Energy Storage, Price and Grid Stabilisation Techniques

Renewable energy is more volatile than regular methods of energy generation such as fossil fuels, and comes with its own renewable integration challenges, so pricing is also more volatile depending on energy production levels.

The importance of energy storage in modern power grids 

Energy storage is becoming more common as renewable energy increases in popularity because of the unpredictability of renewal power generation - it is needed to store excess energy generated during high production periods, to then be used during low production periods. This could be in the instance of solar power generation, when no power is generated during nighttime, or in the case of wind generation when there is a lack of wind.  

We look at some of the energy storage technologies that help bolster the energy market and the new technologies emerging which will affect the market in the future. 

Energy Storage Technologies and battery storage market impact 

For energy storage pricing to have an impact on energy prices, one of the following two elements are required: technological innovation and the cost of development of batteries to reduce.  

Battery storage  

One of the most common methods of storing renewable energy, battery storage, is a flexible way to retain energy for use at a later date, because batteries have a range of different capacities. They are often used because they can be installed in a variety of places and terrains. Installing batteries can reduce the cost of renewable power because it mitigates the volatility of renewable production, stabilising energy pricing.  

Hydropower  

One method of energy storage that is used widely is pumped-storage hydropower. This method uses running water pumped into a large reservoir and secured. Then when hydropower plant isn’t at full production, the water is released generating electricity again. This is a popular method of storage in certain regions with a lot of space to store the water, such as America.  

Global peak demand management 

Over the last couple of years, China’s led the trend in grid-scale storage systems. In 2022, it had installations approaching 5GW, with the USA close behind with 4GW commissioned in 2022. India released its ambitious battery storage targets for its national electricity strategy, while the European Union released policy developments in support of battery storage development.  

Mitigating price volatility with grid-scale batteries  

One of the keyways to achieve grid stability is with grid-scale storage - and globally we are taking steps in the right direction. At the end of 2022, grid-scale battery storage reached 28GW, which included 75% increase in installations since 2021, adding an extra 11GW to the grid.  

Future developments in energy storage and implications for pricing stability 

For energy storage to become a truly viable option, cost and innovation are key elements to its success. We explore some of the factors affecting future energy storage development: 

Affordability in battery storage 

As electric vehicles have exploded in popularity, so the battery storage market has matured, resulting in cheaper batteries for energy storage across the industry. As costs decrease further, this should have a knock-on effect for the rest of the market, reducing prices of renewable energy.  

New grid stabilisation techniques 

Larger, grid-scale storage is imperative to stabilising the grid, which would see large arrays of battery storage storing energy from bigger solar and wind farms. This will allow the volatility of seasonal power generation to have a lesser effect on electricity output and give the renewable market stability in the face of residential and commercial demand.  

Battery storage and material shortages 

While the acceleration of the battery industry has been driven by the electric vehicles industry, market disruptions from e-vehicles have led to competition for the minerals used to create energy storage systems, for example lithium. For prices of energy storage to stabilise, it’s the prices of the materials used to make the batteries that are just important as technological innovation.  

Germany’s renewable energy integration 

A forerunner in European in renewable integration, Germany has invested a lot in battery storage over the last decade, with a particular focus on residential battery storage. Household battery storage is particularly good for the market because it puts the power of energy choice back into the hands of the public and also means part or all of the renewable power/battery systems are funded by members of the public. 

Grants for the battery storage systems came with some requirements - firstly they needed to be coupled with a photovoltaic or solar panel array and batteries accompanied by a seven-year warranty.  

• Batteries were accompanied by a grant that covered 30% of the battery’s total cost  

• The batteries must be paired with a photovoltaic system - other forms of renewable power generation were not accepted.  

• Germany has supported the implementation of residential battery storage since 2013 

• Government subsidies came in at around EUR 3 300 per system 

• The programme received EUR 25 million in total  

• Around 6,500 systems were installed under the scheme  

• Photovoltaic systems can feed up to 60% of their total generation back into the grid 

As renewable energy becomes a larger part of our global energy mix, the role of energy storage and grid stabilisation techniques is increasingly vital. Advances in battery storage technology, coupled with strategic grid-scale solutions, are key to managing the volatility of renewable energy sources and ensuring price stability. By continuing to innovate and address challenges such as material shortages and affordability, we can build a more resilient and sustainable energy future, with countries like Germany leading the way in integrating renewable energy at both the residential and national levels.