Rome, March 16th, 2020
To effectively manage larger scale of variable renewable energy, power system flexibility is the name of the game and indeed storage is and will be one of the core enablers in decarbonized energy system. In this context, the fast growth of storage industry is not surprising. According to the newly released Energy Storage Monitor, the U.S. energy storage installation topped 522.7 megawatts/1,113 megawatt-hours in 2019 as a whole and 186.4 megawatts/364.2 megawatt-hours in the fourth quarter.
Again, looking at the U.S. experience and, in particular, in the framework of Corporate Power Purchase Agreements (PPAs) - an increasingly common arrangement in markets like the U.S. - variability translates into additional revenue risks borne by both developers and off-takers. To enable continued rapid deployment of renewables, effective mitigation of these risks is necessary.
Enel Foundation and Form Energy - a US based startup which is developing ultra-low cost, long-duration energy storage – crafted in cooperation with Enel Green Power a white paper exploring the way long duration storage technologies can mitigate the impact of variability with an higher share of wind power generation.
Carlo Papa, Director of Enel Foundation commented, “the needed transition to a sustainable energy system will necessarily rely on the massive contribution of wind and solar energy. With this paper, we wish to give a contribution to exploring the role of long duration energy storage, a class of enabling technologies currently in the R&D maturity stage, to support the energy transition“.
Results of the study demonstrate the ability of storage to effectively mitigate risks connected to variability, such as basis and shape risks. Simulations developed by the research team show, for example, that a long duration storage technology with costs and efficiency similar to pumped hydro energy storage can boost the returns of wind farm by up to 50% with respect to the case without storage, while reducing the downside risk by up to 10% under today’s market conditions, with a larger impact on risk and return expected with deeper renewable penetration.
Mateo Jaramillo, CEO and co-founder of Form Energy – recently recognized as one of 2020's top climate leaders by Grist! - observed that “this study shows the clear value of longer duration storage technology across a wide range of applications. As even more renewable power gets deployed, we will need new ways to deal with oversupply and transmission constraints and manage merchant risk for existing assets. Enel understands these challenges and clearly is a leader in articulating the need and identifying new technologies to meet the challenge.”
This work has been carried out considering assets located in the US deregulated markets, and thanks to the methodology and scientific approach employed it can be extended to other locations and markets. As the underlying conditions and risk factors are common across locations and market settings, the results of this study have a clear implication for a wide range of geographies.