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A Better Network: Storage as the Keystone of Renewable Energy’s Success

John Habib


  • Discusses how renewable energy is a model of the circular economy.
  • In order to create consistency in the renewable energy grid, the United States must incorporate widespread storage.
  • Addresses energy storage as the biggest impediment to the full-scale adoption of renewable energy.
A Better Network: Storage as the Keystone of Renewable Energy’s Success
Juan Maria Coy Vergara via Getty Images

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As the world battles with, and recognizes the future threats of, climate change—from rising seas to harsher winters to drier summers to food insecurity—the world is turning to systems that reflect a circular economy. The United Nations defines a circular economy as a system that balances economic development with environmental and resource protection, putting an emphasis on the most efficient use and recycling of resources, with low consumption of energy, low emission of pollutants, and high efficiency. A simple example of a circular economy occurs when a dairy farmer feeds cows crops fertilized by manure generated by the same cows.

Renewable energy is a model of the circular economy. Energy is renewable where the energy’s source is constantly replenished, does not deplete, or depletes so slowly that the source does not run out on a human timescale. Renewable energy sources include the wind, the sun, oceans, rivers, and the earth’s core. Renewables seek to eliminate the waste product present in the traditional energy generation framework, namely CO2. In the same way, renewable energy seeks to curb human-caused climate change.

Benefits of renewable energy include lower greenhouse gas emissions, less-limited energy sources (the sun, wind, and geothermal reserves are functionally limitless), cleaner air and water, improved trade balances, safer and better jobs, less catastrophic events like tanker explosions and coal mine collapses, a better ecological environment for plants and wildlife, and greater energy security. Governments at every level have recognized the value of renewable energy. All 50 states offer programs that support renewable energy, including tax exemptions for renewable generation, rebate programs for residential renewable generation installation, green standards for public buildings, and hybrid and electric vehicle tax credits. These efforts have touched off an expansion of renewable generation installation and investigation, such as residential and commercial solar and wind farms, research into harnessing tidal energy, and discussions about how to maintain standards of living while reducing energy consumption. At the same time, technological innovation has advanced renewable energy efficiency and improved renewable energy’s economies of scale.

The volume of generated wind energy has increased 25-fold over the last 20 years. Today, roughly 9.2% of all energy in the United States is derived from the wind, and the cost per kwh has declined nearly 20-fold since 1980. The rising proportion of renewable energy brings with it new challenges, including imbalances in supply and demand, changes in transmission flows, and greater system instability. Exploitation of renewable energy sources, even where there is a good potential resource, can be problematic due to renewable energy’s variable and intermittent nature. In addition, a wind fluctuation, lightning strike, sudden change in electricity load, or line fault can cause a sudden dip in system voltage.

Various states and the federal government are providing incentives to broaden use of renewable energy. The U.S. Department of the Interior announced on January 12, 2022, that it had entered a record-breaking wind lease off the coast of New York and New Jersey that is expected to generate up to 7 gigawatts of clean energy: enough to power two million homes. In addition, the U.S. Departments of Interior, Agriculture, Defense, and Energy are collaborating among themselves and with the Environmental Protection Agency to improve the efficiency and effectiveness of reviews of clean energy projects on public lands. The Department of Energy is launching a new “Building a Better Grid” initiative to accelerate deployment of new transmission lines. The initiative will finance transmission lines and other grid updates; strengthen coordination with state, local, and tribal governments; modernize transmission processes; and improve permitting processes. The Department of Agriculture is testing a Rural Energy Pilot Program, which will provide $10 million in grants for particularly underserved rural communities to deploy community-scale clean energy technologies, innovations, and solutions.

One of President Biden’s well-known renewable energy initiatives is the Build Back Better Act. If passed, the Act will be the nation’s largest legislative initiative to date in combatting climate change, lowering energy costs, and building a clean energy future. It will support manufacturing of wind turbines, solar panels, and other renewable technologies and make renewable energy tax credits more widely available. Although President Biden intended to spur renewable energy development via the Build Back Better Act, the Act remains stalled in Congress as of June 2022. In November 2021, recognizing that the Build Back Better Act was destined-to-stall, Congress passed a narrowed-down version called the Infrastructure, Investment, and Jobs Act. 23 U.S.C. § 101 et seq.

Finally, the Department of Energy is testing a pilot program in Arizona and California that will allow for residential rooftop solar permitting via phone application. The pilot program reduced average permit review time to less than one day. The Department of Energy continues to recruit communities across the country to further test the application.

In addition to renewable energy, many have focused on “distributed generation” as the key to long-term success in nationwide efforts to reduce, mitigate, or eliminate the effects of climate change. Distributed generation is defined by EPA as “a variety of technologies that generate electricity at or near where it will be used, such as solar panels and combined heat and power.” Distributed generation systems come in all shapes and sizes and often rely on a renewable energy source. At home, distributed generation looks like rooftop solar panels, small wind turbines, and backup generators. In commercial and industrial sectors, distributed generation looks like solar arrays atop an office park, wind farms near a manufacturing facility, or biomass/solid waste cofiring at a foundry.

