FORESIGHT Climate & Energy Business - Autumn/Winter 2017 - Teaser

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CLIMATE & ENERGY BUSINESS

ELECTRICITY STORAGE EXAMINED BATTERY BABBLE DEBUNKED

KNOWLEDGE

GRID SCALE STORAGE

BUSINESS

CITIES

No compromise on grid reliability

What storage is for and what it cannot do

Batteries are for grid support not bulk supply

Copenhagen’s urban energy battery trial

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SPECIAL REPORT: PAGES 15-40

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WHEN COST EXCEEDS VALUE

The dangers of pursuing electricity storage

FORESIGHT 05 AUTUMN / WINTER 2017

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CCO Kristian Lee Dahm Dickow EDITOR-IN-CHIEF Peter Bjerregaard, newsdesk@foresightdk.com EDITORIAL ADVISER & CONTENT EDITOR Lyn Harrison PROJECT MANAGER Kasper Thejll-Karstensen ART DIRECTOR Trine Natskår PHOTO EDITOR Lars Just PHOTO Lars Just COVER ILLUSTRATION Hvass & Hannibal ILLUSTRATION Anders Morgenthaler Hvass & Hannibal WRITERS David Milborrow Henrik Bendix Justin Gerdes Sandra Meinecke RESEARCH Mads Krarup

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Danger lies in the misguided belief that transitioning to a green energy economy depends on storing more electricity for powering homes, businesses and the rest of modern society than in the age of fossil fuel. Pursuing storage at any cost risks a rush to create markets that make storage of electricity profitable, whether or not it is needed.

Yet that is what governments are doing. Public money is being poured into developing and implementing “storage solutions,” not in response to demand from power system operators, who are successfully integrating large volumes of variable solar and wind capacity without storage, but to demand from storage providers. Demand is also coming from households and businesses who fear rising electricity bills unless they take matters into their own hands.

Despite these demands, it is not the task of governments to pursue the uptake of technologies, through direct support or by market regulation, when doing so is to the detriment of the common good.

Storing electricity will always cost more than using it directly. The more electricity that is stored, the greater its overall cost, both to society as a whole and to the individual solar-storage home or business.

If the transition to renewable energy was dependent on massive uptake of electricity storage technologies, these would be an unavoidable cost. But it is not. Countries furthest ahead in successfully transitioning to renewable energy are managing the variability of wind and solar supply without adding the cost of unnecessary storage. This summer, wind met 75% of demand for several weeks in western Denmark, where all large central power stations were inactive for 19 days in June. Dutch researchers, in a recent review of more than 60 studies, conclude that in power systems with up to 95% renewables supply, the need for electricity storage is no more than 1.5% of annual demand.

Instead of focussing on leveraging storage into power markets, battery storage in particular, governments should be reducing the need for it by investing in robustly interconnected power networks over wider areas. The less storage, the cheaper the overall cost of supply. Creating markets that widen the spread between the wholesale price of electricity and its sales price might make storage profitable, but it is the customer who pays more in the long run. They should not overpay for an essential service, or feel driven to invest in home supply. The narrower the price spread, the lower the total cost.

Acting on a belief that storing electricity and “firming supply” from variable renewables is essential for reliable power delivery is no substitute for rigorous examination of the case for storage. When markets struggle to unearth a value proposition for investment in a product, it is high time governments asked themselves why that might be so. Only when the value of storage is greater than its cost does investing in it make economic sense.

Lyn Harrison

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SPECIAL REPORT EDITOR

FORESIGHT

Content

SPECIAL REPORT — ELECTRICITY STORAGE

KNOWLEDGE IN BRIEF Elon Musk’s Australian banter about batteries; battery challenge from wind; low cost pumped hydro storage; IEA wants stronger signals for new grid flexibility; facts and figures indicate limited role for battery storage in the big picture Pages 6-7

NO COMPROMISE ON RELIABILITY OF SUPPLY In green and flexible power systems, services like rapid cures for hiccups in grid frequency can be valuable Page 10

TRANSITION THE CASE FOR ELECTRICITY GRID STORAGE EXAMINED Is electricity storage essential?

