Policy Solutions
Energy Storage
Another critical tool that can expand the use of renewable energy sources like wind and solar power is technology that can store electricity and dispatch power at times, such as nighttime or windless days, when these resources are less available.
A range of long-duration storage options already exist. Traditional pumped hydroelectric storage—which stores energy in the form of water in an upper reservoir, pumped from another reservoir at a lower elevation—has been in use since the 1920’s. It provides over 95 percent of the United States’ energy storage capacity today. The next generation of energy storage technologies include flow batteries, underground pumped hydro (which does not require elevation), and molten salt storage. Deploying this next generation of technologies at scale will require policy innovations and market rule reform.
Market Challenges
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Cost Barriers
Several cost-effective grid-scale energy storage options are already available on the market today, but each has its own challenges. Pumped-storage hydroelectricity faces land-use and other environmental constraints, and these projects are only viable in areas with favorable geography for them. Lithium-ion battery prices are dropping rapidly, but current models can only store several hours’ worth of energy.
Other storage technologies like flow batteries, thermal storage, and subsurface pumped hydro address these barriers. However, they are still progressing through various stages of research, design, and development. The higher costs for variable renewables combined with longer-duration storage are especially stark when compared to combustion turbines fueled by natural gas—the dominant technology providing peaking capacity to the grid. Like earlier-stage innovations discussed elsewhere in the power sector, newer technologies also tend to face higher capital costs that do not take into account the negative externalities of fossil fuel sources.
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Market Rules
The ability of energy storage to participate in wholesale markets is determined by regional grid operators, as overseen by federal regulators. Though recent federal orders have begun to open these markets more broadly, regulators still need to make major changes to market rules before energy storage can be fully integrated with power generation resources.
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Land Use and Permitting
Some forms of energy storage, like pumped-storage hydroelectricity, are land-use intensive, and as a result, may face public opposition. Underground pumped hydro can help mitigate some of these concerns but triggers additional permitting requirements for its subsurface injection process.
Technology Innovation Examples
As an increasing share of renewable energy is brought onto the power grid, it becomes more and more important to have resources that can mitigate that variability. Lithium-ion batteries (LIBs) are increasingly being deployed as a potentially low-carbon solution to fill in the gaps of variable generation. These batteries work by passing lithium ions through an electrolyte from negative to positive electrodes, thus generating electric current. (The ions flow in the opposite direction when the battery is charging.)
LIBs are increasingly cost competitive with other, more fossil fuel-intensive forms of responding to variability (like natural gas-fired combustion turbines), and they are scalable from house-sized batteries to utility-scale deployments. But today’s batteries have limited discharge periods and degrade in performance over their lifetime. Continued R&D to address these challenges can enable LIBs to contribute further value to the power grid.
Flow batteries are a promising class of long-duration energy storage technology. A flow battery generates electricity by flowing stores of liquid electrolytes through an electrode stack. It can be recharged by reversing the direction of ion exchange or (more rapidly) by replacing the discharged electrolytes with new liquid. Compared with LIBs, flow batteries can discharge over longer durations, scale more easily, and suffer less performance degradation over time.
The most common battery chemistry today is based on vanadium, which is relatively expensive. Though the cost of conventional flow batteries is still higher than LIBs, this gap is projected to shrink in the coming years, particularly as R&D continues on new battery chemistries, such as those based on iron.
Pumped storage hydropower (PSH) provides 95 percent of utility-scale energy storage on the U.S. grid today. During periods of low electricity demand and/or inexpensive power, a PSH facility pumps water into an upper reservoir. When the energy is needed, gravity draws the water back downhill, through a typical water-driven turbine and generator. Despite its large market share, very little PSH is being built today, as such facilities have a large site footprint and specialized site requirements.
Researchers are pursuing several options for overcoming these challenges. Among these options is subsurface PSH, which pumps water into underground water wells, creating a large amount of pressure. To generate electricity, the pressure is released, pushing the water up the well and through a turbine. This approach can make use of existing “brownfield” sites like abandoned mines or caverns.
Though most people think of batteries when they think of energy storage technologies, there are other ways to store energy as well. For instance, energy can be stored thermally by heating a medium and converting that heat into electricity when it’s needed.
The most common medium for thermal storage today is molten salt, which can be heated to more than 1000 degrees Fahrenheit using the thermal output of a fossil plant or a concentrating solar power (CSP) facility and then stored in an insulated tank. This molten salt can then be run through a heat exchanger to generate steam to drive a turbine, generating electricity when needed. Molten salt can also be used to store electricity as heat by using either resistive heating or a heat pump cycle and heat engine cycle. Researchers are also looking at new forms of thermal storage such as phase-change materials and a variety of options for both hot and cold storage.
Hydrogen can be used in stationary fuel cells that help stabilize the grid under increasing penetrations of variable renewable energy, in fuel cell vehicles, and as a fuel or feedstock in industrial processes. Most hydrogen today is produced through a carbon-intensive process called steam methane reforming (SMR), which derives hydrogen from natural gas through an industrial process. An alternative approach is electrolysis, which uses electricity to split water molecules (H2O) into hydrogen (H2) and oxygen (O2). Depending on how the electricity used for electrolysis is generated, this approach can be much less carbon intensive than SMR.
As the grid relies more heavily on wind and solar energy, hydrogen production is one way that excess generation from these variable sources can be stored. The hydrogen made is subsequently used in a fuel cell to generate electricity during periods when wind and solar aren’t fully meeting energy demand. To achieve this goal, electrolysis costs will have to decline substantially.
