Kelly Hewitt, an ADB Principal Energy Specialist with more than 25 years of experience in gas market regulation and reform, energy efficiency, climate mitigation, and renewable energy, defines key terms related to battery storage for renewable energy.
Why it Matters
The ravages of human-induced climate change are not just media front page headlines, but stark realities for individuals and communities throughout Asia and the Pacific. Massive rainfall accompanied by flash floods, landslides, and crop wash-aways are disaster priorities that cannot be ignored. Unprecedented temperatures causing unlivable rising tides for people and places, alongside surmounting human respiratory and heatstroke ailments have resulted in too many early deaths. Yet, we continue to carbonize the land, the water, and the air that we breathe. We must simultaneously prioritize decarbonization – climate change mitigation, so that relief and adaptation are sustainable. Prioritizing easy and simple clean energy technology, like battery energy storage systems (BESS), is necessary to ensure equity, constructive autonomy, and clean alternative supply solutions give affected people a voice in enabling a sustainable just energy transition.
Battery energy storage systems use rechargeable batteries to store energy from renewables, like solar and wind, for use as electricity. These systems address the limits of renewable energy’s intermittent supply and help integrate clean energy resources into traditional energy systems.
Uses of battery energy storage systems vary from small-scale residential and electric vehicles to utility and industrial large-scale use. There are different types of units used worldwide, including lead-acid, nickel cadmium, flow, and nickel-metal hydride, but lithium-ion batteries are the most economical and environmentally viable. Battery energy storage systems are essential to decarbonizing economies and are recognized as highly important components of countries’ strategies to reduce greenhouse gas emissions while keeping energy prices in check.
Battery storage pricing refers to the cost associated with acquiring and using energy storage technologies, primarily batteries, to store electrical energy for future use. This is a critical factor in how quickly and efficiently countries can transition to renewable energy.
The cost of lithium-ion battery packs fell by more than 80% between 2013 and 2021. However due to global shipping and logistics challenges during COVID-19 lockdowns, battery storage pricing increased in 2022 and is expected to rise further in 2023.
Country strategies that incorporate battery energy storage system components generally aim not only to reduce greenhouse gas emissions but also to increase customer choice for clean energy alternatives while decreasing overall energy costs. Sharp decreases in battery storage pricing over the last decade were encouraging. Yet, battery storage prices have not come down enough.
Higher than anticipated worldwide battery storage pricing has caused countries’ energy transitions to decelerate. Global attention is needed to loosen remaining shipping, logistical, and manufacturing constraints to bring down prices and accelerate the energy transition.
Battery energy storage systems are a key component of a just energy transition because they bolster clean, reliable energy supplies to residential, commercial, and industrial users, giving them greater autonomy over the type of energy they use and their level of participation in society’s decarbonization shift.
Battery energy storage systems empower end-users to make energy usage decisions that can lead to equitable and inclusive economic shifts to a decarbonized society, leaving no one behind. These systems represent cutting-edge clean energy technology, globally crowd-sourced for improvement, and accessible and beneficial to all.
Battery storage for decarbonizing poor and marginalized communities, like a just energy transition, ensures that all stakeholders are fully included in a country’s shift to a decarbonized, low emission economy. Poor and marginalized communities are often unserved or underserved and they generally suffer disproportionately from power shortages, high energy prices, and high carbon-emitting power generation facilities. Battery energy storage systems can help provide energy to all.
Appropriate public policy measures that decrease risk and improve financial viability can incentivize regulated energy companies and the private sector to invest in battery energy storage systems alongside renewable energy, such as solar, ensuring that decarbonized energy technologies are attainable for all. Battery energy storage systems provide reliability and resilience to households and businesses, including those in poor and marginalized communities. They are viable paths toward community well-being, prosperity, and resilience.
Battery storage under demand response is a mechanism where consumers can switch from grid power to battery power in return for compensation in order to help power companies manage supply. This can provide clean affordable grid load shifting and operational flexibility. Battery storage and demand response helps align wind and solar power supply with electricity demand. These mechanisms have enormous potential to expand the use of grid-based wind and solar.
Some see battery energy storage systems and demand response as competitive mechanisms because they perform a similar function. Yet, they are complimentary. A single back-up for reducing the demand for grid power is weaker than two systems. Both increase reliability. Both are needed for a successful energy transition.
As global leaders look to lower the price of battery energy storage systems while simultaneously working toward a just energy transition, the right policies are needed. Production and operational tax incentives would increase investments in battery energy storage systems while lowering barriers to market entry.
Subsequently, with increased entities in the battery storage market, pricing would likely recommence its pre-2022 decade-long decline, improving supplies to communities, and enhancing grid reliability and efficiency.
Prioritization and incorporation of battery energy storage systems in countries’ energy resource plans enable the displacement of fossil fuels in electricity generation, supply and use. Battery energy storage systems are an accessible low-carbon mechanism that can empower poor and marginalized groups to participate in the shift to decarbonized economies.
Battery storage, as a simple viable solution for improving reliability, reduces carbon emissions and helps clear a path to a just energy transition. These systems have the potential to sustainably lessen recurring human-induced, global warming-related disasters while providing access to affordable energy for all.