Belief is a dangerous foundation for decision-making and beliefs about storage risk major investment errors

WHAT STORAGE IS FOR AND WHAT IT CANNOT DO Filling in for wind and solar over days of calm and cloudy weather is not a task storage can perform, even if it was a power system requirement

GRID SCALE STORAGE NOT ESSENTIAL BUT NICE TO HAVE The uptake of renewable energy does not increase the need for storage capacity, but stored power can help grid operators flexibly operate power systems, provided it can pay its way

COBALT CATCH FOR LI-ON Limitations on the supply of cobalt will restrict the production ramp-up of today’s lithium-ion batteries Page 44

KEY TAKEAWAYS AT A GLANCE Essential facts for evaluating the prospects for grid scale storage

THE RACE TO BUILD BETTER BATTERIES Lithium-ion batteries have developed a competitive edge for some uses, but flow batteries could be best for grid scale storage

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STORAGE HAS TO MULTI-TASK TO EARN ITS KEEP By relieving grid bottlenecks of surplus supply and providing bursts of power when needed, storage can add sufficient value to find routes to profitability, but they are limited

BUSINESS BATTERIES FOR GRID SUPPORT NOT BULK SUPPLY Batteries score in their ability to rapidly inject bursts of electricity into the grid, but demand for the service is not greater in countries furthest ahead in transitioning to renewable energy

CITIES AN URBAN ENERGY BATTERY TRIAL A full scale energy management laboratory is part of a dockland regeneration project in Copenhagen

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UNDERSTANDING ONE ANOTHER A glossary of terminology used in electricity supply, power system management and grid services

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THE GRID IS A GIANT BATTERY Grid operators need incentives to use the grid as a large scale battery

NO SIGN OF A SILVER STORAGE BULLET No means of affordably storing large volumes of electricity in all geographies exists, but a robust grid, connected over a wide area, can deliver green energy reliability

GIANT SCALE BATTERY SHOWCASES The biggest battery bank experiments are in California and Australia

POLICY GREEN TECH MUST ENGAGE WITH BIG BUSINESS Former EU Commissioner for Climate Action and Denmark’s first minister for climate and energy, Connie Hedegaard, in conversation with FORESIGHT

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FORESIGHT

5

Knowledge

In Brief

Banter about batteries

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Battery challenge from wind While Tesla has stolen most of the headlines in connection with Australia’s Hornsdale Wind Farm (previous story), the 100 MW stage two of the wind facility is setting out to prove that it, too, can provide grid stability services just as well as any battery.

The Australian Energy Market Operator (AEMO) says that from October 2017 it will remotely control the 100 MW of wind turbines to allow them to provide frequency control as an ancillary service (FCAS) for the national electricity market. AEMO is partnering on the A$600,000 project with wind farm owner Neoen and the Australian Renewable Energy Agency. “If successful the trial will provide a critical proof of concept to the market and investors on the ability of wind farms to provide FCAS,” states AEMO. Wind farms already provide FCAS in Canada, the US and Europe.

FORESIGHT

ILLUSTRATION Anders Morgenthaler

Tesla boss Elon Musk was quick to join the Twitter storm that erupted after 40,000 customers were deprived of their electricity supply in South Australia during a heat wave in February this year.

