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B U S I N E S S I N T E L L I G E N C E

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The threat of electrical
storage to CSP
CSP Today have published this article in conjunction with the launch of CSP
Today Seville 2014 this 12-13 of November in Seville, Spain. This article looks
at the rise of interest in electrical storage, focusing on PV with batteries and
its possible impact in an industry who has held a monopoly on utility scale
renewable storage.
12-13 November, Seville, Spain
www.csptoday.com/seville2014
8
th
International Concentrated Solar Thermal Power Summit
In association with:
CSP Today Seville 2014
For more details on CSP Today Seville 2014 please visit: www.csptoday.com/seville2014
CSPToday | The threat of electrical storage to CSP | www.csptoday.com/Seville2014 2
B U S I N E S S I N T E L L I G E N C E
The threat of electrical storage to CSP
PV with batteries: a threat to CSP?
By Jason Deign
TES versus Batteries
Introduction
For the last half-decade or so, CSP has struggled
to compete with solar photovoltaic (PV) technology
because of the low cost of the latter. Seeking to nd
a source of competitive advantage, developers have
scrambled to incorporate thermal energy storage (TES)
into their plants, giving CSP something that PV cannot
offer: the potential to provide dispatchable generation.
Despite adding to plant costs, this dispatchable capacity
is highly sought after by many grid operators, enabling
CSP with TES to command a premium and potentially
secure a place in major renewable energy markets such
as California.
Unsurprisingly, then, the CSP sector has embraced
TES wholeheartedly in recent years, with storage
technologies (usually based on molten salt) becoming a
standard feature of modern plant designs. It would be
unwise of the sector to become complacent about the
benets of TES, however.
PV, and indeed other variable-generation technologies
such as wind, can also provide energy on demand
when coupled with electrical storage systems such
as batteries. And while the latter have until now been
prohibitively expensive for widespread use in a grid
setting, there are signs the cost of batteries could be
about to plummet.
The state of electrical energy storage
PV-and-battery combinations are already more
competitive than traditional energy sources for off-grid
CSPToday | The threat of electrical storage to CSP | www.csptoday.com/Seville2014 3
B U S I N E S S I N T E L L I G E N C E
The threat of electrical storage to CSP
0,70
0,60
0,50
0,40
0,30
0,20
0,10
0,00
Year
LCOE electricity price comparison
Source: EuPD Research 2013
2007
Q
1
Q
3
Q
2
Q
4
2009
T1
T2
T3
Q
1
Q
3
Q
2
Q
4
2011
Q
1
Q
3
Q
2
Q
4
2013
Q
1
Q
3
Q
2
Q
4
2015
Q
1
Q
3
Q
2
Q
4
2008
Q
1
Q
3
Q
2
Q
4
2010
Q
1
Q
3
Q
2
Q
4
2012
Q
1
Q
3
Q
2
Q
4
2014
Q
1
Q
3
Q
2
Q
4
2016
Q
1
Q
3
Q
2
Q
4
n FIT
n Electricity price
n LCOE PV
n LCOE PV + storage
T1 = Grid party
T2 = Self consumptions is better than feed-in
T3 = Storage pays off
applications such as mobile phone base station power,
where maintenance and fuel costs can be reduced
by almost 99%.
1
And, as gure 1 below shows, PV
with storage is nearing its payoff point in the German
residential market.
Homeowners in Germany installed 4,000 PV and battery
systems in the year to May 2014.
2
Most sources agree
that PV-connected battery storage is set to take off in a
residential setting, with EuPD predicting a 20-fold increase
in Germany over the next four years, for example.
3

