The growth of intermittent wind and solar and the search for replacements for coal and gas points at storage solutions that can ensure a reliable supply of electricity at all times. Standard lithium-ion batteries have limitations. Put simply, the future demand for batteries (including for transport) is expected to far outstrip the supply of lithium. But hydrogen and bromine are abundantly available on a global scale. Helena Uhde and Veronika Spurná at ECECP look at HBr Flow Batteries and talk to Guido Dalessi, CEO of the Dutch scaleup company Elestor which is developing the technology. It can bridge long periods of time, currently 10-12 hours but this is likely to rise to 100+ hours. At scale, costs should be lower than lithium-ion plants. Lower than the rival technology Vanadium Flow Batteries, too. Its chemistry means it can plug into the planned hydrogen infrastructure, creating new optimisation opportunities and cutting costs for both. But policy frameworks must urgently be updated to level the playing field for the new battery storage solutions coming into play. Storage regulations are out of date, and new incentives will be needed to enable business models that make sense for innovators, investors and business partners. [Article promoted by Elestor]
Electrification, renewable energy sources and innovation are set to help the world on its way to achieving its climate and carbon neutrality targets by the 2050s. Denmark is on track to have a fully renewable electricity supply by 2030. However, as yet there is no answer to this question: how can a stable electricity supply be guaranteed with no fossil-fuel baseload?
A ray of hope if offered by battery energy storage, which could balance the grid while keeping emissions and costs down. Elestor is a Dutch company that is developing a Hydrogen-Bromine (HBr) flow battery and has big plans for battery storage. 
Battery storage capacity grew by 50% in 2020 alone and this rapid trajectory is likely to continue. However, the predictions for the future of storage vary dramatically. The IEA estimates that global installation of utility-scale battery storage will increase 25 times between 2020 and 2040, reaching 10 TWh by 2040, which equals 50 times the size of the current market. McKinsey predicts an even steeper growth, reaching 85 to 140 TWh by 2040.
Elestor’s estimate, which is based on a global 100% carbon-free electricity supply by 2050, is much higher, at 500 TWh. Whatever the variations, it is clear that the energy storage industry is set to thrive, with a particular focus on long-duration energy storage. This is already apparent in metrics such as the 14% rise in patent applications between 2005 and 2018.
According to IRENA, there was an estimated 4.67 TWh of electricity storage in 2017. Lithium-ion batteries represent the majority of electrochemical storage projects in the EU. Fraunhofer ISE estimates the global cumulative capacity of lithium-ion batteries in 2019 at 195 GWh, of which mobile applications (predominantly electric vehicles) account for the largest share followed by electronics.
Lithium-ion batteries are unchallenged in their energy density and they will play a key role in the energy transition. The Joint Research Centre of the European Commission estimates that by 2040, global annual sales of Li-ion batteries could rise to between 0.6 TWh and 4 TWh, compared to a sales volume of about 60 GWh in 2017.
However, grid-scale storage based on lithium is not feasible. Firstly, there is a significant resource scarcity: ‘If you used all the lithium in the world just for grid storage, you could not reach 500 TWh, which is our estimate of the world’s grid storage demand by 2050. And don’t forget that the automotive industry needs hundreds of TWh as well. There will be a shortage and I don’t believe that lithium batteries are going to get any cheaper’, says Dalessi. His view is backed up by a 276% surge in the price of lithium between January and November 2021, prompted by high demand and low supply of lithium.
Are we going from OPEC to Li-PEC?
Secondly, the geographical distribution of lithium-producing countries means the supply chain is vulnerable. ‘This is a situation that can easily lead to an oligopoly that we can recognise in the OPEC countries. Also, there is no competition to drive the price down. It is the other way around: They’re limiting supply to have a guaranteed good price,’ argues Dalessi.
Finally, Li-on batteries use large amounts of water, energy, and acid and have notoriously low recycling rates. Add to this the unsafe conditions for those who mine lithium, and it is clear that this type of storage is not viable at the required scale.
Although the EU foresees a role for Li-ion batteries in stationary storage systems, it is clear that major technological breakthroughs and rapid commercialisation of alternative energy storage innovations is essential for the energy transition.
Under the technological neutrality principle, all technologies should have an equal chance to compete on a level playing field. We have yet to see genuine competition in large-scale stationary energy storage.
At present, pumped hydroelectric storage has been the main load balancing tool for intermittent energy sources, accounting for about 99% of energy storage for electricity worldwide. However, due to its highly specific geographical constraints and potential environmental issues, it is not possible to deploy it on the scale required by the energy transition.
This is where flow batteries, such as Elestor’s HBr stationary storage, come into play. In flow batteries, energy is stored in one or more electroactive species dissolved into liquid electrolytes.
Vanadium is most commonly used, but Elestor uses bromine as it does not face the typical resource constraints, and is up to 20 times cheaper per MWh. Bromine comes from the sea, is freely available and is not limited to a specific geographical location.