The system operator said it ordered the cut in supply to avert the risk of rolling blackouts which may have resulted from insufficient generating capacity. In a bout of Twitter exchanges after the event, Musk offered a giant 100 MW battery solution at a "pack cost" (excluding infrastructure) of $250 for each kilowatt hour of storage capacity, delivered within 100 days or it would be free of charge. The cost is likely to be closer to $500/kWh once shipping, construction and infrastructure are accounted for, estimates Carnegie Clean Energy, indicating a total investment of $50 million for 100 MWh of supply, far outside the price range a utility would typically countenance. The South Australia battery, which reportedly can provide 129 MWh for 80 minutes at its full 100 MW capacity, is to share the Hornsdale Windfarm's grid infrastructure north of Jamestown. The wind farm of Siemens turbines will have a generating capacity of 315 MW when stage three, under construction, is complete. It is owned

by Neoen, a French renewable energy project developer. Australia has other and cheaper options than battery banks for storing electricity, including 67,000 GWh of pumped hydro storage potential at 22,000 sites identified in a research project by the Australian National University. Using just 459 GWh of that potential, Australia can transition to 100% renewable energy within 20 years, according to lead researcher Andrew Blakers.

Knowledge

Low cost pumped hydro storage By using electricity to pump water to an upper reservoir and releasing it downhill through turbines as required, electricity can be stored in large quantities in a medium that is found in abundance. Pumped hydro storage capacity is influenced by the size of the reservoirs, the power of the flow and the head of water, which is determined by the difference in height between the lower and upper reservoirs. The round trip efficiency is dependent on the productivity of the pump, motor, and turbine as well as evaporation rates, but 70-85% pumped storage efficiency is commonly quoted.

Only 3.4 GW in all the world Grid storage other than pumped hydro

Li-ion Flywheel CAES NaS Lead acid Redox-flow Nickel-cadmium

1394 MW 952 MW 646 MW 204 MW 102 MW 68 MW 34 MW

41% 28% 19% 6% 3% 2% 1%

Source: IEA Tracking clean energy progress 2017

The IEA view verbatim “In many cases, it is unclear whether the business models in place are conducive to encouraging adequate investment in flexible electricity assets, raising concerns about electricity security. Continuous investment in flexible assets to ensure system adequacy during periods of peak demand and to help integrate higher shares of wind and solar PV capacity into the system is essential. The bulk of the flexibility that has been introduced so far has come from existing assets, primarily dispatchable capacity (mainly gas-fired plants and hydropower) and transmission interconnections. In 2016, the amount of new flexible generation capacity plus grid-scale storage that was sanctioned worldwide fell to around 130 GW, its lowest level in over a decade, reflecting weaker price signals for investment stemming from ongoing regulatory uncertainty and flawed market designs. For the first time ever, this capacity was virtually matched by the 125 GW of variable renewables capacity (solar PV and wind) commissioned in 2016, whose construction times are generally a lot shorter. The 6% increase in electricity network investments in 2016, with a larger role for digital technologies, supports grid modernisation and the ongoing integration of variable renewables. However, new policies and regulatory reforms are needed to strengthen market signals for investment in all forms of flexibility.�

Source: IEA 2017 World Energy Investment

Real world investment Not much of a market for storage

GRID SCALE BATTERY BASED ENERGY STORAGE

ELECTRICITY NETWORKS AND STORAGE

$1

$277

RENEWABLE BASED POWER CAPACITY

GLOBAL ELECTRICITY INVESTMENT

$297

$718

BILLION

BILLION

BILLION

BILLION

Source: IEA World Energy Investment 2017

FORESIGHT

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The big picture The Arctic has lost more than half its volume of sea ice over the past three decades and three-quarters of the sea area that was once frozen is now open water. The rate of ice decline indicates the Arctic Sea could be free of ice by 2040.

For the first time this year a Russian tanker made it through the Arctic ice fields without the aid of an icebreaker escort.

The Russian government expects cargo along the northern sea route between Siberia and the Pacific to grow tenfold by 2020. The Arctic region has in recent years experienced periods with temperatures 15-20°C above average.