For now, the perception is that electrical energy storage
remains costly when deployed at scale. At grid level
it remains more cost effective and energy efcient to
deploy traditional forms of energy storage, such as
pumped hydro4. Nevertheless, some solar developers
are starting to investigate the potential of large-scale
battery storage tied to PV.
SolarCity of the US, for example, announced in April that
1 Deign, J., 2014. Dialling up prots in the base station business. Energy Storage
Report, Feb 26. Available through http://energystoragereport.info/mobile-world-
congress-base-stations/ [Accessed 11 June 2014].
2 Ayre, J., 2014. Germanys Residential Battery Storage Subsidy A Success
4,000 New Systems In 1st Year. CleanTechnica, May 18. Available through http://
cleantechnica.com/2014/05/18/germanys-residential-battery-storage-subsidy-success-
4000-new-systems-1st-year/ [Accessed 11 June 2014].
3 Vorrath, S., 2014. Solar storage market tipped to boom in Germany. RenewEconomy,
March 25. Available through http://reneweconomy.com.au/2014/solar-storage-
demand-tipped-boom-germany-15695 [Accessed 11 June 2014].
4 Barnhart, C. J. and Benson, S. M., 2013. On the importance of reducing the energetic
and material demands of electrical energy storage. Energy Environ. Sci., 2013,6, 1083-
1092
it had created a Grid Engineering Solutions department
with a focus on energy storage
5
. And Solar Grid Storage,
a rm launched by former PV company executives,
is looking to deploy PV-tied storage projects of up to
10MW.
Lithium-ion (Li-ion) batteries are the technology of choice
for most of these early projects, but other electrical
storage concepts could become more economical.
Redox ow batteries, for example, are simple to engineer
and scale because they essentially consist of big tanks
of electrolyte. A number of redox ow energy storage
projects are already in operation around the world.
In Japan, for example, a 4MW facility from Sumitomo
is used to smooth out wind-generated energy peaks.
Primus Power is building a 25MW plant in California,
again for grid-scale renewable energy integration.
25MW of electrical storage is a respectable size when
considering the average capacity of CSP plants.
And while most redox ow projects so far have been
based on vanadium, new variants such as zinc-bromide
or iron-chromium (being trialled by EnerVault for solar
energy storage in California) could further reduce costs
6
.
5 Rive, P., 2014. Put Battery Storage in the Hands of Grid Operators. SolarCity Blog,
April 16. Available through http://blog.solarcity.com/put-battery-storage-in-the-hands-
of-grid-operators/ [Accessed 18 June 2014].
6 Stone, M., 2014. Redox ow batteries for energy storage. Energy Storage Report, Jun
11. Available through http://energystoragereport.info/redox-ow-batteries-for-energy-
storage/ [Accessed 18 June 2014].
Figure 1: Grid parity for PV with storage in the German market, including feed-in tariff (FIT).
1

1 Ammon, M., 2013. Electricity Storage & PV: Current Status & Market Overview Germany. EuPD Research, Jun 20. Available through http://www.ibesalliance.org/leadmin/
Downloads/pdf/IBESA_Presentation_Ammon_ISEU2013.pdf [Accessed 11 June 2014].
CSPToday | The threat of electrical storage to CSP | www.csptoday.com/Seville2014 4
B U S I N E S S I N T E L L I G E N C E
The threat of electrical storage to CSP
Investors rushing in
The potential for imminent growth in the energy
storage market is evidenced by the interest from major
investors. In May, for example, Khosla Ventures, Bill
Gates and Karen Pritzker of the Hyatt Hotel family
group became among C-round investors in Ambri, a
liquid metal battery start-up promising unrivalled cost
savings
7
.
And back in 2008, Warren Buffetts Berkshire
Hathaway bought 10% of BYD, cars-to-mobiles
manufacturer with a focus on the automotive and
grid-scale energy storage sectors. In fact, Bloomberg
last year reported that a number of erstwhile solar
investors, including Silicon Valley funds such as
Khosla and VantagePoint Capital, were switching their
attention to energy storage
8
.
Although Li-ion batteries remain a favourite because
of the scale offered by major manufacturers such as
Panasonic and NEC, the focus of investments covers
the gamut of energy storage technologies. Eos Energy
Storage, for example, has attracted backers such as NRG
Energy for its zinc hybrid cathode battery technology.
Meanwhile LightSail, a compressed-air energy storage
company, leapt to prominence after securing funding
from Khosla, Gates, Facebook investor Peter Thiel and
French petroleum giant Total.
7 Reilly, R. B., 2014. Clean tech lives! Energy storage startup Ambri reels in $35 million.
VentureBeat, April 30. Available through http://venturebeat.com/2014/04/30/clean-tech-
lives-energy-storage-startup-ambri-reels-in-35-million/ [Accessed 18 June 2014].
8 Herndon, A., and Martin, C., 2013. Silicon Valley Shifting to Power Grid After Solar
Sours. Bloomberg, Feb 25. Available through http://www.bloomberg.com/news/2013-
02-25/silicon-valley-shifting-to-power-grid-after-solar-sours.html [Accessed 18 June
2014].
An industry about to explode
The picture that emerges from these developments is
one of a market very similar to PV up to a decade ago,
with plentiful money to spend on innovation and lots of
players seeking to rapidly reduce the cost of products.
This outlook is espoused by luminaries such as
SunPowers chief executive, Tom Werner, who has said:
Storage is where solar was ve or 10 years ago; 2014
for batteries feels a lot like 2003 in solar.
9

