The Emerging Leaders in Environmental and Energy Policy Network

July 29, 2015

Energy storage has been a hot topic in energy news during the past year because it is widely considered to be one of the primary means by which renewables can entirely replace fossil fuels. There are many types of energy storage including power-to-gas, pumped hydropower, compressed air, and most notably, batteries. Companies like Tesla and Daimler, the owner of Mercedes-Benz, are developing batteries that could be used for energy storage in residential homes. New devices like the Tesla Powerwall are house batteries that would be charged during the day by solar panels and then used during peak electricity hours during the evening. These batteries would reduce demand for electricity from the grid when demand is at its highest. While Tesla has yet to ship out its new Powerwalls, a housing company recently built a carbon positive house in Wales which has a price that is competitive with similarly sized houses. The company used only affordable, already developed technologies to build the house with a combination of solar panels, insulation, and battery storage. This is the just the start what is likely to be a new process for building design, especially when Tesla and Daimler increase production and start making sales on their new batteries.

One particular aspect to remember about battery energy storage is that it will allow renewables to overcome intermittency problems, which currently prevent some renewables from becoming optimal, reliable sources of electricity. Battery energy storage can be used to trap the electricity that wind and solar produce when supply exceeds power demand and release it back into the grid when electricity demand exceeds supply, thus removing the need for fossil fuel power plants to generate electricity. If residential sized, and especially industrial sized, battery storage technologies become widespread in the United States and Europe, they could allow solar and wind power to replace base-load fossil-fuels, like coal and natural gas, without compromising grid reliability. This expansion of battery storage would go hand-in-hand with the continued increase in solar and wind energy. The Energy Information Administration (EIA) has projected that utility-scale solar capacity will increase by 90% and wind power will increase by 13% by the end of 2016. This huge growth in wind and solar will likely continue to drop the price of both of these renewable energies which will help them expand even more.

The battery storage expansion is not without risks, however, because it relies heavily on renewables becoming widespread and affordable. One critique of solar power is that it has not yet reached grid parity in the United States. However, the question of grid parity for solar panels does not have that clear of an answer. It is easy to tell if solar has reached grid parity in many places, like California, Hawaii, and countries like Germany, because their cost of electricity is higher than in most US states thus making solar panels more appealing. Where the price of electricity is cheaper, the question of grid parity gets more complicated. It depends on state and local regulations, most notably net metering, which allows producers of renewable energy to sell it back to the grid operators at a premium price. Grid parity also depends on certain tax benefits. Solar power currently gets a boost from the United States federal government with a 30% tax credit for money spent on residential and commercial solar power. This tax benefit reduces the cost greatly for solar panels and solar companies rely on it to sell their products. This tax benefit is set to expire by the end of 2016, and it is uncertain whether or not the US Congress will renew it. A lack of renewal could set back the solar industry significantly, however, it could also encourage innovation in the solar market to bring down the price without government help. There are many uncertainties in the future of electricity the United States and it remains to be seen which direction the US will take. The future will certainly have some mix of renewable energy, energy storage, and smart grid technology that uses fossil fuels more efficiently, and perhaps more sparingly. 


Notice: The main image of this article was taken from a presentation given by J.B. Straubel, the co-founder of Tesla Motors at the 2015 EIA Conference. This image is only being used for non-profit educational purposes. 

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