While there may be no doubt that the future of human energy consumption requires distributed generation from renewable sources, there has not been a corresponding focus on distributed storage. Renewable energy technologies—namely zero-emission technologies like wind and solar—are reliable energy sources only when the wind blows or the sun shines—wind and solar availability does not coincide with human demands for energy. The key to long-term success of renewable energy is distributed storage: a network of cost-efficient, adequate, and reliable sources to draw from when the sun is not shining and the wind is not blowing. This article provides a background on the energy generation and distribution system and an overview of what states and the federal government are doing to promote energy storage.

Energy Generation and Distribution

The energy market can generally be divided into three tranches or types of demand: (1) base load, (2) intermediate load, and (3) peak load. Base load is energy that is nearly always required on the grid. Intermediate load is energy needed when there is a predictable but rapid rise in grid demand. Peak load is energy needed to cover sudden surges in demand. In the current energy market, base load is typically maintained by nuclear or coal-fired power plants. Intermediate load and peak load are typically maintained by natural gas or oil-fired power plants. Most of today’s energy consumption is linear. Energy comes from a consumable source such as coal, natural gas, or crude oil that, when consumed, leaves behind energy—often heat—and a waste product—often CO2.

In general, the energy supply framework is broken down into three interrelated parts: generation, storage, and transmission. Depending on the situation, energy can be (1) generated from a stored medium and immediately transmitted onto the grid (such as burning natural gas to heat water, which turns a turbine that generates electrical energy that flows onto the grid), (2) generated from a stored medium and re-stored in another medium for future transmission (such as burning natural gas to heat water to turn a turbine that generates electrical energy stored into a battery system), or (3) immediately generated and stored (such as using solar panels to charge a battery system). Which mechanism or combination of mechanisms is used depends on the costs to the generator, storer, and consumer; the urgency of the need for the energy; and the sophistication of the energy grid.

Linear energy consumption centered on burning coal and natural gas has been found to have a negative effect on the earth’s climate. Many projections suggest that for the world to attain its climate goals, the energy sector must fully decarbonize by 2040. McKinsey modeling suggests that by 2040, storage systems will deploy between 1.5 and 2.5 terawatts—between 8 and 15 times the total energy-storage capacity deployed today—globally. This deployment is estimated to avoid 1.5 to 2.3 gigatons of CO2 equivalent per year, which accounts for roughly 10 to 15% of today’s energy sector emissions. In just the United States, energy storage could reduce the cost of achieving a fully decarbonized energy system by $35 billion annually by 2040.

The Renewable Energy Issue

The key to renewable energy’s long-term success is consistency. Unlike coal and natural gas, renewable energy sources cannot be called upon at any given time to raise or lower output to the energy grid to meet market demand. When the sun is shining, the wind is blowing, or the tides are moving, energy can be supplied to the grid. To create consistency in the renewable energy grid, the United States must incorporate widespread storage. Key factors for successful energy storage include its deployability, scalability, and low marginal cost of storing electricity.

Distributed energy storage systems are relatively small systems designed primarily to store electricity for later use by a single onsite residential or commercial landowner. A typical distributed storage system is a solar-charged home battery bank drawn upon after sundown. A less typical example is Tesla’s use of car batteries to create home power banks.

Bulk energy storage systems are generally much larger and store much more energy for eventual dispatch to offsite consumers. The overwhelming majority of bulk energy storage systems rely on pumped-storage hydropower, which involves pumping water above a dam during periods of low energy demand and then releasing the water through a generator during peak periods. Another form of bulk energy storage is compressed air energy storage, where air is pumped and compressed into underground caverns during off-peak periods and subsequently released through a generator during peak periods.

Energy storage has three other popular forms: flywheels, thermal, and batteries. Flywheels accelerate a rotor to a very high speed and store energy as rotational energy that can be utilized by connecting the rotor to a generator. Thermal energy storage involves either heating or cooling media during periods of high generation and then utilizing the heat or cold when needed. A common form of thermal storage is molten salt storage, which utilizes mirrors to focus heat on salt, which can later be used to heat water to turn a generator after the sun goes down.

The most widespread form of energy storage is batteries. The U.S. Department of Energy predicts the global lithium-ion battery market to grow five- to 10-fold by 2030. The world’s rising population, expected to be 9.8 billion by 2050 and 11.2 billion by 2100, will undoubtedly put further pressure on the global battery market. Unfortunately, however, batteries have several limitations. Batteries that can store a meaningful amount of energy are extremely large and expensive. Fairbanks, Alaska, has a battery the size of a football field that can only provide energy to 12,000 residents for a period of seven minutes. Further, batteries corrode, contaminate, and degrade as they age. Finally, when incorrectly discarded, batteries can cause fires. These issues can be improved by incorporating the cost of end-of-life management into the cost of batteries, similar to some states’ fees for plastic or glass bottles at the point of sale. Additionally, life-cycle management can be included in battery design and closed-loop recycling processes can be implemented that are profitable without government subsidies. Incorporating life-cycle management and closed-loop processes into batteries would significantly help to move renewable energy toward a more circular economy.

