Energy storage is booming in the USA: what does it mean for South Africa?
by Sean Moolman
Energy storage is projected to grow rapidly in the USA over the next few years, according to an interesting Utility Dive article. Growth in the past year was over 40%, and they are projecting similar growth rates over the next few years.
In the article they state that “Cost-effective energy storage is widely seen as the “holy grail” for reaching higher penetrations of renewables and distributed energy resources — it’s the one emerging technology that enables the rest.” (bold added)
Some utilities in the US are also looking to energy storage to defer further capital investment in new generation capacity and infrastructure upgrades: “ConEd’s plan to use storage and other demand side management strategies to defer billion dollar investments in substations and other grid upgrades shows energy storage’s potential for capacity deployments.” (bold added)
As the cost of batteries comes down even faster than forecasts predicted (see how Tesla and Nissan are leading the ‘pack’), and the reductions in solar panel costs continue, it seems that a transition is in sight where solar plus storage will become viable economically, and not just in the USA. With the rapidly rising cost of electricity in South Africa, combined with the impetus given by load-shedding, we could also see faster adoption of these solutions locally. This might happen even without regulatory or tariff incentives.
Already there is a plethora of businesses that have sprung up to service this new market in South Africa, although many of these operators might not be around for long, and quality of service and technology is a concern. (See this article for some tips around selecting a battery storage system.)
As residential and commercial electricity customers start turning to solar for reducing dependence on the grid and reducing the inconvenience and cost of load-shedding, issues like grid stability, feed-in tariffs and the cost of maintaining the infrastructure will become a concern for Eskom and municipalities.
This is because solar without storage will reduce their electricity sales but not the morning and evening peak demand, and will not reduce their infrastructure and maintenance costs. When feed-in tariffs are added to the mix, they become even less profitable.
This is not a new issue, and has been resolved internationally through adding fixed charges to the electricity bill, or increasing peak charges to incentivise customers to add their own storage capacity. For example, the same Utility Dive article states that:
“… utilities are attempting to reduce the rates at which they compensate rooftop solar owners for the electricity they put back onto the grid… More recently, Arizona municipal utility Salt River Project instituted a higher demand charge for solar customers based on their peak energy usage each month.”
Whatever happens, it will certainly be interesting to watch things unfold in SA. Perhaps we will look back in 20 years and decide that the current electricity crisis was a good thing, in that it spurred the transition from a fossil fuel-dependent electricity supply to more renewable and distributed generation.