term fluctuations just as well, and in fact much better than, diesel and other fossil fuel-powered thermal generators. This capability allows for the use of up to 100 percent renew- able energy, with conventional units used only for back-up generation.
Where has this been done?
The world’s first renewables-based power system is currently being built on the Azorean island of Graciosa (Portugal).
What’s the hold-up?
Financing and (perceived) country risk: Substituting conventional generation with renewable energy and storage basically means substituting capital for fuel. Clean tech infrastructure (including batteries) fuel produces power at near zero marginal cost for 20 years or more, but needs to be financed up front – whereas fossil fuels are obtained as required. That means replacing traditional generation requires a lot of capital at once – which financiers are reluctant to provide because they’re afraid of both political and technological risk.
What needs to be done now?
Provide public guarantees and/or financing.