At the end of its lifetime, the HBr flow battery can be fully recycled, as the chemical elements (hydrogen and bromine) can simply be reused for many other applications, while recycling of Li-ion batteries is still a challenge.
Furthermore, HBr flow batteries can provide storage on a truly industrial scale. In fact, only large-scale applications make economic sense, since larger installations lower the levelised cost of storage (LCOS). In the case of Elestor’s battery, there is a free choice as to the combination of power and capacity (MW and MWh). These two are coupled to each other in conventional battery technology, so with greater power you also get a higher energy capacity. This makes the technology suitable to bridge longer periods of time (currently 10-12 hours, but this is likely to rise to 100+ hours) without having excess power.
It is important to recognise that individual technologies have their own merits. The decision as to the most appropriate storage technology for an application scenario needs to be based on energy storage policies that reflect the principle of technology neutrality and letting the market play a decisive role.
Policies to help storage innovations take off
The EU has a wide range of funding opportunities to support research on energy storage, and has focused on sustainable batteries in recent years. But while Dalessi agrees that there are many funding opportunities for R&D, market incentives are lacking.
Mandates offer one way of boosting the storage market. In a world first, California’s Energy Code has mandated that new commercial and residential blocks must install solar together with battery storage. Financial incentives offer an alternative, or additional boost. In Germany, the subsidy policy ‘Solar plus Storage’ has supported more than 270,000 battery storage systems linked to private solar installations.
However, distributed residential storage provides only minimal support to balance the grid; more large-scale neighbourhood energy storage solutions will be needed in the energy grid of the future. If current policies can be updated to make such solutions a requirement across the EU, they would provide the necessary investor certainty for a healthy storage market. Incentives similar to rooftop PV could facilitate a faster roll-out of energy storage. Upcoming funds, such as ‘NextGenerationEU’ – the EU’s stimulus package to rebuild post-COVID-19 Europe – could provide a good opportunity to extend the renewables roll-out into energy storage investment.
Subsidies, however, can only help develop the storage market on a short-term basis. In the long run, it is important that a viable business model for storage is developed to attract investment to cover the large upfront costs. Policy support needs to be built on a systematic cost and benefit assessment, as well as an understanding of the services and use cases of different storage technologies.
In the EU, storage has been defined as a power generator for the purpose of electricity and ancillary services markets. For grid tariff and taxation purposes, the classification is extended, so that storage is defined both as generator and consumer, which means that double taxation issue can occur, undermining the business case of energy storage.
Since the unbundling process in the European electricity market, energy supply and generation have been separated from the operation of transmission networks. Electricity generators, such as large solar and wind parks, rarely see themselves as responsible for balancing their volatile energy supply, so their investments in electricity storage is not sufficient, unless this is required by law. The unbundling process happened at a time when the power grid was still largely based on fossil fuels and helped make the system more competitive and open to private companies.
New players offer new services and prompt the system to change at a fast pace, with an increasing amount not only of utility scale renewable energy generation, but behind-the-meter assets, such as rooftop solar, combined heat and power systems, electric vehicles and the emerging paradigm of active consumers. However, Dalessi does not believe consumers should be responsible for meeting the demand for electricity storage: ‘I cannot expect individual customers to solve this problem. It’s a national, or even an EU scale problem. We need solutions to get this ball rolling’, states Dalessi.
Grid operators have to solve an increasingly complex optimisation problem due to the ever-increasing share of volatile electricity sources and electrification. Due to the unbundling regulation, however, grid operators are not allowed to own any electricity storage – a vicious circle that is difficult to break. The division of the electricity system into generation, transmission and distribution, and consumption does not sufficiently address the evolving role of electricity storage, and the question of who is responsible for building up storage remains unresolved.
To deploy flow batteries, cost is of the essence, because it determines the rate at which the technology can be absorbed. ‘Let’s take the example of a large wind farm: on a very windy day, electricity prices are very low, sometimes even negative. So in this case it is not interesting for the generator to feed the electricity into the grid. Then it is better for the wind farm to store the electricity in a battery and sell it when there is little or no wind, because then the price is much higher,’ says Dalessi. For storage, there is only a profitable business case if the cost of storage per MWh is less than the difference between these two prices.
At present, different potential business models for storage are under consideration, e.g., a minimum price guarantee, where a battery owner is compensated with EUR/kWh for the electricity stored, similar to the subsidy arrangements for solar PV. Another option is the so-called ‘Capacity Remuneration Mechanism‘ (CRM). ‘This is a remuneration for keeping electricity stored as a reserve capacity. People get a fixed payment per MWh from the government, even if nobody is buying, to keep 10 MW available ‘just in case’. It works like insurance’, says Dalessi. In Belgium, a competitive auction mechanism allows established and new market participants to participate in the CRM. The first auction in 2021 saw a total of 4,477 MW of storage selected, but only four battery companies were included among the successful bidders, accounting for just 1% of the total, with most chosen bidders made up by gas-powered stations. When these gas-powered stations are phased out in a future fully decarbonised system, large-scale battery storage looks like a viable alternative.