PHOTO Lars Just

NEW APPROACH TO ANCILLARY SERVICES

As provision of electricity moves away from command-and-control governance to become a multi-faceted business subject to the rules of demand and supply, specific sub-markets for vital grid support services are emerging. The new approach means services like rapid response to deviations in grid frequency become products in their own right

NO COMPROMISE ON RELIABILITY OF SUPPLY IN GREEN TRANSITION

A NEW APPROACH The increasing proportion of renewable energy in today’s power systems carries the risk that the electricity for frequency control may not always be available. As the head of the Australian Electricity Market 10

Operator, Audrey Zibelman, recently put it, a higher level of renewables on the system means the provision of frequency control and other ancillary services needs a new approach, “Not because it is a bad thing, but because it was bundled previously with the big generators.”

The emerging approach, whether in Australia, Europe or across America, is to treat the electricity needed for frequency regulation as a product in its own right and subject it to the forces of demand and supply in a specific services sub-market. The UK system operator recently held a specific auction for ultra fast frequency response, which was won by bidders offering instantaneous power from batteries. In the wide Pennsylvania-Jersey-Maryland area of the United States, PJM Interconnection, a regional transmission organisation, now operates a frequency control market for fast ramping resources to bid into tenders to provide grid services.

PLENTY OF OPTIONS Batteries are beginning to demonstrate a market edge for provision of instantaneous bursts of power now their prices have dropped, particularly the price FORESIGHT

Modelling by Danish researchers of various volumes of wind generation in the power system demonstrates that maintenance of grid frequency and power quality is not a problem

TEXT Justin Gerdes

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lectricity grid operators have a tough job. Not only do they oversee the most vital delivery system in the world, the product they distribute has to exactly match demand for it at all times, down to split second intervals. Should supply fall short of demand, or exceed demand, grid frequency would wobble off target (60 Hertz in America and 50 Hz in most other regions) and risk collapse of the whole system.

The second-by-second matching of supply and demand to maintain frequency is achieved through frequency regulation, a largely automated process in which the dispatch of electricity from generators is constantly increased and decreased in tiny amounts.

This dispatchable generation comes as part-and-parcel of the bulk supply of electricity from thermal capacity, hydro and other plant. Integral to the delivered package, it is an “ancillary service” and provides essential support to the primary activity.

SPECIAL REPORT — ELECTRICITY STORAGE

Outside the box

Potential energy storage in Denmark compared with the UK and Ireland

If all cars were EV in Denmark ~ 75 GWh (2.5 million x 30 kWh)

Thermal storage in district heating grid, 2.6 TWh

SOURCE Aalborg University

DANISH GAS STORAGE ~ 11 TWh

Total electricity storage in Ireland and Britain ~ 30 GWh

“Modern wind turbines can draw on the kinetic energy in their rotating blades to deliver fast-acting power injection into the grid”

of lithium-ion technology. But they are not the only contenders for frequency regulation. Batteries face competition from electricity generators and also from electricity consumers. Consumption can be turned off at the flick of a switch to restore frequency and users who are unaffected by a dip in power supply are often prepared to accept relatively low payment for the demand response service they provide.

Generators will continue to provide frequency response, wind turbines among them, if for no other reason than it conveniently comes from the inertia inherent in the kinetic energy of many rotating generators. In Canada, the Hydro Quebec power utility has equipped hundreds of wind turbines with grid-responsive technology, as Tom Butler at the Clean Energy Council, Australia’s main green lobby group, points out. “Modern wind turbines can draw on FORESIGHT

the kinetic energy in their rotating blades to deliver fast-acting power injection into the grid if triggered by an event. They can also be flexibly controlled to deliver the correct response to suit the local grid conditions and requirements,” he states. In the US, the Public Service of Colorado also draws on wind energy for frequency regulation.

Admittedly the practice requires careful coordination of all the many clusters of wind turbines, especially on a power system running almost entirely on wind energy, as researchers at the Technical University of Denmark (DTU) and Denmark’s Aalborg University point out in a study from 2016, Provision of Enhanced Ancillary Services from Wind Power Plants. Their modelling of various volumes of wind generation in a power system demonstrates that maintenance of grid frequency and power quality is not a problem.

