COVID-19 highlights vital role for storage in unlocking 100% renewable energy future

COVID-19 highlights vital role for storage in unlocking 100% renewable energy future

Across Europe, decreased energy demand due to the COVID-19 lockdown has accelerated the electricity system transition, with the level of renewable penetration up by around 10% on last year.

However the transition in Europe is already making such progress that a 10% increase was expected by 2024 regardless, according to Bloomberg forecasts.

For many years, sceptics have questioned whether our grids will be able to stand up to a significant increase in renewable penetration, but this crisis has proven without doubt that they can.

A huge part of that success has been due to energy storage and flexible generation.

With high renewable penetration and low demand, average market prices in the UK, for example, have dropped by around 45%, and that means that baseload thermal generation is making less money.

However the opposite is true of energy storage, which is more profitable than ever with UK operators seeing a 21% upturn in income from 24 March – 23 April 2020 compared to the previous year. On an annual basis this would mean over £280 000 increase in income for 50MW/50MWh installation.

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And not only are we seeing an increase in income for storage, we’re seeing more utilisation too. Average cycles in the UK are up from 2.7 to 2.9 per day.

These positive numbers are due to the significant increase in market volatility caused by the uplift in renewable penetration. This is because storage profits on volatility as providers are exposed to the difference in price rather than the price itself, and can leverage the relative price differential by charging when prices are low and discharging when prices turn back up.


A sign of things to come?

I’ve been amazed by the speed of change caused by COVID-19. We have seen a revolution in the power system almost overnight.

But this is only a glimpse into our energy future. The revenues from storage will increase hand in hand with the share of renewables, so I would expect this 21% increase in income to continue to grow in the years to come.

When the share of renewables increases, it will limit the need for traditional baseload fossil fuel generation. This transition must therefore be supported by an increase in flexible capacity that can be used when the sun isn’t shining and the wind isn’t blowing.

Investors around the world have already shown real interest in storage technology, but these new numbers, which explicitly tie the income for storage to the increase in renewables, will give them even greater confidence.

That confidence is underlined by the decreasing price of storage, which has fallen to US$150 per MWh for lithium-ion battery storage with four hours’ discharge duration, according to BloombergNEF.[1]


Embracing volatility

The COVID-19 crisis has had an extraordinary impact on our energy markets, as demonstrated by our new free-to-use tool, the Energy Transition Lab, which provides open data and insights for European energy markets to help accelerate the transition to 100% renewables.

The platform reveals the incredible spikes we are currently seeing in terms of energy pricing and generation on a daily basis.

But this is a vision of the future that we must embrace. Average prices are low right now due to the high level of renewables and reduced demand, and that means that industry and consumers are getting cheap and clean electricity. The significant volatility is already driving investments for flexibility and these two factors will help to accelerate the future energy grid that we need.

So my advice to policy makers is to let the market work. Don’t try to interfere or limit any price volatility as it must become the new normal as we look to enable the transition to 100% renewable energy.

That’s where Wärtsilä can help. Our flexible energy solutions, energy management systems and lifecycle services are designed to enable the energy transition across Europe and the world.


How to increase revenues for energy storage in the UK

This Tuesday, I will be hosting a webinar with my colleagues Matti and Björn and diving even deeper into this story. We will look to provide further insight into how to increase revenues for the UK energy storage market. Make sure you tune in at 1pm EEST by signing up here.


The Energy Transition Lab

We created the Energy Transition Lab to help our industry, policy makers and the public understand the impact of COVID-19 on European electricity markets and analyse what this means for the future design and operation of its energy systems.

What have you discovered from using the platform? What additional functionality would you like to see from it? We are adding new tools all the time to help better understand how we can all lock in the positive change in our energy systems and accelerate towards 100% renewables.


[1] https://www.energy-storage.news/news/bloombergnef-lcoe-of-battery-storage-has-fallen-faster-than-solar-or-wind-i



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