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Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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The Supersized Future Of Energy Storage

In the battery industry, records seem set to be broken almost as soon as they are hit. This is what may be about to happen with the largest battery storage system to date, if a California company gets all the permits it needs to build a 350-MW installation in the desert near Palm Springs.

When Tesla completed its 100 MW/129 MWh last year, it became a hallmark in the evolution of renewable power, signaling that the race for bigger and better storage systems was just beginning. Now, Recurrent Battery has staked its own claim in this race.

The San Francisco-based company is the U.S. unit of Canadian Solar and it has plans to build a 350-MW solar farm in the California desert along with a battery storage system of the same size. The Crimson project will span 2,500 acres. However, it is far from certain it will be completed.

The idea is certainly great. Tesla’s battery can power several tens of thousands of households. This one—if built—would power three times that, reducing this part of California’s dependence on natural gas power plants. These are now used after sunset for lack of enough solar energy storage installations. But the key is to find a buyer for the energy that will be produced by the solar farm—and this client needs to be large enough to justify the investment.

In other words, for now, the battery that will have triple the size of Tesla’s jewel is still just a possibility. Another project, however, is not: A British billionaire is building a 120 MW/140 MWh installation not far from Tesla’s installation in Australia.

Sanjeev Gupta, owner of Australian steelworks Whyalla, is building the battery to use both as storage for electricity produced by a solar farm, and in construction at the steelworks site. What we’re seeing there is likely just the beginning of ever-bigger battery storage systems that will accompany every large-scale solar or wind project. Related: Three Takeaways From OPEC's Latest Report

A recent Moody’s report on energy storage supports this forecast. It found that investors are getting more and more interested in energy storage projects as their commercial viability improves. Moody’s calculated that a kWh of electricity from a battery storage installation currently costs around US$0.133. That’s based on a price of US$400 per kWh of storage (a high-price estimate) for a fully installed system divided by 3,000 charge/recharge cycles per battery over a lifetime of 10 years.

Now, Moody’s notes that this cost per kWh is still higher than conventional electricity, but adds that things are changing fast as batteries become cheaper and cheaper, so soon we may actually have renewable electricity that costs less than the output of fossil fuels power plants.

There is the question of battery life spans, of course, when compared to the life span of the average gas-fired power plant. Also, there are some unique challenges, Moody’s vice president and senior credit officer Rick Donner said in the report, especially with regard to operating risks. Still Donner said, on the whole, battery storage projects carry the same risks as conventional power generation projects.

Costs are falling, in the meantime. Moody’s estimates that by 2020-2022, the cost per kWh of storage will drop to US$100. This will make even bigger projects than Crimson viable. If things continue moving in the same direction as they have been for the last decade, it won’t be long before a 100 MW storage system becomes the lower end of renewable storage capacity.

By Irina Slav for Oilprice.com

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