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Energy storage sector upbeat about renewables, micro-grid opportunities

According to reports, renewable energy is here, can ‘storage’ be far behind? This industry riff captures an emerging mega trend, one that is underscored by three recent announcements.

The first was that of the US renewable energy major, SunEdison, wanting to purchase 1,000 vanadium flow batteries from another US company called Imergy Power. A couple of months back, SunEdison had announced that it would jointly power 5,000 villages and small towns in India in collaboration with OMC Ltd, a company that has been in the mini grids business for some years. Now, SunEdison wants to use these batteries for the micro and mini grid systems that it would put up jointly with OMC Ltd.

The second announcement came from Switzerland. It said that ABB and Samsung SDI had joined hands to produce lithium-ion batteries to promote micro grid solutions globally. Samsung would bring the batteries, ABB control systems, and together they would make micro grids a viable solution to bringing electricity to rural areas.

Embedded in these two announcements is the message that is increasingly becoming evident to those who deal with renewable energy. Without proper storage systems, the role of renewable energy can at best be marginal.

That is more so in solar powered micro and mini grids – where companies put up a solar power generation unit and cable-up un-electrified or poorly electrified villages and start supplying power. Electricity is mostly needed for basic lighting, mobile charging and fans. Solar panels generate power during the days and the power needs to be stored for the nights.

For companies like OMC, whose business model is to supply power to a well-paying anchor customer, such as a telecom tower or a petrol bunk, and provide surplus electricity to nearby villages, storage solutions are not just facilitators; they are indispensable.

Renewable energy and storage systems go hand-in-hand everywhere, not just in solar-powered micro and mini grid solutions, where the need for storage is more obvious.

The third announcement illuminates this: on Wednesday, a French battery company called SAFT said it had won a $ 10 million order for supplying some 40,000 batteries for “critical solar-powered served systems” at 775 oil fields of Qatar.

“Storage is the next big thing in energy,” notes Toine Van Megan, an industry expert and Co-Founder of Auroville Consulting, who was earlier an executive at Suzlon. “Storage is an area ripe for research,” he says.

Storage systems come with their own issues. First they are costly. For instance, if you want to use a flow battery of Imergy Power to provide 4-hour back up for a 1 MW solar power plant, it would approximately cost Rs. 3 crore, which, according to A Sethuraman, Managing Director of the company, is much below the competition.

However, costs are coming down. Imergy has a roadmap to bring down cost by 40 per cent in three years. A November 2014 report of UBS and Navigant Research said that battery costs would come down to $ 230 per kWhr (around $ 700 per kWhr now) in about three years and would likely fall to $ 100.

Storage systems are also maturing in technology. Lithium-ion technology is the market leader today, but is likely to be takeover by flow-batteries due to several issues. For instance, lithium-ion has problems in ‘deep discharge’ – you’d have to start recharging when it has discharge half of its capacity, and it could be dangerous if the battery is overcharged, so you’d have to stop charging the moment it reaches full. Flow batteries do not have these issues, last as long as 20 years and even have a residual value, because (in some cases) the metal in the electrolyte can be sold. On the other hand, flow batteries are bulky and hence cannot be used in all applications.

Energy storage is therefore still an evolving science but its future seems assured. The UBS-Navigant Research report predicts that the storage industry, riding on the back of falling costs and maturing technology, will grow 50-fold by 2020, from 400 MWhr in 2013.

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