Low-cost renewable energy isn’t just changing where end users are getting their energy; it’s changing how they get it as well. Energy networks are growing more distributed, interconnected, and interchangeable, driven by technologies that can accommodate the ever-increasing amounts of cheap solar and wind. The infrastructure that holds together the global energy system is far too big to fail – the industry and its stakeholders will need to repurpose as much of it as possible, but customers will still desire flexibility from their own energy supply. The tension will change capabilities and business models for distribution networks and pipelines globally.
COVID-19 exposed the vulnerabilities of the industry to dramatic changes in demand. This was a major stress test from both a financial and technology perspective and highlighted the risks of disruption to our energy infrastructure and supply chain. While the situation will return to business as usual in the coming years, 2020 provided a preview of the future of the global energy landscape – notably reduced oil and gas demand, and greater supply of solar and wind energy on the grid – a new norm the industry was clearly not prepared for. In response to the shock, countries and companies are diversifying their business operations more aggressively to avoid underutilized and eventually stranded assets. The preview of the future of energy shows how to capitalize on the opportunities provided by increased renewable generation, both at home and overseas.
As we're a month into 2021, we take a look back at some of the most important developments that occurred in the Evolution of Energy Networks storyline.
- Highview Power raised $46 million from Sumitomo Heavy Industries, bringing the company valuation to $330 million. The investment will support the company’s plans to commercialize its liquefied air energy storage system, though the cryogenic energy storage approach faces significant technical challenges compared to its electrochemical counterparts.
- Azelio launched a demonstration project of its thermal energy storage system at Masen’s Noor Ouarzazate solar complex. Azelio’s system stores thermal energy by melting recycled aluminum at 600 °C and during discharge, the heat is transferred from the aluminum phase change material (PCM) using a heat transfer fluid to drive a Stirling engine for long-duration storage applications.
- Great River Energy announced plans to procure 1 MW/150 MWh energy storage system from long-duration energy storage developer Form Energy. This represents Form Energy’s first commercial application and will likely be the company’s iron-air battery with a replaceable metal electrode.
- The California Independent System Operator (CAISO) along with Avangrid, NREL, and GE tested the ability of a 131.1 MW wind farm to provide ancillary grid services. The report found that the wind farm’s inverter-based smart controller could provide balancing or regulation up and down, voltage regulation control, and frequency response, showcasing that existing renewable assets with minimal upgrades could find new revenue streams and applications beyond energy production.
- Siemens and Uniper announced a partnership on sector coupling and power generation decarbonization. While short on details, hydrogen and green hydrogen were the main theme, with Uniper likely focusing on exploring the potential to use hydrogen in its gas grid and generating assets.
- Apex Energy launches hydrogen plant with combined heat and power integrated into an industrial park. The project in wind-rich northern Germany consists of a 2 MW electrolyzer, storage tank, combined heat and power (CHP) plant, and stabilizing battery and costs in the low double-digit-millions Euros.
- Thyssenkrupp qualified its 2 MW alkaline electrolyzer with German grid operators to provide primary control reserve services, thereby providing another revenue stream for water electrolysis units. The electrolyzer can respond to grid conditions within 30 seconds and is operated by partner E.ON’s virtual power plant network.
- Australia announced its AU$25 billion, 10 GW solar project connected to Singapore through an underwater HVDC line. This project is set to become the world’s largest solar farm, but is also an unprecedented effort in terms of storage requirements and distance. The project plans to transport power from the PV array installed near Tennant Creek to Darwin (roughly 750 km) and eventually to Singapore via a 3,750 km underwater HVDC cable.
- Stem announced it will be seeking a buyer for its energy storage systems that use predictive analytics for demand change management and are aggregated into virtual power plant (VPP) networks. Months following the announcement, Greenbacker Renewable Energy Company acquired the energy storage system portfolio from Stem.
- Shell signs offtake deal for a project consisting of two 50 MW battery units, slated to become Europe’s largest battery storage facility upon completion. Through the agreement, Shell signed a multiyear year power purchase agreement and will use the 100 MW of capacity for grid balancing, frequency response, and integrate into Limejump’s virtual power plant platform.
- Southern California Edison announced it would procure 770 MW of Li-ion battery energy storage to be brought online by August 2021. The seven new projects would replace aging natural gas power plants that are being decommissioned due to California’s 100% renewable electricity mandate. The energy storage assets will be co-located with existing solar facilities and NextEra Renewables Resources was the leading developer, winning 460 MW of the projects.
- UC Berkeley study found that 90% of the U.S.’s electricity demand in 2035 can be met cost-effectively by scaling wind, solar, and Li-ion battery storage deployments. The study concludes that $1.7 trillion invested into 1,100 GW of new wind and solar, 150 GW of four-hour storage, and modest increases in transmission capacity would result in a 10% reduction in wholesale electricity prices by 2035.
Additionally, the Lux Energy Team curated the following “Analysts’ Choice” for further reading on the Evolution of Energy Networks storyline.
- Decarbonizing the Global Energy Trade. Currently, solar and wind energy are only transferred via electrified power lines, but most energy import schemes look beyond electricity. To identify the optimal energy carrier to import renewable energy, a new framework is needed. In this report, Lux introduces those renewable energy carriers and assess their suitability for importing low-cost renewable energy to resource-constrained or energy-intensive economies.
For more information, download the report executive summary here.
- 2035 Global Renewables Penetration by Region. It is no longer a question of if global renewables penetration will exceed 40% within the next 15 years but how fast and in which regions these high penetrations will occur. Understanding such factors will be critical for power industry stakeholders as renewables deployments reach the point where balancing the electric grid require shifting the supply of intermittent energy sources and shifting demand on the scale of demand of hundreds of MW to GW.
- Addressing the $500 billion global pipeline problem. The world is in the midst of a pipeline building boom with $500 billion worth of new infrastructure expected to be completed over the next three years. With record-low prices from even-larger wind and solar projects, the existing natural gas system is an ideal way to transport and distribute green hydrogen. The issue is how easily, and inexpensively natural gas infrastructure can be transitioned to hydrogen; the complexity of the natural gas system makes that difficult to answer.
- Vanadium Flow Batteries in 2020: Where are they now? China is home to the largest flow battery projects in the world. Completion of the project will be transformative for the vanadium flow battery industry; one project would immediately triple or even quadruple the total installed capacity of vanadium flow batteries around the world. That alone speaks to the infancy and small scale of the current flow battery market.
- Shell’s 10 GW plan to stay relevant in the North Sea. Shell announced that its future plan for the North Sea is a 10 GW wind farm producing hydrogen for the Port of Groningen industrial area and for further distribution to customers by Gasunie. Shell expects to tackle this enormous undertaking in stages, starting with a 3 GW offshore wind farm delivery electricity to an onshore electrolyzer by 2030, then expanding to a 10 GW wind farm, which could feature offshore hydrogen production and pipeline or tanker distribute onshore, by 2040.
This blog is part of the Lux Energy Team's Year in Review series examining the highlights and key developments of the energy industry in 2020. For an overview of the other storylines in Owning the Energy Transition, be sure to subscribe to our energy newsletter.