FROM SOLAR TOO Solar photovoltaic power can also be tapped to balance the grid. First Solar and the California Independent System Operator (CAISO) partnered for a series of tests in summer 2016 demonstrating that a 300 MW 11

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FORESIGHT

TEXT Lyn Harrison & David Milborrow ILLUSTRATION Hvass & Hannibal

SPECIAL REPORT — ELECTRICITY STORAGE

It is widely believed the shift to renewable energy will open vast markets for electricity storage to mop up surplus wind and solar output in times of plenty for use when it is in short supply.

In response, governments are scrambling to support uptake of storage solutions.

But is storage essential for the energy transition, or even desirable, and what type?

Or is it a big added cost without cause?

THE CASE FOR ELECTRICITY GRID STORAGE EXAMINED Elemental Transitioning to renewable energy requires a modest increase in the volume of overall generating capacity needed to maintain high levels of supply security, but it does not automatically trigger a requirement for more storage capacity

Storage is widely seen as the essential missing piece in the energy transition puzzle. Only by storing electricity for use when the wind is not blowing and the sun not shining can variable sources of energy form the backbone of a clean power system. Or so the argument goes. Examine the case for storage more closely, however, and it is far from clear cut.

Storage is not essential for guaranteeing reliability of supply on a power system based on renewable energy. Alternatives for managing the ebbs and flows of supply and demand have long been in use and this flexibility remains available when renewable energy replaces fossil fuel and nuclear supply. Moreoever, new digital tools increase the ability to flexibly manage power systems.

Significantly, not one of the challenges presented by high proportions of renewables has proved insurmountable, or demanded large storage capacities, FORESIGHT

even on power systems regularly running on all renewable energy for many hours at a time, such as in regions of Europe, North America and elsewhere.

It was more than ten years ago that Denmark’s power system operator produced an analysis demonstrating that the entire western half of Denmark could reliably provide 70% of electricity needs from wind alone without storage and without relying on interconnections to its neighbours or the other half of the country. Trading power across borders, however, is a common sense use of interconnected grid networks, reducing electricity cost for all parties involved. The analysis was an academic exercise not a statement of intent. At the time, the foreseen 70% of wind electricity would require the remaining 30% to come from gas-fired generation.

Since that analysis, Denmark has transitioned to renewable electricity for 54% of its requirements 15

SPECIAL REPORT

GLOSSARY OF TERMINOLOGY

UNDERSTANDING ONE ANOTHER

GENERAL TERMS RELATED TO ELECTRICITY SUPPLY AND POWER SYSTEM OPERATION

AGGREGATORS Organisations or commercial businesses that pay disparate users and producers of electricity for slow or rapid reductions and increases in demand or supply to and from the grid and aggregate the result into packaged quantities that are of sufficient size to be attractive to power System Operators.

ARBITRAGE The buying of low cost energy on a power system with the purpose of selling it elsewhere or at another time in expectation of making a profit. Owners of storage facilities require a sufficiently large spread between the price at which they buy electricity and the price at which they sell it to make arbitrage worthwhile.

BALANCING Ensuring a match between power demand and power supply, without which electricity systems cannot maintain stability.

out the need for electricity supply from a grid connection.

BASELOAD The minimum load (demand from consumers) on an electricity network.

GRID BOTTLENECKS See congestion.

BULK POWER SUPPLY The provision of electricity for consumption by society. By far the largest market for sales of all electricity generated.

INERTIA The energy stored in an electricity system by virtue of the kinetic energy of the rotating generators.

CONGESTION Also known as grid bottlenecks and network congestion. Electricity networks become congested when more electricity threatens to flow into them than the capacity of the wires or transformers to absorb and transport it to customers.

INTERCONNECTOR Transmission lines linking sectors of the grid that are controlled by different System Operators. Power systems can be divided into sectors within a country, be contained to an area surrounded by water, or span international borders.

