In a recent study, the Deloitte Research Center for Energy and Industrials analyzed the growth of energy storage amidst a grid shifting to renewable energy. The report offers a framework for expanding the role of energy storage through proposed business models and grid optimization strategies.
The Deloitte report identifies three dimensions involved in the evolving role of energy storage: renewable energy integration, grid optimization, and electrification and decentralized support. Each category includes a primary objective for increasing the role of energy storage, also identifying the many benefits of energy storage, such as cost savings and positive environmental impact.
Renewable energy curtailment, caused when renewable energy supply exceeds energy demand and creates output below what it is capable of producing, has generally risen as solar and wind generation becomes more widespread. In order to avoid this wasted potential, grid-scale energy storage should be deployed. According to the report, if energy curtailed during 2022 in California alone had been stored instead, over 534,000 metric tons of carbon emissions could have been avoided.
The report suggests electric companies install hybrid systems with both renewable energy generation and energy storage components, or “colocated” energy storage for renewable energy sites. Forecasting tools should also be used to monitor and predict energy usage in a given area.
In terms of business models that would support these efforts, the report emphasizes storage power purchase agreements (PPAs) along with tolling and capacity contracts. Electric companies should use PPAs to ensure new renewable projects include adequate energy storage in their development. In the case of tolling and capacity contracts, buyers pay a fixed fee to use energy from a storage system.
In order to create a more reliable, flexible grid, the report first recommends replacing natural gas peaker plants with energy storage to manage peak demand. Most peaker plants, or plants that only run during high energy demand, are run by emissions-causing natural gas and may be harmful to surrounding communities. As energy storage has become more economically feasible, these peaker plants may be repurposed into renewable energy storage.
Electric companies may also offer financial incentives to customers for discharging energy during times of high demand. Virtual power plants may be used by customers to help balance the grid, also providing cost-savings by avoiding the need to invest in more power generation plants. For example, Green Mountain Power has a program in which 200 customers with a Tesla Powerwall battery are compensated for creating a virtual power plant to supply energy to the grid during high demand, lowering dependence on fossil-fuel peaker plants.
In order to reduce grid congestion, storage should also be strategically located along the grid. The report suggests that energy storage may be used for energy transmission at a much lower cost than wire-based solutions.
Distributed energy resources (DERs) are small-scale energy resources, such as rooftop solar panels, that are transforming how energy is delivered and consumed. As DERs contribute to an increasingly decentralized grid, a number of storage strategies are needed to support the electrification of end-use sectors.
The Deloitte report first suggests integrating energy storage with electric vehicle charging infrastructure, which would both benefit profitability for EV fast-charging stations and alleviate grid stress. EV batteries may also be leveraged as battery storage with new technologies such as bidirectional charging. Energy storage should also be integrated into the industrial sector as it works to electrify operations, but a variety of strategies will need to be implemented based on each sector’s individual needs. For instance, in the mineral manufacturing industry, electric arc furnaces may be used paired with waste-heat capture and storage for later energy use.
Community-based systems, microgrid storage, and peer-to-peer energy trading platforms may also be implemented to provide more affordable, reliable electricity, especially in underserved areas.
Deloitte’s report recommends business models that consider energy storage as an equity asset, also emphasizing the Microgrid-as-a-Service (MaaS) model. MaaS offers customers access to microgrid infrastructure, storage, and renewable energy through a subscription rather than requiring an upfront investment.
In order for renewable energy to reach its full emissions-reducing and cost-saving potential, energy storage should reportedly be implemented in a wide variety of ways. Deloitte’s report recommends that electric power companies adapt to integrating storage systems through their strategic suggestions, allowing for acceleration of a clean energy transition and solidifying resilient energy operations.
