THREE FLOATING SOLAR POWER PLANTS TO BE SET UP IN MP WITH INVESTMENT OF RS 7500 CRORE

The session was chaired by Sanjay Dubey, Principal Secretary, Energy and Renewable Energy Department, Madhya Pradesh. The work on three floating solar power projects at a total cost of Rs 7,500 crore will start soon, officials said. These projects will be in addition to the 600 MW floating solar power plant in Omkareshwar dam area of Khandwa district. Memorandums of Understanding (MoUs) worth a total of Rs 16,000 crore in the field of energy and renewable energy were signed at the summit, officials said. Madhya Pradesh’s New and Renewable Energy Minister Hardeep Singh Dang assured the investors that they will not face any problems if they set up their units in the state.

WHAT’S NEXT FOR GRID STORAGE AFTER A BOOMING BUT CHAOTIC YEAR?

Energy storage succeeded like never before in 2022 — and the sheer scale of this newfound success is causing problems. A few years ago, batteries played an insignificant role on the U.S. grid, or any grid, really. Advocates talked up the theoretical benefits batteries could deliver for a cleaner, more efficient grid, if only someone would notice how great they were and, like, pay them for it. How quickly things change. In the rosy dawn of 2022, the federal government predicted that the U.S. would add 5.1 gigawatts of batteries over the course of the year, equating to 11 percent of new power plant capacity. At the close of the year, the count looked more like 5.4 gigawatts, according to the storage analysts at Wood Mackenzie.

Up to 2020, we’d never had a single year break a gigawatt of storage deployments, said Jason Burwen, an architect of U.S. grid-storage policy and vice president of energy storage at the American Clean Power Association. “That is a bonkers rate of acceleration.”

Batteries have taken over the market for new power capacity in California. The wildcat free-marketeers of Texas chase close behind in their zeal for this new type of power plant. And the authors of the Inflation Reduction Act delivered the storage industry’s most ardent desire: its very own tax credit. It’s off to the races. But while that phrase generally connotes speed, the storage market today is the kind of race where the starting gun unleashes sheer chaos, as more contestants than the course has room for jockey to pull to the front of the pack. Just as everybody’s decided they want to install grid batteries, the batteries themselves have become nearly impossible to get ahold of. Factory capacity to manufacture lithium-ion batteries lags demand by a few years. But now both electric-vehicle manufacturers and grid-storage companies are clamoring for more than ever before. Those who can’t buy in historically unprecedented bulk will have to wait a few years.

The annual ritual of tracking lithium-ion batteries’ inexorable cost declines crashed into a hard reality this year: Prices rose for the first time since BloombergNEF started tracking them a decade ago. Startups shouting into the wind that they had invented viable alternatives to lithium finally found some receptive ears. The scarcity of new batteries even inspired investors to put money behind used electric-vehicle batteries as a grid-storage resource — one of those supposed slam dunks that nobody has managed to dunk thus far.

BUY BIG OR GO HOME: THE ERA OF PORTFOLIOLEVEL STORAGE PROCUREMENT

Electric-vehicle makers have always gotten first dibs on battery supply because they buy so much more volume than grid-storage companies. But developers used to be able to go to market when they had a project ready to build and get some high-quality lithium-ion batteries to power it. Now, it’s not so easy. “Our expectation is that most of the supply is spoken for for 2023, and a lot of 2024 is probably spoken for as well,” said Burwen.

In such a moment of scarcity, developers are unlikely to get a seller’s attention unless they stack their shopping lists for many battery projects and buy at the portfolio scale instead. “The project is probably not going to get the capacity — the portfolio is,” said Kelcy Pegler, CEO of storage integrator FlexGen, during a September interview.

This principle trickles down to the storage integrators, who buy battery cells and assemble them into containers with the controls and power electronics needed to make a viable energy-storage facility. In 2022, integrators started touting their own battery purchases, to signal to customers that they actually had something to sell. Thus, at RE+ in September, the biggest annual conference for the solar and storage industry, FlexGen held a signing ceremony to celebrate its purchase of 10 gigawatt-hours of liquid-cooled lithium-ion batteries from Chinese manufacturing giant CATL.

“In a world of haves and have-nots, FlexGen customers will have battery capacity,” Pegler told Canary Media. Another leading U.S. storage integrator, Oregon’s Powin Energy, announced in February it was buying 5.8 gigawatt-hours of capacity to deliver across multiple developer customers over the next three years. Then in May, it said it would buy a stupendous 28.5 gigawatthours of battery cells from Norway’s Freyr from 2024 through 2030. Locking in massive cell purchases gave Powin the assurance to sell big deals of its own. In May, it pledged 2.5 gigawatthours to Ameresco. Later in the year, Powin announced a deal to supply 1.7 gigawatt-hours over two years to Akaysha Energy, an Australian storage developer that got acquired by BlackRock last summer. With battery supply secured, Akaysha subsequently announced it would build the world’s largest battery to replace a massive retiring coal plant.

Any one of these portfolio deals constitutes more storage capacity than the entire annual U.S. storage market just a few years ago.

Alternate Technologies Shoot Their Shot

The increase in battery costs that BloombergNEF identified won’t persist past the medium term, Burwen said. “High prices become really good reasons to invest in expansion of supply and innovations to produce that supply more efficiently,” he noted.