CURTAILMENT The throttling back of power, usually at the request of the System Operator, because a sector of the electricity transmission system is congested and would otherwise be overloaded (see congestion).

PEAK SHAVING Various mechanisms for reducing the peaks in demand that require bringing more generation online. Peaking plant only sell power occasionally (to cover peaks in demand) and must cover their capital and running costs with high charges, which make their electricity the most expensive to procure. Reducing peaks in demand reduces the average price of electricity to the consumer and the spread between high and low prices that can make arbitrage profitable (see arbitrage).

BALANCING MARKET A short-term market that enables power generators to make bids to increase or decrease the output of their plant.

DEMAND SIDE MANAGEMENT (DEMAND RESPONSE) A system service, energy users are paid to reduce (sometimes increase) power demands to facilitate balancing of the system. Users can receive payment from aggregators of demand side response or directly from the System Operator.

BLACK START Power stations or storage facilities that are able to start up independently with-

FLEXIBILITY Measures that enable electricity systems to respond to the continuous variations

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in consumer demand and power supply, including the supply from some renewable energy sources.

FORESIGHT

SYSTEM OPERATOR The body whose responsibility it is to ensure that system demand and supply are kept in balance.

ELECTRICITY STORAGE

POWER SYSTEM SERVICES FOR MAINTENANCE OF GRID STABILITY

ANCILLARY SERVICES A range of adjustments to electricity supply into and out of the grid to keep the power system stable and sustain a reliable supply of high quality electricity.

Adjustments are automatic and manual.

They are controlled by power System Operators who call on generators to provide grid support services in a market driven or command and control process.

There is no globally standard nomenclature for the various ancillary services AUTOMATIC FREQUENCY RESTORATION RESERVE (AFRR) See “frequency response.”

BALANCING SERVICES Measures to balance supply and demand by reductions or increases in power output from generating plant. There are several types of balancing service delivered on various timescales, from seconds to hours. They fall into two basic categories, automatic or manual. Most of the rapid response services are provided automatically.

FREQUENCY CONTAINMENT RESERVE (FCR) Measures that include primary regulation, primary reserve and frequency response, See frequency response.

ENHANCED FREQUENCY RESPONSE Ultra rapid delivery of active power output in one second or less in response to a grid frequency deviation. A relatively new service. Some system operators now hold specific auctions for “enhanced frequency response,” with battery storage providers competing for contracts. Batteries are particularly well suited to injecting near instantaneous bursts of power into the grid as needed. Development of cheaper batteries is making enhanced frequency response from batteries affordable. They can potentially deliver the power more rapidly than generating units.

FREQUENCY RESPONSE Provided by power generators whose output increases or decreases automatically in response to changes in frequency Output is increased when frequency falls below or exceeds the target (50 Hz in Europe, parts of Africa and Asia and 60 Hz in North America). Also referred to as simply “response.” Most primary frequency response services have timescales around ten seconds and secondary frequency response timescales of around 30 seconds. Enhanced frequency response is within one second.

Synchronous generators can provide “lagging” or “leading” power and are used to bring current and voltage in phase. Some wind turbines can perform this corrective function.

MANUAL RESERVES Also referred to as manual frequency restoration reserve (mFRR). Reserves that are called on by the System Operator to restore system frequency or balance supply and demand.

RESPONSE See frequency response.

REGULATING POWER The power used to assist in the restoration of system frequency, up or down.

RESERVES A generic term for increases or decreases of power supplied to the grid (for a fee) as requested by the System Operator.

MANUAL FREQUENCY RESTORATION RESERVE (MFRR) See manual reserves.

SECONDARY REGULATION (SECONDARY RESPONSE) Also known as automatic frequency restoration response (aFRR). Measures that may be needed to restore system frequency after primary regulation has provided the initial action.

