Storage is a requirement as renewables replace coal, but which technology is best? Donald Vaughan and Nick West weigh the case for pumped hydro and batteries.
Two very different storage technologies – one old, one new; one that takes years to build, one that can be built “within 100 days (or it’s free)”. How else do they differ, and is there a place for both?
The rapid growth of renewable energy generation has been driven by two factors: the falling levelised cost of the energy produced by wind and solar, and the retirement of coal-fired power stations. The Finkel Review notes that by 2035 about 68% of the fleet of Australian coal generating plants will have reached 50 years of age.
More renewable energy generation brings new challenges in an increasingly complex grid and Dr Finkel proposes that energy storage be mandated for solar and wind farms. Power needs to be dispatchable, meaning that energy can be provided upon request. If the sun is not shining or the wind is not blowing, renewable energy cannot be dispatched unless it has been stored in some way.
There are a number of different types of storage but the two being discussed most widely are batteries and pumped storage hydropower. These two technologies are very different and there are some limitations involved in comparing a well-known and established technology with one that is new and developing rapidly.
How do they support the network? Pumped hydro is based on well-established synchronous generation, providing critical ancillary services to the grid through the provision of inertia, frequency and voltage support and sufficient fault level support.
Battery inverter technologies are still catching up on most of these fronts. The potential for batteries to provide “synthetic inertia” or fast frequency response is high but this is balanced by their reliance on system strength. They offer minimal support with fault levels but can still provide some support to system frequency and voltage regulation.
Pumped hydro boasts a very low price per megawatt hour, ranging from about $200/MWh to $260/MWh. Battery costs range from $350/MWh to nearly $1000/MWh, with this cost reducing rapidly (costs dropped by about 25% during 2016).
According to the Lazard’s Levelized Cost Of Storage report, capital costs for pumped storage projects around the world range from about $1.5 million to $2.5 million per MW installed. The report also reveals that the cost of installing a grid-scale battery solution ranges from about $3.5 million to $7.5 million. This wide range of pricing for batteries is typical of a developing technology that is implemented in a variety of applications.
Ultimately, it’s difficult to predict how low the cost of batteries may go, but reports predict costs of lithium-ion batteries at somewhere around $120/MWh by 2025.
Considering that batteries need to be replaced once or twice a decade, a battery facility will need to be replaced a number of times during the potential 100-year life of a pumped storage project. For batteries, assuming an economic life of 40 years, the initial cost plus replacements may mean whole-of-life costs fall in the range of $200/MWh to $330/MWh.
So, what does the future hold?
Batteries are here to stay and will undoubtedly play a significant role in future power systems as the technology develops and costs fall. However, while batteries can provide fast response times, they are yet to demonstrate their ability to provide the full range of ancillary services needed to support the grid. Pumped hydro remains a landmark, proven and reliable technology, able to meet the needs of the grid and provide sustained output for up to a century.
Ultimately, there is room for batteries and pumped storage hydro, and they may even complement each other. Batteries are more cost-effective at delivering small amounts of stored energy over a short time at high power levels. Pumped storage is more cost-effective at storing and releasing larger amounts of stored energy. Achieving the optimum storage solution will depend on careful planning and finding the best fit for the particular circumstances.
What is certain is that both technologies will play important roles in the development and expansion of a network powered by renewable energy.