If you look around, you’re likely surrounded by multiple items — including your laptop, tablet and mobile phone — that are powered by a rechargeable battery. Although these batteries may seem small and low-tech, they contain big potential to power vehicles, homes and even communities.
Evolving technology, eco-friendly benefits and decreasing prices are driving many industries to consider lithium-ion and other rechargeable batteries as a main power source. Bloomberg reports that lithium-ion batteries for electric vehicles are selling for 24 percent less than they did in 2016 and about 80 percent less than in 2010 (Chediak 2017). In the past two years, 98 percent of the new battery projects initiated by electric companies involved lithium-ion batteries (McMahon and Infante 2017). Going forward, experts project that these batteries will make up approximately 63 percent of global grid-scale storage (Stenclik, Denholm and Chalamala 2017).
This trend toward rechargeable batteries is most obvious in the automotive industry. Rechargeable lead-acid car batteries start vehicles and maintain the energy needed for the lights, radio, dashboard notices, onboard GPS and other gadgets. As these batteries evolve to become larger and more versatile — and as prices continue to decline — the increasing use of these vehicles could propel their annual power consumption to 551 terawatt hours by 2040, roughly the same amount of electricity consumed by nearly 60 million average residential utility customers in 2015, the U.S. Energy Administration estimates (Copley 2017a).
Furthermore, as rechargeable batteries extend into the home utilities market, they will give homeowners the ability to collect and store energy for later use, as opposed to having to sell excess energy back to the local power grid and then buy it again when needed. This also can help homeowners stockpile energy in case of power outages and better manage their power requirements by reducing consumption from the grid at peak demand periods (International Energy Commission 2017).
On an even larger scale, some groups are investing in lithium-ion battery systems to support community power grids. Duke Energy recently announced that it will spend $30 million on a pair of lithium-ion battery systems designed to strengthen the electric grid in western North Carolina. This is the first phase of a broader plan to improve efficiency and provide supportive services such as frequency regulation (Copley 2017b).
The Imperial Irrigation District in California installed a 20-megawatt-hour lithium-ion-battery energy storage system that increases reliability and puts the utility at the forefront of the energy industry’s technological evolution. The system is designed to improve the ability to integrate wind, solar and geothermal energy into the local grid. It also enables the district to supplement backup energy resources while acting at extra generating capacity.
Tesla recently installed the world’s largest lithium-ion battery in South Australia. The 100-megawatt, 129-megawatt-hour Powerpack system is connected to the 99-turbine Hornsdale Wind Farm. The system can supply 30,000 homes with about an hour’s worth of power (Hitch 2017).
Pluses and minuses
The adoption of these technologies is spurred by their multiple benefits to both consumers and providers. Energy storage enables the expanded use of renewable energy; helps control costs by reducing downtime and production losses; manages supply and demand variability; and improves operations in generation, transmission and distribution. Across the board, new energy storage solutions integrate renewable resources such as solar and wind, boost reliability, and more quickly restore power in an emergency (McMahon and Infante 2017).
Despite these advantages, energy storage systems still are an emerging technology. One estimate is that stored capacity, including pumped hydropower plants, is 24 gigawatts, but peak demand in the United States alone is nearly 840 gigawatts. This leaves a considerable gap that would need to be filled before a changeover to this power source. In addition, obstacles including high costs, lower-than-desired rates of charge and discharge, life cycle limitations, and concerns about the safety of battery energy storage systems are slowing growth (Stanclik, Denholm and Chalamala 2017). In order to better meet demand and overcome these obstacles, the energy storage industry will need to create a variety of technologies ranging from high-power, short-duration batteries for balancing applications to long-duration storage for energy applications.
Even once the technology is perfected, communities still will need to update their infrastructures to better use lithium-ion and other rechargeable batteries. Electric grid infrastructures typically are highly complex, interconnected networks that involve thousands of electric utilities and millions of businesses and homes. Many, if not all, of the electrical connections that exist will have to be altered to accommodate the thousands of energy storage systems being introduced into the electric grid. This will result in implementation costs and years of time spent coordinating the work of contractors, subcontractors and individual homeowners.
However, the global market seems to be betting on the pros over the cons. The worldwide grid storage market is expected to increase more than tenfold by 2025, with nearly 80 percent of that growth coming from outside the United States (Stenclik, Denholm and Chalamala 2017).
Stenclick, Denholm and Chalamala go on to say, “Battery energy storage will be one of many valuable technologies and resources that will help facilitate additional renewable penetration and modernize the grid.” For now, the authors suggest that the industry focus on providing “essential grid reliability services in regions where the value is highest, such as island and remote grids, municipal and co-op electricity providers, and areas with high renewable penetration.” As the power system modernizes and the industry starts to focus more on renewable energies, battery energy storage will play a more significant role in the marketplace.
- Chediak, Mark. 2017. “The Latest Bull Case for Electric Cars: The Cheapest Batteries Ever.” Bloomberg, December 5, 2017. bloomberg.com/news/articles/2017-12-05/latest-bull-case-for-electric-cars-the-cheapest-batteries-ever.
- Copley, M. 2017a. “Duke Energy Proposes 1st Large-Scale Battery Projects for Its Utilities.” SNL Energy Power Daily, September 22, 2017.
- Copley, M. 2017b. “Utilities Told to Prepare for Growth from Fledgling Electric Auto Sector.” SNL Energy Power Daily, April 18, 2017.
- Hitch, John. 2017. “Tesla Delivers on Down Under Bet with World's Largest Battery.” New Equipment Digest, December 1, 2017. newequipment.com/industry-trends/tesla-delivers-down-under-bet-worlds-largest-battery.
- International Electrotechnical Commission. Market Strategy Board. Electrical Energy Storage.Switzerland: 2017. iec.ch/whitepaper/pdf/iecWP-energystorage-LR-en.pdf.
- McMahon, R., and L. Infante. 2017. “Harnessing the Potential of Energy Storage.” Electric Perspectives 42 (3): 48-50, 52-53.
- Stenclik, Derek, Paul Denholm and Babu Chalamala. 2017. “Maintaining Balance: The Increasing Role of Energy Storage for Renewable Integration.” IEEE Power & Energy Magazine, November/December 2017.
The author would like to thank Mike Carpenter of the APICS Foothills Chapter for suggesting the topic for this issue’s “Relevant Research.” If you have suggestions for future topics, contact Richard E. Crandall, Ph.D., CFPIM, CIRM, CSCP, at email@example.com.
Richard E. Crandall, PhD, CFPIM, CIRM, CSCP, is a professor emeritus at Appalachian State University in Boone, North Carolina. He is the lead author of “Principles of Supply Chain Management.”