The Solution

The United States needs more energy storage to stabilize the inconsistencies of renewable energy. This stability will allow widespread adoption of renewable energy, thereby mitigating the climate effects of today’s energy economy and moving toward a more circular economy. Public policy benefits of enhanced energy storage include enhanced reliability of the grid, reduced storage costs, reduced transmission infrastructure, efficient use of resources, and fewer environmental impacts because of the shift to usable renewables. We need to increase storage on the grid to enable operators, utilities, and customers to store energy during periods of excess supply and then quickly dispatch the energy when the need arises later.

Government action will be required to catalyze the market for energy storage by lowering costs, incentivizing investment, and enabling investors to make an appropriate return. Governments can catalyze storage in three ways: establishing clear goals for renewables’ share of the grid, establishing dedicated support programs for storage to ensure that the technologies reach their full potential, and creating supportive market designs such as capacity mechanisms and policies that capture the full value of storage to enable investments to have returns commensurate with their risk. Increased investment in storage will result in more storage, which will result in more system flexibility as the renewable share of the energy mix grows. Already, the Biden administration and several states have begun making and incentivizing investments in energy storage.

On February 11, 2022, the U.S. Department of Energy issued two notices of intent to provide $2.91 billion to boost the production of advanced batteries that will be critical to the long-term success of renewable energy. The money will fund battery materials refining and production plants, battery cell and pack manufacturing facilities, and recycling facilities.

In addition, the Infrastructure, Investment, and Jobs Act allocates nearly $7 billion to strengthen the U.S. battery supply chain, which includes producing and recycling critical minerals without new extraction or mining and sourcing materials for domestic manufacturing. Funding from the Infrastructure, Investment, and Jobs Act will allow the Department of Energy to support the creation of new, retrofitted, and expanded domestic facilities for battery recycling and production of battery materials, cell components, and battery manufacturing. The law also supports research, development, and demonstration of second-life applications for batteries once used to power electric vehicles, as well as new processes for recycling, reclaiming, and adding materials back into the battery supply chain.

The Department of Defense announced an investment in the expansion of the largest rare-earth element mining and processing company outside of China to provide the raw materials necessary to help combat the climate crisis. These elements will become components of electrical storage and transmission infrastructure and include lithium, copper, nickel, zinc, manganese, potassium, and lead.

The Biden administration released findings from a comprehensive 100-day assessment of the supply chain for large capacity batteries. The assessment required the Department of Energy to release a National Blueprint for Lithium Batteries codifying findings of the battery supply chain review and creating a 10-year, whole-of-government plan to rapidly develop a domestic lithium battery supply chain to combat the climate crisis. On June 7, 2022, the Department of Energy released the National Blueprint and laid out four goals for the domestic supply chain to be met by 2030: (1) secure access to raw and refined materials; (2) support growth of a U.S. materials-processing base to meet battery manufacturing demand; (3) stimulate U.S. electrode, cell, and pack manufacturing sectors; and (4) enable end-of-life reuse and critical materials recycling.

The Department of Energy’s Loan Programs Office will immediately leverage approximately $17 billion in loan authority in the Advanced Technology Vehicles Manufacturing Loan Program to support the domestic battery supply chain. The program will make loans to manufacturers of advanced technology battery cells and packs for re-equipping, expanding, or establishing those manufacturing facilities in the United States. Further, the Loan Programs Office has more than $3 billion in loan guarantees available to support efficient end-use energy technologies, such as mining, extraction, processing, recovery, or recycling of critical materials that can expedite delivery of new and refurbished storage mechanisms.

Additionally, the Department of Energy’s Federal Energy Management Program will launch a new effort to support the deployment of energy storage projects by federal agencies. It will begin by evaluating current opportunities for deploying battery storage at federal sites. The Federal Energy Management Program will also launch a call for projects from federal sites interested in deploying energy storage projects and provide necessary technical assistance to get those projects built. Further, in December 2020, Congress extended a federal tax credit program that provides a 26% tax credit for solar panels installed between 2020 and 2022. Expenses that may be offset by the credit include energy storage devices charged by the solar panels.

States are establishing storage mandates and targets, amending Renewable Portfolio Standards, and creating new statutes modeled after Renewable Portfolio Standards to promote energy storage. California, in particular, has mandated that its utilities install 1,325 MW of storage by 2024, with 500 MW distributed. California also has established a Self-Generated Incentive Program, which provides purchasers of home batteries with rebates at a rate between $400 and $500 per kwh of the purchased system. Hawaii has a customer self-supply option where citizens living in certain regions receive expedited distributed solar permitting if they agree to make minimum payments to the utility and disconnect from the grid.

As the United States has seen deployment of renewable energy generation rise, it has only begun to address the biggest impediment to full-scale adoption of renewable energy: storage. Energy storage, at all scales, is the key to progress towards a renewable energy economy. The Biden administration and several states have announced programs that will incentivize consumer and commercial investment in energy storage systems. As the renewable share of the energy mix grows, time will tell whether the United States’ recent push for widespread storage systems facilitates a quicker adoption of a renewable energy economy.