PRIMARY REGULATION Also referred to as frequency containment reserve (FCR).

SECONDARY RESERVE MARKET A commercial market for secondary regulation (above).

PRIMARY RESERVE MARKET In Europe refers to a reserve market forged from a coupling of the primary reserve markets of Germany, Belgium, the Netherlands, Switzerland and Austria to make up a combined market of over 800 MW, expected to grow to 900 MW in 2020, according to PA Consulting Group.

Weekly tenders for the reserve needed provide no long-term cash security, a disincentive to participation by battery energy storage systems.

SHORT TERM OPERATING RESERVE See spinning reserve (below).

REACTIVE POWER Reactive power exists in alternating current power systems when current and voltage are not in phase. It exists as a consequence of current passing through most machines and other devices. In most electrical systems, the current lags behind the voltage, due to the presence of motors and other inductive loads, but capacitive loads have the opposite effect and the current leads the voltage.

FORESIGHT

SPINNING RESERVE The provision of extra or reduced power under instruction from the System Operator, with a notice period of around 30 minutes, also referred to as short term operating reserve.

STANDING RESERVE The provision of extra or reduced power under instruction from the System Operator, with a notice period of typically two to four hours.

VOLTAGE SUPPORT Measures needed to keep system voltage and reactive power levels within statutory or technical limits. The support may be provided by ensuring that there is adequate generation within a particular area or by the use of static devices such as synchronous compensators.

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FORESIGHT

TEXT Henrik Bendix ILLUSTRATION Hvass & Hannibal

BUSINESS — ELECTRICITY STORAGE

The big attraction of batteries for grid support services is their superior ability to rapidly inject bursts of electricity into the grid just when it is needed. But demand for battery storage in power systems is limited and is not proving to be greater in countries furthest ahead with transitioning their electricity supply to variable sources of renewable energy

BATTERIES ARE FOR GRID SUPPORT NOT BULK SUPPLY

Vivid imagination Despite all the colourful talk about batteries they cannot store and discharge energy for long enough and in sufficient quantities to be either a practical or affordable technology for making up shortfalls in bulk power supplied by generators over grid networks

Today’s 169 GW of pumped hydro electricity storage, well tried and tested, makes up 96% of the global capacity for storing electricity in grid networks and will continue to be the dominant means of grid storage for years to come, says the US Department of Energy (DOE). Of the remaining 5 GW of grid storage capacity, 1.8 GW is provided by various types of battery.

That small proportion of the global grid storage capacity, however, is destined for massive growth, if the predictions of a swathe of energy market analysts hold true.

Among the analysts, consulting company McKinsey predicts an increase in total grid storage capacity to 1000 GW over the next 20 years and Morgan Stanley, a bank, believes that utility scale batteries will absorb most of an annual demand for storage capacity of $2-4 billion by 2020, up from $300 million today. Navigant Research, another consultancy, FORESIGHT

predicts a market for power system batteries of $3.6 billion already by 2025.

Batteries can be located anywhere in a power system and can be easily scaled to the capacity required. In contrast, pumped storage has a major disadvantage. It is geographically limited. Only hilly and mountainous areas provide the necessary topography for water to be pumped uphill into a reservoir for later release, through turbines, to a lower reservoir.

Pumped storage, however, remains the only way to affordably absorb and discharge enough electricity to make up for deficiencies of renewable energy over periods of many hours or days. At a cost range for energy delivered of $152/MWh to $198/MWh, according to a 2016 report by Lazard, a financial consultancy, it is the cheapest means of electricity storage available.