Plenty of startups have innovated to make ways to store energy without relying on the lithium-ion monoculture. For years, mass-produced lithium-ion batteries crushed all competitors, just like mass-produced crystalline-silicon solar panels dominate their market. But challengers seized on the logjam in mainstream storage to put bigger numbers on the board in 2022. Battery-controls startup Element Energy put together the largest deal thus far for storing grid power in used electric-vehicle batteries. It will supply 50 megawatt-hours of “second-life” batteries to renewables powerhouse NextEra Energy Resources to store power at a wind farm in Texas. The actual project still needs to get built, but Element secured $7.9 million from the Department of Energy to construct it. And Element is advertising that it has another 2.5 gigawatt-hours of lightly used batteries to sell to other customers after this initial project is done (see portfolio-level purchasing above). Element investor Tim Woodward of Prelude Ventures said the Texas pilot aims to prove second-life battery projects can serve the market’s need for more storage supply. “Because of that demand, there’s a willingness to try something,” he said. “If they try it and it works, it opens up the whole opportunity for us.”

Few developers today trust used batteries because there’s an elevated risk that they catch fire compared to new batteries (see below). But if you can’t even buy new batteries, and the used ones are proven safe and cost a lot less, customer attitudes could shift. NextEra’s as big a heavyweight as you could ask for to legitimize this long-discussed, little-actualized source of cheap storage. Other alternatives are further along. ESS closed a multiyear, 2-gigawatt-hour portfolio deal (look at that!) with Sacramento’s municipal utility to deploy iron flow batteries. That’s an alternative storage tech touted as fire-resistant, durable and capable of economically storing energy for many more hours than lithium-ion does. Nobody’s installed that much flow battery capacity in the U.S., but thanks to Sacramento’s rapidly approaching zero-carbon power deadline and the lack of other types of battery capacity, ESS closed the deal. And though we’re still waiting for actual, large-scale projects built with lithium-ion alternatives, the startups pioneering them raised a lot of money this year. Form Energy took the top prize with its October raise of $450 million to commercialize its iron-air batteries. Also notable: Goldman Sachs’ private-equity division invested $250 million in Hydrostor, which stores energy by compressing air into purposebuilt caverns.

FIRES STILL FRUSTRATE LITHIUM-ION’S SUCCESS STORY

At the grand unveiling of a massive grid battery in Moss Landing in June, Elliot Mainzer, president and CEO of California’s independent grid operator, heralded the dawn of “a golden age of energy storage here in California.” Barely three months later, the Tesla-supplied, 182.5-megawatt Elkhorn facility Mainzer spoke at caught on fire. As far as fires go, it was uneventful — nobody got hurt, and the blaze didn’t spread beyond a single battery container.

What made the small conflagration reverberate was that emergency authorities shut down traffic around the coastal hub south of the San Francisco Bay and warned residents to shelter indoors in case of noxious air. It turned out that no notable air pollution resulted from the fire, but the surrounding community was alarmed by the experience, and businesses had to close temporarily. Compounding matters, Vistra’s even larger battery next door to Elkhorn had already been shut down for two separate fire incidents in the preceding year. That September fire captured the energy-storage industry at an awkward growth stage. After a nasty 2019 battery fire that injured four first responders in Arizona, storage providers across the board stepped up and improved designs to avoid hurting anyone in the future. Those human-safety measures have succeeded, but the fires haven’t stopped. They’ve made it hard for the Moss Landing battery to deliver the golden future that it promised as the largest source of carbon-free battery capacity anywhere.

IRA CHANGES THE GAME, BUT NOT IMMEDIATELY

The Democrat-passed Inflation Reduction Act gave energy-storage folks what they’d always pined for: a dedicated tax credit. That will fundamentally alter the market’s trajectory, but the impacts won’t manifest right away. The tax credit technically goes into effect for projects placed in service on or after January 1, 2023, per the statute. The IRS has issued the detailed labor standards companies will have to meet to claim 30 percent of a project’s costs as an investment tax credit. But the industry is still waiting to hear how it can qualify for credit “adders” that reward using domestic content and building in “energy communities,” such as towns that used to host coal power plants. Whether developers can actually nab the 40 or 50 percent tax credits hinges on the fine print (and, for domestic content, a whole lot of new factory construction). Any projects coming online early this year, however, were developed well before anyone knew they’d be getting this credit. A storage plant that made economic sense without a 30 percent discount should be a Hamilton-level smash hit with the credit now available. But storage developers have been slammed by inflation, logistics hang-ups and the market-specific scarcity discussed above. Projects that were contracted before the pandemic-era disruptions, which are actually getting built now, have had to renegotiate contracts with utilities in light of the soaring costs. The first wave of storage developers claiming the tax credit may well need it to save deals that were going underwater.

In the longer term, once people know how to actually claim all the tax credits, the development game will change. The credits will boost all projects across the board, and then nudge companies to focus on geographic areas that are affected by the energy transition.

“The IRA turned a lot of yellow-light projects into blaring green lights,” Pegler said. Independent developers can seize these opportunities in competitive markets. In the many states where utilities run the grid, the outcome depends on getting them to update their planning calculations with the newly reduced costs of grid storage. That typically comes to a head in integrated resource plans (IRPs), where utilities figure out the right mix of power plants for the future.

“The IRP is the new RPS,” said Burwen, referring to the renewable portfolio standards that sparked clean-energy development in the industry’s early years. Going forward, the IRP is “where these decisions will get made. If it’s not done correctly, if you’re using the wrong inputs because you don’t factor in the IRA incentives, that’s going to change your view as to what makes sense.”

Source: canarymedia