February 10, 2021
Welcome to the Storage Decade
This blog post is taken from Jason Burwen’s comments at the ESA Energy Storage Policy Forum, February 3-4, 2021.
Hello and welcome to the 6th annual Energy Storage Policy Forum. I’m Jason Burwen, the Interim CEO at the U.S. Energy Storage Association. It is an honor and a pleasure to host you over the next two days.
This community of policymakers, industry members, and advocates is carrying on one of the most sophisticated conversations in the power sector—how to accelerate energy storage onto the power system to save money, build resilience, and diversify sources of supply.
We are in a moment of immense challenge. After all, we are holding this Policy Forum virtually for the first time ever, due to the ongoing COVID public health crisis. Our politics has experienced tremendous upheaval, including a wake-up call on the extent to which anti-democratic extremism has grown. Add to this the continued deepening of the climate crisis, portended by extreme weather, wildfires, and normalization of the public safety power shutoff.
Fortunately, the U.S. energy storage industry is weathering these storms. Despite significant disruptions from COVID early in the year, many members of the industry have been able to recover and continue deploying projects despite persistent challenges. 2020 appears to have been the modern storage industry’s first-ever GW+ year, more than doubling the amount of capacity of last year. We have now multiple projects operational at the scale of hundreds of MW—truly power plant sized storage.
Storage continues to enjoy broad political support at the national, regional, and state level. The widely bipartisan Better Energy Storage Technology Act was enacted last year, the first major storage legislation moved through Congress in more than a decade. Storage targets under development in states as diverse as Republican-led Arizona and Democratic-led Virginia. And in a post-Order 841 world, every single wholesale electric market operator is working on updating market designs and rules to better integrate storage.
Also, storage is increasingly just helping with storms, period, bringing in new constituencies of support. Frontline communities facing climate impacts are making investments in their resilience with storage. For that matter, new coalitions are looking to storage to replace locally emitting power plants and electrify transportation to improve air quality in historically burdened communities.
Indeed, in the face of challenges, storage presents a tremendous opportunity. We at ESA envision that 100 GW of new storage by the end of the decade, in line with moving the U.S. to a 50% reduction in GHGs, would create two-hundred thousand new jobs. The global battery race is increasingly one that America can compete in, with new manufacturing capacity in the U.S. expected to more than double in the next two years to nearly 100 GWh. Beyond batteries, an expanding portfolio of innovation investments at DOE—combined with refreshed regulations at FERC and in state utility commissions—are paving the path for the next generation of storage technologies. Storage companies, moreover, now find public capital markets joining private investors pouring resources into their businesses, with as the transformative market potential of storage becomes a commonly held investment thesis.
I closed last year’s Policy Forum by tracing how far the U.S. storage industry has come in the past 5 years. This year, I am excited to share with you my vision for why we will look back on this decade as the decade of energy storage… the decade of the Charging 20s.
Energy storage will keep pushing the envelope
With the cost of battery storage dropping by half every 4-5 years, grid storage has moved faster than most expert predictions—and there’s still room to keep going. It’s part of why recently commissioned and upcoming storage facilities are now power plant sized at 100s of MWs—a single project installed in 2020 has the same stored energy capability as all storage installed in 2019. Over 23 GW storage now economically selected in utility resource plans out to 2030, and we expect that number to keep rising as planning assumptions catch up to where the technology is. Recent work by NREL indicates that today’s storage technologies could substitute for 70-80 GW of peaking capacity. And the next generation of longer duration storage technologies is just getting started, offering another 100+ GW opportunity according to NREL. The first truly large aggregations of distributed storage are also just getting started, with FERC Order 2222 and harmonized state regulations the foundation for unlocking them to strengthen the reliability and resilience of the grid.
Energy Storage will be central to resilience
Our infrastructure faces a challenge of adapting to changing weather extremes for which it was not designed. The proliferation of customer-sited storage in the face of wildfire-induced power shutoffs is just a leading indicator of what’s to come. We are now seeing plans for energy storage and microgrids as a regular feature of planning, such as in the hurricane prone grid in Puerto Rico and the wildfire prone grid in California, at the critical facilities of major cities and in off-grid and island communities alike. And at the same time, utilities are finding new ways to use storage to enhance the capabilities of the existing wires infrastructure, extending its life and making service more resilient in the face of rising grid stresses. I would posit, much like the refrigerator was first a luxury item but is now a fundamental necessity, energy storage that may seem novel in our homes and local grids today will become a commonplace feature of our lives.
Storage will play a key role in electrification
Battery cost and performance has been critical to the takeoff of electric vehicles and vessels, with hydrogen coming behind it. As other sectors of the economy electrify at the location of the end-user, particularly thermal needs for buildings and industrial processes, there is an increasingly critical coordination between the local grid and the larger power system. Energy storage—and the software to control it—is going to be a central enabling technology to that coordination–whether buffering the demands of fast-charging on the grid, modifying building consumption to match the timing clean energy supply, or relieving grid stress during peak demands. Transforming the electric system from “the world’s largest machine” into something with computer-like fidelity, provides the operational capabilities to meet the demands of a more fully electrified 21st century.
Energy storage is central to decarbonization
We do only three things with energy: we determine what form we want it in, where we want it, and when we want it. Most of decarbonization to date has been focused on the progress in conversion technologies. On the generation side, we discuss how we turn carbon-free sources of energy, like the photons of solar power and the kinetics of wind and hydropower, into electricity. On the end-use side–how we turn electricity into light, motion, heat, and other services, while using less and less. Diversifying generation technologies and driving efficiency over the last 30 years has reduced our overreliance on fuel-based generation.
Now, the bigger challenges of decarbonization are on the “where” and the “when” of that power. America needs greater infrastructure investment, including in the power sector; more wires are fundamental to ensuring clean energy can get where it needs to go, and there is already much work done here with more underway. But we still rely on the hydrocarbon chemical bond as our primary way to store energy and get it exactly when we need it—whether fueling our power plants or our vehicles. As long as we rely on extracted fuels for most of our stored energy, our economy remains tied to carbon, limiting what more clean generation and efficiency can accomplish. Indeed, I propose that the main challenge of decarbonization in the 2020s is the challenge of diversifying energy storage as fast as possible, whether through electrochemical, mechanical, or thermal means, or through power-to-gas technologies that can produce carbon-free carriers like hydrogen. If you as a policymaker are committed to task of decarbonization, consider this a clarion call and your invitation to work with us in the energy storage industry.
Decarbonization, decentralization, digitization, and automation – all of these trends of the 2020s will depend on energy storage.