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Renewables Boom Will Cause a 40-Fold Increase in Storage in Developing Countries by 2025

Renewables Boom Will Cause a 40-Fold Increase in Storage in Developing Countries by 2025

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Energy storage is set to grow 40 percent per year in developing markets, says a team of researchers at the World Bank Group. That growth will take the current installed base of around 2 gigawatts up to 80 gigawatts in less than a decade. And if certain rule changes are made, capacity increases could be higher than that. The findings were published in a new report from the International Finance Corporation and the Energy Sector Management Assistance Program, which are both part of the World Bank. Unsurprisingly, China and India, with their ambitious renewables programs, are predicted to be the biggest contributors. But a host of other developing economies are set to become strong players in storage. The International Energy Agency estimates that by 2020 developing countries will need to double their electrical power output to meet rising demand. By 2035, these countries will represent 80 percent of the total growth in both energy production and consumption.

An estimated 2.5 billion more people will be flocking into the world’s cities by 2050, placing increasing strain on existing grid infrastructure. These stresses will be felt most in the world’s developing economies, adding to power demands caused by increased industrialization.Meanwhile, a commitment to limiting carbon emissions through large-scale adoption of intermittent renewable energy will only add to the need for investment in energy storage at the grid level, behind the meter, and in off-grid communities, according to the report. In the case of isolated rural or island communities, renewables paired with storage is often a more cost-effective option than a grid connection. As a result, by 2025 all developing territories will show considerable yearly growth in storage.

Numerous factors will determine how storage flourishes. They include the penetration and mix of renewable and fossil generation, grid reliability and stability, and how easy it is for companies to own and operate storage facilities. The presence of pumped hydro is also significant. A large installed base of pumped hydro can reduce the need for storage projects in the future. In addition to predicting the energy storage uptake in different regions, the report makes a series of recommendations for developing economies, based in part on lessons learned from earlier adopters of storage solutions. Irrespective of the territory, the biggest single factor is access to cost-effective funding. Securing such funding would give an advantage to tried-and-trusted vendors who can offer warranties and performance guarantees.

With this in mind, the report recommends that developing economies do not exclude foreign expertise and technology from supplying energy storage. Avoiding niche projects, and instead choosing easily replicated installations, is another recommendation that would help accelerate the pace of deployment and solidify the knowledge base for storage in a developing economy. The researchers also recommend market reform. Opening ancillary services markets up to different technologies, instead of relying only on large generators, would allow different players access to additional revenue, improving their ability to make storage profitable. Lengthening the periods of contracts would lower risk for potential investors, and help improve funding of projects. Currently utility business models in developing economies routinely encourage large capital investment in infrastructure. Opting for energy storage might be a more cost-effective route. Promoting conservation and efficiency instead of large capital investment would make storage more attractive to utilities.

Legislation should also incentivize behind-the-meter storage for individual businesses and households, by introducing pricing models that allow them to reduce their electricity costs. Although many barriers remain, the predicted 40-fold increase in energy storage within developing economies will likely become a reality, concludes the report. And if its recommendations are widely adopted, the results could be even more impressive.

Anand Gupta Editor - EQ Int'l Media Network

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