Why home batteries and electric car batteries could be a cheaper way to balance renewable energy compared to centralised storage solutions

Decentralised energy resources (DER) consisting in large part of solar pv units and storage batteries and electric vehicles (EVs) sited in domestic or commercial properties are increasing in number and capacity. Yet the key energy think tanks are busily ignoring this phenomenon in favour centralized-only solutions for balancing fluctuating renewables. This criticism certainly applies to a much publicised report published yesterday by Aurora which, apart from a fleeting reference to smart charging for electric vehicles (EVs) appears to completely ignore DER, seemingly in favour of large-scale battery assets. In fact there will be, arguably is already, a very large and growing DER in existence which would be much cheaper to mobilise than a lot of the centralised battery assets.

The Aurora report talks about a need for 46 GW of battery resources, and you get the impression from the paper that effectively all of this has be provided by cventralised operations supported by policy options such as the ‘capacity mechanism’ which pays companies guaranteed payments to have capacity in waiting for when they are needed. Of course we need policy innovations that support centralised assets. But their volume, and the cost of balancing variable renewable energy supplies might be a lot lower if decentralized energy resources (DER) are brought into the equation, and, on top of that incentivised to be centrally coordinated.

At this point a lot of energy economists and modelers will sigh with their self-assumed  superior knowledge that of course a large scale centralised battery on an electricity distribution network will provide balancing much more cheaply than some alleged hippie fantasy of solar pv and home batteries. But they would be dead wrong simply because their models have the wrong basic assumption.

Sure, if you cost out the homescale batteries that are being deployed in increasing numbers against the costs of the centralised batteries using the same discount rate, then the centralised batteries  win easily. But what matters as far as cost reduction to the electricity system, and bills paid by individual electricity consumers of all types, is the cost of the incentives required to pay for the battery assets, whether centralised or decentralised. When you look at it that way the decentralised resources will win hands down because they cost absolutely nothing to the system. People are installing home batteries as consumer items to reduce their electricity bills (and feel greenly fashionable of course) usually in concert with solar panels. By comparison, the authors of the Aurora report that centralized batteries will require payments from the electricity system to the battery owners to enable them to pay for the capital costs of these assets.

Less blinkered studies (compared to Aurora) , recognise the importance of DER. In California interest in how to use decentralised electricity resources (DER), mainly solar pv and batteries in buildings, has increased. One study, for example, argues that a mixture of centralised and decentralized solutions provides the cheapest scenario for integrating high levels of renewable energy, as can be seen here. On top of this an academic paper  recently published in the Energy journal suggests that the usefulness of DER is increased if owners of DER are given some (small) incentives to allow their assets to be centrally controlled. Regrettably, the Aurora report is written in such a way that you would reasonably believe that such policy options do not exist.

In fact the volumes of the distributed energy resources that are coming into existence are very large indeed. If a Powerwall 2 home battery was installed in half of all homes in the UK that would represent 65GW of battery capacity. We are also moving towards motor vehicle market dominated by battery electric vehicles which opens up great opportunities for using car batter to balance the grid through ‘V2G’ (vehicle to grid) charging . An IEA report says that the usable V2G potential in the EU amounts to around 130 GW which would equate to roughly 20GW in the UK. So clearly decentralised energy resources have potentially a massive role to play, something you would not guess at all from the report from Aurora.

It is easy to see why, in interest group terms, that interests of big energy companies will feature more prominently than rational solutions like harnessing decentralized energy resources. The owners of DER tend to be atomised and even companies like Social Energy who themselves try to coordinate solar pv and home battery systems are minnows relative to the energy giants. But we have an opportunity to organise, from the grass roots, a campaign for decentralised renewable energy, and that is what we at 100percentreneweableuk are doing/. In that vein, please sign the petition for green buildings! Make solar panels and low carbon heating systems mandatory in new buildings https://100percentrenewableuk.org/make-solar-panels-mandatory-on-new-uk-buildings-petition  – Please share with your friends

As a final note I must comment that another curious thing about the report is that it does not even mention the (inter-seasonal storage) option of storing green hydrogen (produced by renewable energy through electrolysis) in offshore aquifers and caverns. The hydrogen can be used in gas turbines or possibly fuel cells (if they decline in costs) to generate electricity as required. Given that Centrica already is offering a big resource to this end in the form of the former natural gas storage facility at Rough, I find the lack of discussion of this type of option strange. Is using expensive batteries once every year or less  really cheaper than this form of storage? I suspect not.

David Toke


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2 thoughts on “Why home batteries and electric car batteries could be a cheaper way to balance renewable energy compared to centralised storage solutions”

  1. You say Aurora down-plays smaller scale local battery storage and decentral supply options. Well yes, a bit , though they do get mentioned, hydrogen especially. And certainly they can and should play a role, but I’m not sure how even lots of small batteries could help with responding to week-long lulls in wind and PV. Aurora stick with ‘4 hours or more’, as their benchmark, whereas an earlier US study went for 10 hours or more. https://www.sciencedirect.com/science/article/pii/S2542435120303251

    That was if anything even more up-beat than the Aurora study. It concluded that long duration storage (LDS) was very valuable in system terms. It said that batteries are used primarily for intra-day storage and LDS is used primarily for inter-season and multi-year storage and noted that ‘the introduction of LDS lowers total system costs relative to wind-solar-battery systems, and that system costs are twice as sensitive to reductions in LDS costs as to reductions in battery costs’. Perhaps that is not surprising- there can be economies of physical scale, but also it seems of temporal scale.

    Dave Elliott

  2. My short response is that I don’t think that long duration batteries mean anything longer than a few hours. For weeks of storage it’s best to talk about storing hydrogen in offshore caverns or aquifers, an option that they don’t even mention. That’s another thing that I think is wrong with the report.

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