California's seasonal, rolling blackouts and the recent winter storm in Texas are proof that partial solutions cannot bring reliability to a century-old electricity network. While many of the pieces needed for grid transformation are in place (solar and wind resources, along with lithium-ion (Li-ion) batteries for shorter-duration storage), Li-ion technology falls short on several key indicators: sustainability, human health and safety, levelized cost, and providing the longer-term resiliency the grid needs. 

Most renewable energy assets lack long-duration storage, leaving them unable to provide essential backup power for facilities that require constant power availability to serve critical needs for energy consumers. Most of the grid-scale energy storage assets deployed thus far use materials that can pose hazards to human health, and are harmful to or negatively impact our environment due to their extraction, processing, and inability to be recycled - all of which challenge the metrics we currently use to define "clean energy." These hazards are a mismatch with the environmental, social, and corporate governance (ESG) investment strategies that are driving finance leaders to identify the energy transition as an historic investment opportunity.

Prospects for renewable generation are now inextricably linked with energy storage due to the added value these projects can provide asset owners, energy consumers, and the grid when zero-carbon electricity becomes dispatchable electricity. Long-duration storage fills a critical gap in the market: where excess renewable generation must be curtailed and fast-ramping peaker plants are fired up to supplement conventional baseload power. The grid needs long-duration storage at scale to facilitate the transition to more renewables, lower carbon emissions, and fewer power system disruptions. 

Battery Options

Though Li-ion was the first battery technology to unlock the market for electrified transportation and stationary storage-based grid services, it has its drawbacks. These include fire risk, toxic materials, performance degradation over time, and recycling challenges. Li-ion batteries perform well in certain market segments/applications, but they cannot function as a cornerstone of a sustainable, global energy storage strategy that fully enables a more resilient and decarbonized grid. 

Nickel, manganese, and other metals found in Li-ion batteries also pose supply challenges that can threaten battery sector demand. If lithium continues to dominate the market, the impact of raw material supply constraints could slow market growth before the industry can develop new mines and ramp up capacity. According to Bloomberg New Energy Finance, prices for metals commonly used in Li-ion batteries are subject to volatility and are concentrated in countries that represent long-term supply risk. For example, Nickel prices of late exceed the five-year average. Another set of challenges involve the end of the Li-ion battery life cycle; very little lithium-battery recycling goes on today; recycling rates in the European Union and the U.S. are currently less than 5 percent.

In comparison, non-Li-ion long-duration storage offers superior safety, cost, and value - meeting all ESG criteria. Long-duration iron flow batteries are cost competitive with Li-ion at four hours, and lower cost up to 12 hours. The incremental cost of storage is less than $20 per kWh, resulting in the lowest Levelized Cost of Storage (LCOS) on the market. 

Long-duration iron flow batteries allow system operators to effectively store curtailed energy to use in the evening or the next morning. Storage can also fortify aging grid infrastructure, helping communities keep the lights on during extreme weather events, such as wildfires and ice storms. It can reduce grid congestion while deferring the need for new transmission lines. Iron flow batteries are also environmentally benign as they are 100 percent non-toxic, non-corrosive, and fully recyclable at the end of system life. 

Renewables Need Storage

There is no one-size-fits-all solution for climate change or the energy system. 

While Li-ion batteries are ideal for power applications like electric vehicles and short-duration grid storage, cycle life limitations and capacity degradation inherently limit long-term performance. Levelized cost of storage calculations show that long-duration storage technologies, including flow batteries, have an edge on Li-ion cycle life and degradation - which is why grid planners and large energy users have singled out flexible, long-duration storage as a required solutionfor decarbonization and grid resiliency.

By pairing solar or wind with long-duration storage, projects in markets with capacity value can provide dispatchable power and increase revenue certainty. It also gives projects more flexibility to shift output to avoid periods of congestion on the grid. As the market continues to evolve, new value streams will come to light.

Long-Duration Value

The value of storage is nonlinear. This helps explain the market dynamics for Li-ion batteries and long-duration storage, and the reasons why short-duration storage was first to scale. For short-duration use cases, inexpensive components make Li-ion batteries well suited for power-intensive grid support and ancillary services; the market value exceeds the cost of this service. The value of that storage holds relatively flat until the point that storage systems can defer or displace investments in grid infrastructure or new generation. This is where value exceeds cost for long-duration storage, and where long-duration storage undercuts Li-ion on levelized cost.

The Growth Curve

Ready or not, the watershed moment for long-duration energy storage has arrived. Over the next 30 years, the International Renewable Energy Agency (IRENA) anticipates a three-fold increase in global renewable electricity generation. All signs point to rapid, continual growth in energy storage supporting an overhaul of market design and business models. The technologies and system operations that touch every aspect of the energy market will enable the energy transition required to address climate change.

Hugh McDermott is the Senior VP of Business Development & Sales for ESS Inc., a manufacturer of long-duration iron-based flow batteries for commercial and utility-scale energy storage applications. McDermott focuses on the growing energy infrastructure and advanced energy technology businesses, primarily addressing utility, industrial and commercial sectors.

ESS, Inc. | essinc.com

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