by: Josh Dale, Rabobank North America
In the coming years, you’ll likely see stored renewable energy overtake coal-fired and nuclear power plants as the primary source of baseload power for the electricity grid in many parts of the U.S. Battery storage technology is making that possible by dramatically changing the renewable energy market as we know it.
Battery storage technology is a key enabler toward the use of renewable energy sources to help mitigate climate change, allowing us to distribute power when we need it most. We’ve seen almost unbelievable predications of market growth – such as 11 times growth multiple over the next five years – but that’s not the only impressive number. Global demand for battery storage is expected to reach 2,800 gigawatt hours (GWh) by 2040, while forecasters at Bloomberg New Energy Finance predict more than $600 billion in global investment in battery storage by 2040.
This technology has enormous potential. Here are three reasons why battery storage will transform the future of the renewable energy market:
It’s a Practical Solution for Intermittent Power
In the next few years, battery storage technology could remove a critical barrier to growth in the renewable energy space – intermittent power. While this energy is typically only made effective by the sun shining or the wind blowing, battery storage is able to retain excess energy generated by wind and solar and then steadily deploy the power when it’s in high demand.
It Competes with Coal
While coal is an effective method of power generation, it produces greenhouse gas emissions that contribute to climate change. Energy storage can help solar and wind facilities to operate as base-load energy facilities, effectively decreasing the use of coal plants and producing cleaner energy. It can further replace peaking gas-fired power plants given how quickly it can be dispatched.
It Can Help Developing Countries
Battery storage technology can provide power sources to areas of the world that don’t have access to fuel supplies like natural gas. For instance, in Haiti, a battery storage and solar project will provide electricity to 800,000 people and 10,000 schools and other institutions.
Rabobank recently played an important role in the growth of energy storage systems by taking part in a behind-the-meter battery storage project for use by Southern California Edison (SCE) in the West Los Angeles Basin service territory. Rabobank, alongside other financial partners, is helping to fund the completion of the project that will advance Southern California’s grid-connected battery storage infrastructure. This significant project marks the second-largest, behind-the-meter project financing project to date and is a vital step forward in helping to support more build out of renewable energy facilities.
If developers are looking to become involved in battery storage ventures and make them financeable, they should consider securing fixed price contracts with strong offtakers and to ensure that the risk of battery degradation is being addressed.
Rabobank welcomes the opportunity to help developers finance the growth and emergence of energy storage
Rabobank Group is a global financial services leader providing wholesale, rural and retail banking, leasing, and real estate services in more than 40 countries worldwide. Founded over a century ago, Rabobank today is one of the world’s largest banks with over $750 billion in assets. In the Americas, Rabobank is a premier bank to the food, agribusiness and beverage industry, providing sector expertise, strategic counsel and tailored financial solutions to clients across the entire food value chain. Additional information is available on our website or on our social media platforms, including Twitter and LinkedIn.
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