The China Energy Storage Alliance’s Industry Tracking database has traced an ever increasing number of new companies entering the energy storage market since 2016. At present, the newest entrants into the energy storage business can be divided into two categories: international oil and natural gas companies such as Shell and BP, and large electric power utilities such as E.On.
This article tracks the recent activities of the above-mentioned companies, tracing their involvement in energy storage and reasons for entering the storage market and using such analysis to help understand the current trends in the entire energy storage industry.
1. Oil and Natural Gas Companies Such as Shell Enter the Energy Storage Market
1.1 Oil and natural gas companies begin transformation into comprehensive energy providers, seeking new business methods to combat poor performance caused by declining oil prices
Oil and renewables have often been viewed as incompatible forms of energy, yet in recent years many leading international oil and gas companies have released plans and targets for development in the renewables sector.
Table 1. New Energy Business Development Plans for Major Oil and Gas Companies
Such conditions have led Shell, BP, and other companies to began putting major effort and investment into New Energy business not only to offset poor performance due to low oil prices, but also to find new opportunities for business growth. For example, in September 2017, Shell acquired Texas-based wind, solar, and fuel gas developer MP2 Energy, planning to expand the company’s distributed energy and demand response businesses. MP2’s New Energy business is expected to grow from 200 million USD to 1 billion USD by 2020.
1.2 International oil and gas companies are also engaging in energy storage as a means to build on strengths and more fully develop New Energy business
Table 2: Summary of Major Oil and Gas Company Energy Storage Activities
Total has concentrated efforts on developing solar power and has been a leader in Europe in biofuel technology. The company’s collaboration with Saft provides benefits for nickel and Li-ion battery design and manufacturing businesses.
Shell has focused efforts on developing wind and hydrogen energy, incorporating electric vehicle charging as a part of such business.
BP is looking towards biofuels as its primary direction for New Energy development. Current collaboration with Tesla on wind farm energy storage allows BP to make more informed decisions when evaluating and developing future battery storage projects. BP has at the same time begun developing new low-carbon business activities to expand its involvements in New Energy development.
Finally, ExxonMobil has emphasized investments in biofuels and carbon capture and storage technology. Collaboration with Fuel Cell Energy has focused on research and development of fuel cell technology. Current fuel cell applications have primarily been concentrated on portable power supplies, mobile power supplies, and small-scale custom power supplies.
2. Large Electric Power Utility Providers Such as E.ON Enter the Energy Storage Market
Table 3: Summary of Major Electric Power Utility Energy Storage Activities
The above table shows that from March 2016 to April 2018, Enel and other electric power utility companies engaged in a variety of energy storage business activities, including the construction and operation of new storage projects. There are two main reasons for these activities:
2.1 Energy storage technology has proven itself beneficial to the energy transition and an important component of large-scale renewable generation and grid integration
The Paris Agreement signed at the Paris Climate Change Conference on December 12, 2015 included China, the United States, Russia, and numerous other countries. The agreement specifies actions for combating global climate change by 2020. The primary goal of the Paris Agreement is to keep this century’s global average temperature from rising more than 2 degrees Celsius while at the same time limiting the global temperature increase to within 1.5 degrees Celsius above pre-industrial levels. The most direct method to combat the rise in temperature is to decrease carbon emissions.
In light of this agreement, power utilities such as E.ON must begin turning their primary business models away from carbon-intensive power generation to low-carbon power generation business models. As a result, Engie, E.ON, and other companies have announced low-carbon power generation plans.
The key to the energy transition is scalable renewable energy. Current global renewable energy resources are extremely abundant, particularly solar and wind power. Data suggests that if earth were able to harness 1/6000th of the energy released by the sun’s rays, or 1/500th of the energy created by the earth’s winds, then the entire global economic demand for energy could be met. Yet despite the enormous potential for renewable energy, its lack of stability hinders large-scale development and applications. Solar and wind curtailment are also common problems. However, with energy storage, renewable energy issues such as variations in voltage and frequency can be managed, and wind and solar curtailment can be reduced.
E.ON has recently announced that its two 9.9MW Li-ion battery storage projects in Texas have begun operation. The projects, known as the Texas Waves Energy Storage Projects, are located at E.ON’s Pyron and Inadale wind farms near Roscoe in eastern Texas. The projects provide ancillary services for ERCOT, provide rapid response to power demand changes, and increase the stability and efficiency of the grid.
2.2 Energy storage can provide a variety of services to power grids, including increased grid efficiency, optimization of current resources, and effective integration of newly added renewable resources
In traditional grid planning, rising peak energy demands are handled through addition of new infrastructure to meet capacity needs, leading to issues of excessive construction and a decrease in system efficiencies. Maintenance and upgrade of transmission and distribution infrastructure is the largest expenditure for electric utility companies, yet aside from expensive investments, traditional methods for expanding grid capacity provide no alternative solutions. However, the installation of low-cost, intelligent behind-the-meter distributed resources and energy storage can open new doors for harnessing the full potential of current infrastructure.
In order to avoid investing in large-scale grid upgrades, New York state required utilities to research solutions for T&D upgrade deferrals, with energy storage among possible solutions. The Marcus Garvey apartment project is a classic case study arising from the incentive policies of New York state’s climate change bill. In Arizona, APS has made plans to utilize AES’s 2MW/8MWh energy storage project to offset the need for 20 miles of line upgrades in remote areas caused by load increases. The project will cut fixed-asset investment cost by half. Unlike the New York project’s focus on innovation, the Arizona project is focused entirely on economic benefit.
As the global energy transition continues, major global energy companies will continue to devote business to energy storage. The advantages and resources of such large companies is certain to provide many new opportunities and a positive development outlook for energy storage.