If the two industries follow a similar course, then energy
storage is about to hit a tipping point similar to the one
that brought PV prices crashing down. When that might
happen is still anyones guess.
But some observers, such as ABB senior vice president
Hans Streng, think dominant battery makers such as
Panasonic or Samsung could initiate a price war at any
time, to seize market share.
10
CSP Today believes there
are a number of factors currently in play that could
signicantly reduce the cost of grid-scale energy storage
for PV. For example:
Battery manufacturing is rapidly developing
economies of scale owing to demand from the
automotive sector. The carmaker Tesla is planning to
build a gigafactory that will reduce lithium-ion battery
costs 30% by 2020.
The growth of residential-scale battery storage could
9 Lacey, S., 2014. Storage Is the New Solar: Will Batteries and PV Create an
Unstoppable Hybrid Force? Greentechmedia, Jun 16. Available through https://www.
greentechmedia.com/articles/featured/Storage-Is-the-New-Solar-Will-Batteries-and-
PV-Create-an-Unstoppable-Hybri [Accessed 18 June 2014].
10 Deign, J., 2014. Why you might want to give up this years prot. Energy Storage
Report, Jan 22. Available through http://energystoragereport.info/abb-battery-market-
prices/ [Accessed 11 June 2014].
CSPToday | The threat of electrical storage to CSP | www.csptoday.com/Seville2014 5
B U S I N E S S I N T E L L I G E N C E
The threat of electrical storage to CSP
also lead to economies in battery manufacturing,
inverters and management systems that could be
applied to larger, grid-connected systems.
Mandated energy storage in California and potentially
other renewable energy markets will encourage
technology developers to come up with lower-cost
options.
Considerations and scenarios for CSP
In addition, CSP strategists should consider that cost-
effective battery storage can be added to wind farms,
too, setting them up as potential competitors to CSP as
well. Since wind is cheaper than P V, this could be an
even greater threat.
Furthermore, the research effort into cost reduction for
electrical energy storage is growing at a much faster rate
than for TES, so it is logical to expect battery costs to fall
more quickly. Given the above, it is possible to envisage
one of at least three scenarios playing out in the CSP
market in the short to medium term:
Grid-scale electrical energy storage cost reductions
fail to live up to expectations while efforts to cut
TES costs bear fruit. CSP with TES maintains its
competitive advantage over PV with batteries.
Battery storage costs fall rapidly and batteries begin
to be used widely in grid-scale PV projects. CSP with
TES loses its competitive advantage.
Battery storage costs fall but its use in grid-scale solar
projects is restricted for technical reasons such as TES
providing valuable spinning reserves or the greater
land resources needed for batteries. CSP with TES
maintains a competitive advantage but remains at
risk.
Potential outcomes and timelines
Because of the emphasis on battery storage research
highlighted above, the rst of these scenarios appears
highly implausible. How far and how fast the second
scenario plays out is difcult to say at present.
Francisco Lpez Banderas, of Magtel, which has
experience of the CSP and PV markets, says solar-
thermal power with TES is still by far the cheapest option
for multi-megawatt scale plants in high direct normal
irradiation areas. You need to look at the scale at which
each technology is competitive, he comments.
The costs for battery storage rise almost in proportion
with the size of a plant, he adds, while molten salt
storage can scale massively without incurring much
additional cost, since the main difference is the volume
of the tank. Furthermore, molten salt storage is known
to last for the lifetime of a plant, whereas the upper limit
of battery life spans is still an unknown.
For this reason, it seems unlikely that PV with batteries
will pose much of a challenge to grid-scale CSP with TES
in the next two years or so, even if battery technologies
experience a drastic reduction in price. Within ve years,
however, it is reasonable to expect battery prices to have
reached a point where their use with PV could pose a
serious threat to smaller CSP projects.
For larger projects, however, the third scenario above
is still likely, particularly if TES itself has gone down
in price. But looking to 10 years from now, if energy
storage achieves its full potential then the whole
landscape for power generation and distribution could
change drastically.
Ubiquitous storage would mean any form of energy
could be stored and despatched at will, removing any
competitive advantage for costlier forms of dispatchable
generation. This being the case, the CSP industry may
need to think carefully now about strategies to cope
with the day when TES is not longer a selling point.
We hope you enjoy reading our report, CSP Today Seville has
always characterized itself for being the central platform for
thought leadership in the industry - This year at CSP Today Seville
there will be representation from thought leaders across the solar
thermal industry. To nd out more please visit:
www.CSPtoday.com/Seville2104

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