Nowadays, there are rarely times when too little electricity is produced, as is evidenced by negative electricity markets. When the weather conditions favour high renewable energy production at a time of low demand, power plants are switched off and electricity is voluntarily curtailed. Dalessi, however, sees a different scenario ahead: ‘Once we depend more on solar and wind, we will have periods where we don’t generate enough electricity. If I look outside today, there’s no sun, there’s no wind. Generation will be very low today. Without fossil-fuelled electricity, you will see electricity prices go through the roof. The urgency is not there yet, but we need to build the capacity now to bridge longer periods of time.’ So far, price volatility has increased in line with the share of renewable energy in the market. Long-term electricity storage could compensate for this and cover the need for base load in the system.
‘Storage is only a buffer and doesn’t generate electricity,’ says Dalessi. In a future electricity system with a high share of renewable energy, however, this buffer will become very valuable as it acts as the base load of the energy system. Elestor believes that in future gas power plants will be replaced with large-scale battery storage and that flow batteries will connect to the hydrogen infrastructure and thus reduce investment costs.
The question of what role storage should have in our future electricity system can be taken even further. ‘The world thinks of solar panels and wind turbines as a replacement for fossil power plants. We reimagine the concept: solar panels and wind turbines replace fossil fuels, and batteries take the role of the power plant,’ says Dalessi. Battery storage can be designed as bi-directional power plants, which store intermittent energy from solar and wind resources and charge and discharge whenever necessary. This design offers optimal environmental and economic properties for the substitution of today’s gas-fired power plants. At the retired Moss Landing gas power plant site in California, an immense storage facility with 400MW/1,600MWh capacity has been built. The project uses Li-ion technology, but Elestor questions whether Li-on batteries are the most suitable technology for such projects.
Elestor claims that creating an optimal economic configuration of a system consisting of wind, sun and storage, can offer a reliability similar to the current system. With Elestor’s flow battery, technology costs per 99.98% reliable kW are estimated at EUR 7,200, while with Li-on technology the costs per reliable kW are EUR 10,600.
Elestor sees enormous potential for this technology. At around 6,300 TWh, gas accounts for 24% of overall power generation. Though less pollutive than coal-fired power plants, natural gas power stations still emit a significant proportion of global greenhouse gases. As such, technologies such as the HBr flow battery can play an essential role in the move to a fully decarbonised power system. From a technical point of view, this is achievable: flow batteries are a modular technology, so power blocks can be added to get the right capacity. ‘The technology is 100% modular. In theory, you can just add power blocks and capacity blocks to whatever figure. Of course, at some point it becomes too big or unrealistic, but from a technical point of view, you can just add modules and then increase power and increase capacity. It’s just like adding building blocks,’ explains Dalessi. At present, Elestor’s units range between 1 MW and 15 MWh, but in the next decade they will offer capacity of hundreds of MWh. For example, in 2021, Elestor has signed an agreement with Vopak to scale up battery capacity to 300 MWh in the next two years.
Another proposal from Elestor is to link the hydrogen infrastructure – that is yet to be constructed in the EU – to the flow battery’s hydrogen storage. During the charging cycle, the flow battery can feed hydrogen into the pipelines instead of a separate hydrogen tank, while during the discharge cycle, the battery can extract exactly the same amount of hydrogen again.
According to Elestor, linking their HBr flow battery to the future hydrogen infrastructure reduces the capital expenditure (CAPEX) and physical footprint of the storage system and cuts storage costs per MWh (LCOS). Including this technology feature in the construction of large bi-directional power plants ultimately leads to CAPEX levels in the range of EUR 25/kWh.
Such a solution is in line with the System Integration Strategy, which aims to link different energy sources together and combine the end-use sectors. For instance, this integrated solution resolves the debate about batteries versus hydrogen since it combines both worlds and introduces new optimisation possibilities for the overall energy system.
Furthermore, the HBr flow batteries can help address the problem of the high electricity costs incurred by electrolysis. An Elestor analysis predicts a 30% lower cost of green hydrogen production by integrating its technology with electrolysis.
The road ahead
The growing need for energy storage is directly linked to the green energy revolution. While R&D is already generously funded through various programs, it is important to create sustainable business models and to support them by means of an appropriate policy framework. The case of large-scale energy storage systems also shows that the roles of different players across the energy system are evolving in line with the energy transition, and need to be reflected adequately in related regulations. Energy storage can provide a large amount of management tools and services such as power quality control, ranging from flexible discharge to frequency regulation or peak shaving, and so facilitate a future energy system that is based on 100% renewable energy.
This article was first published in the EU-China Energy Magazine – 2021 Christmas Double Issue, available in English and Chinese, and is published here with permission
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