Lazard’s cost for energy delivered from lithium-ion battery storage technology, is $285/MWh to $581/ 43

PHOTO ESSAY

A young girl stands sentinel over her father’s fishing boat as it works the shoreline along a stretch of Ghana’s rapidly eroding Cape Coast. With the land being washed away from under their feet, many of the villages that line West Africa’s shores know their whole way of life is threatened. The steady destruction of the land is partly caused by the harsher storms and rising sea levels that come with climate change, but the damming of rivers is also to blame. The Akosombo Dam on the Volta River is a prime example. Opened in 1965 its hydro power plant provides over 70% of Ghana’s electricity, but at the same time it disrupts the natural flow of sediments from the north. No longer are sediments transported south by the rivers, leaving the shoreline with no means of replenishment to counter the Atlantic Ocean’s constant feasting upon it. The result is massive coastal erosion

VA N I S H I N G COAST Text and photo — Lars Just

Policy

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FORESIGHT

Policy

energy system has more or less been done. What we are missing is the behavioural case. What is it that ensures that we act on what we know and that we are willing to change our behaviour? I don’t believe in top-down policies. It’s absolutely crucial that we as citizens get engaged. One thing is to price pollution and get our national climate policies aligned with tax systems, but even then, there is the component of the individual’s choice. And we need to improve our understanding of this component.

Q: As EU commissioner you succeeded in mainstreaming climate action into the relevant policy areas and getting 20% of the EU budget focused on climate change in the midst of a global financial crisis, high unemployment and other pressing issues.

How did you succeed in not only maintaining a climate focus but getting it to the top of the agenda?

A: To begin with I did not think the idea would have a chance. It just goes to show how important it is that you have a critical mass of high-level politicians who are aware and talking about these issues. It is also very important to note that climate action is not about de-growth. It’s a new way of generating growth and when you’re able to show the economic case for action then it is possible to succeed and persuade others. This is how we succeeded with the mainstreaming agenda. It was a major arm wrestle within the Commission. A lot of preparation and political capital went into that process.

“It is almost built into the system that large companies will lobby to avoid too many changes”

Q: Well, that sounds relatively easy. Prepare your case and reason will eventually prevail. If that’s the case why would we need to stress the importance of climate policies even more now than back in 2010?

A: It was essential that we could show that investing in a greener economy would create more jobs, give us a technological edge, improve innovation and potentially weaken our dependency on Russian gas.

You need to present different arguments for the different stakeholders. It probably took one-and-a-half years from when we first introduced the idea of mainFORESIGHT

streaming climate action into the relevant sectors at a seminar in the Commission until it ended up included in the EU budget. To get climate policy mainstreamed into the entire EU budget is a pretty big thing.

The take-away is that these systems are not as bureaucratic and complex as they are often made out to be. And sometimes the EU Commission is able to think more long term than, for example, member states. Many industries might not be the biggest advocates of ambitious climate policies. It is almost built into the system that large companies will lobby to avoid too many changes, but new companies that might be big companies five years ahead do not have the strength to roll out a targeted lobbying effort. So, there is a problematic asymmetry between those that defend the current set up and the green companies of the future.

Q: What would your advice be to the future companies that focus on selling renewable energy?

A: They should continue to push their agenda and try to find common ground with like-minded companies.

One of the main challenges is counteracting the influence of some big pan-European lobby organisations.

BusinessEurope is a very large lobby organisation and sometimes they tend to represent the interest of fossil fuels instead of renewables. I think it is very important that companies selling renewables increase their focus and effort within these organisations to make sure that their voice is heard. I understand that this is not the first priority for the entrepreneur who just invented a new smart device, or a small greentech company, but it is very important to get engaged in these industry associations and the political process if you want to get heard.

Q: You have spent a large part of your adult life dealing with energy and climate issues. Why did you choose to dedicate so much of your time to this particular cause?

A: The more you learn about the challenges posed by climate change, the more you realise how serious it all is. I became energy minister in 2004 and I attended my first climate conference in Buenos Aires, Argentina, and I thought it was a nightmare. I hated it. I had recently learned about how urgent the matter was and then you enter the UN system, which is anything but fast. But a small group of dedicated people can change things and I thought it was fascinating to try to change things for the better at an international level, but also at the European and national level. • 65

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