A light bulb moment…
You may think it futuristic and a bit farfetched to imagine a world where your solar panels charge up your neighbour’s car, but the notion of energy sharing communities is becoming a reality.
In light of the UK government’s announcement to invest £246m in developing battery technology via the Faraday Challenge, we welcome their approach and recognition of the huge potential this brings. Now is a terrific opportunity to invest and put the UK at the forefront of electric vehicles (EV) and smart networks. With this new support, we need to seize the industrial opportunity to export battery products and know-how, and gradually replace more traditional energy industries such as oil and gas.
The recently announced UK regulatory changes will go some way in smoothing surges in demand and shortages in supply, while also encouraging more battery storage, enabling householders to increase or decrease their usage when needed, and selling back to the grid. A significant change is the removal of double charging for battery storage using the system. This has been seen as a major deterrent for potential investors. We see EV’s playing a much bigger role in the next few years and therefore we need to think differently about how we generate, store and use energy.
Cars driving change
More and more distributed generation is now coming online. The introduction of smart meters and increased uptake of electric vehicles, coupled with vehicle to grid (V2G) technology in its infancy, means that the opportunity for connectivity at a local level looks set to change the energy landscape as we know it.
Increasingly, EVs are becoming both a key driver of electricity demand and in future will become a facilitator for energy storage at home, transforming the way we use energy on a daily basis. Your car can be idle for 95% of the day and sit happily on your drive overnight but with tens of kWh of storage in its battery pack it could be more fully utilised. By providing additional flexibility for the local distribution network, it could manage peak demand and enable households to avoid paying the associated high tariffs.
It’s now estimated that the global V2G integration technologies market is to grow at a CAGR of 33.7% by 2020. V2G refers to the reciprocal flow of power between any electric or hybrid vehicle and the grid. The energy stored in the vehicle can be used to provide extra power and avoid peak tariffs at times of high demand, as well as optimise the value of electricity generated from domestic renewables such as solar panels.
Your car can also be connected to a separate home battery energy storage, to hold on to energy generated from renewables and provide a level of energy independence and added security. The challenge to integrate and share these systems is not insignificant, but if this is rolled out across local distribution networks, it can be beneficial for grid efficiency. A widescale rollout would also mean homeowners pay less for generation and storage technologies due to reduced costs achieved through economies of scale.
Does energy storage mean the end of the Big 6?
Residential energy storage is already gaining significant traction amongst the global hi-tech community due to a growing demand for clean energy. According to market research firm IHS, the energy storage market is set to ‘explode’ to an annual installation size of 6 gigawatts (GW) in 2017 and over 40 GW by 2022 — from an initial base of only 0.34 GW installed in 2012 and 2013. With energy security being a priority for governments around the world, renewable energy sources such as solar and wind are expected to hold a key position in the future.
This begs the question of what this means for the ‘Big 6’, the UK’s oldest energy suppliers and their business models, which are estimated to currently supply 90% of British households with gas and electricity. In the UK, new rules will make it easier for people to generate their own power with solar panels, store it in batteries and sell it to the National Grid, reportedly saving consumers up to £40 billion by 2050. Current legislation means that people with solar panels and battery storage are charged tariffs when importing electricity into their home or exporting it back to the grid. The government’s step change will enable people to use energy more flexibly, with demand side response alleviating stress from the grid at peak times.
Utility companies will now have to adapt their business models in order to operate at a much more local level to meet these changing customer demands. For UK-based Hyperdrive Innovation, their market leading lithium-ion battery technology offers energy storage solutions across residential and commercial scale applications, allowing the first steps of energy independence from the utilities. Likewise, German company Sonnen, offer an energy storage system that automatically optimises supply and demand such that renewable energy within a community is possible all of the time.
To the future
Legislation is now changing with industry and consumer demand driving government decisions. As renewable energy increases it’s share in the world’s electricity mix, and as EV take up accelerates, battery energy storage technology will be a key enabler. In order to optimise energy, distribution and use, significant changes in business models and the approach to managing infrastructure will be needed.