Solar Energy Storage Faces a Battery of Challenges – How to Overpower Them
In recent years, it has become a near-consensus among experts that displacing diesel generation with solar + storage energy solutions makes overwhelming sense. Not only does diesel generation have unsustainable health and environmental impacts, but it is incredibly expensive and leaves users vulnerable to fuel price volatility. Using a clean and abundant solar resource instead of burning fuel seems like a simple solution to solve the sustainability and socio-economic problems caused by diesel generation. But while on paper it is, diesel generation still dominates the energy mix in grid-weak emerging markets.
Solar generation has been well-established as a low-cost and proven technology for over a decade. However, core issues related to intermittency have made it difficult to effectively incorporate solar into a reliable energy system. These integration challenges, caused by both the predictable (daily solar cycle) and unpredictable (cloud coverage, weather, etc.) intermittence of solar generation, can be solved by using energy storage to “level” the production curve. But if implementing solar + storage is such a simple route to reducing diesel reliance, why isn’t the technology being adopted at a faster rate?
The root cause for slow adoption of solar energy in emerging markets is the lack of storage deployments. Solar is an easy-to-deploy and mature technology, however the lack of storage prohibits the impact of solar energy in the markets that need it most – keeping diesel-reliant markets diesel-reliant. This begs the question: Why isn’t more storage being deployed?
There are three key barriers to storage deployment in emerging markets: 1) historical battery pack prices; 2) customer cost structure; and 3) system installation. Solar + storage solutions have only reached real economic viability in the last few years due to an 85% cost reduction in lithium-ion battery packs since 2010. Now that these systems are economically viable, two remaining hurdles are stalling the deployment of solar + storage in emerging markets with the highest potential for impact.
Key Barrier: Customer Cost Structure
Energy storage projects require large upfront investment, but they make economic sense when considering the ensuing savings and low operating costs. Most potential customers in emerging markets are familiar with diesel-centric energy budgets, which while low in upfront cost, require high recurring monthly expenditures on fuel and maintenance. While long-term project finance is a solution for a sub-set of potential customers, there are substantial obstacles to securing credit for small- and medium-sized enterprises (SMEs) in emerging markets. To further compound these issues, SMEs in emerging markets are not traditionally early technology adopters, and they exhibit an understandable degree of skepticism when being asked to make long-term financing commitments or upfront investments. The need for substantial customer commitment before system deployment has stalled the penetration of solar + storage in emerging markets. Existing customer cost structures have constrained storage deployments to a small sub-set of forward-looking enterprises that can afford to make large upfront investments in their energy systems.
Key Barrier: System Installation
The reluctance of SMEs to commit to expensive energy storage technology is not without good reason. Energy storage is now a tried-and-true technology, with successful deployments throughout high-income countries. However, the installation of this technology in emerging markets has established a track record of delay, cost overrun and sometimes outright failure.
Existing battery systems, even those now being advertised as “mobile,” require substantial installation and redeployment efforts. Typically, the batteries, power electronics and system enclosures all ship separately to customers for on-site integration. Communities in emerging markets often lack the specialized expertise needed for efficient installation. Local electricians are very capable of integrating some of the familiar technologies required for energy storage (transformers, transfer switches, inverters, etc.), but asking a local team to integrate a cutting-edge technology that varies from one system provider to the next is difficult.
Storage providers generally use one of two installation strategies: 1) provider-led installation, or 2) customer-led installation. Provider-led installations have high success rates and involve bringing in company technicians to execute the complicated and technical on-site system integration. The downside of these provider-led efforts is apparent when looking at the final cost – it is expensive to transport and accommodate non-local technicians for the period it takes to integrate, test and install the tonnes of batteries (typically ~10,000 kg) and other crucial hardware. Since provider-led installation is often prohibitively expensive and forces the supplier to take on the installation risk, the far more common method is customer-led installation. In this model, the customer takes on the installation responsibility and typically hires a local electrician to lead the effort. Electricians are provided with Ikea-style installation guides for systems that cost well north of $100,000, and remote support is provided to overcome project challenges – historically these installations have been subject to months of delay and low success rates.
Simple Solution: Mobile Energy Storage Leasing
Informed by over 200 customer discovery interviews, Gridspan Energy was founded in early 2018 with the mission of using energy storage to improve the cost, reliability, resilience and sustainability of electricity in high-impact markets. At Gridspan, we identified customer cost structure and system installation as the two most critical barriers to energy storage deployment in diesel-reliant communities, and subsequently validated a novel solution to these problems: mobile energy storage leasing. Now in 2020, we have developed, deployed and implemented the underlying technology required to enable this barrier-breaking business model – which we see as the world’s most versatile mobile energy storage system.
By offering customers a low-commitment monthly leasing structure for energy storage, our solution will circumvent the previously highlighted challenges and accelerate solar + storage adoption in high-impact markets. Short-term contracts, available for as low as $150 per day (with no upfront cost) fit well within monthly budgets and remove the need for customer investment or financing. This model encourages rapid adoption by providing bottom-line savings and removing the need for customers to purchase and maintain systems.
How can a company deploy such expensive assets without long-term commitment? What about the system installation challenges? Answering these questions necessitated Gridspan Energy’s technological innovation.
Through our team’s recently commissioned pilot project with the Government of Anguilla, Gridspan has successfully demonstrated the world’s most versatile mobile energy storage system – the GSE-125/250. Shipping as a fully integrated system certified for intermodal transportation over sea, rail and roads, this containerized mobile battery is capable of rapid redeployment and takes less than 15 minutes to connect/disconnect at an existing customer site. Providing customers with a simple-to-install “node” allows cost-effective site preparation, where local electricians are working within their comfort zone for two to three days before the battery system’s arrival. By simplifying the required on-site preparation for local teams, and replacing the troublesome energy storage integration with a 15-minute plug-and-play process, Gridspan aims to deploy energy storage throughout emerging diesel-based markets. This unique “node” setup also enables Gridspan’s mobile energy storage units (MESUs) to be entirely modular and interchangeable from site-to-site, since all site-dependent elements are contained in the separate node. The ability to quickly and cost-effectively redeploy MESUs, which account for ~80% of overall cost, ensures that no high-value Gridspan assets become stranded, and removes the need for long-term customer commitment.
Mobile energy storage leasing is a cost-effective and scalable model that breaks the existing barriers to storage deployment in high-impact communities. Making energy storage more attainable will pave the way for increased solar penetration and the reduction of unsustainable diesel-reliance throughout the world. Our model is just one example of how multi-disciplinary innovation informed by rigorous customer discovery will be key to overcoming the diverse challenges in our global energy transition.
Alec Macklis is Founder & CEO of Gridspan Energy.
Photo courtesy of author.