Support to R&D Strategy for battery based energy storage

Transcription

1 Support to R&D Strategy for battery based energy storage Initial Implementation Plan (D6) - Draft -

2 Support to R&D Strategy for battery based energy storage Initial Implementation Plan (D6) - Draft - By: Bart Mantels, Kris Kessels Date: 13 April 2016 Project number: POWNL16059 Reviewer: Heleen Groenenberg, Frank Wiersma Ecofys 2016 by order of: European Commission Directorate General Energy POWNL16059

3 Executive summary The present document describes the draft implementation plan for the period on the topic of battery energy storage systems (BESS). It involves a brief background on the role of battery energy storage systems in the European electricity system. This implementation plan provides a proposed list of short-term actions in line with the objectives outlined in the SET plan. A subsequent roadmap will translate these SET plan objectives to objectives, more focused on the topic at hand (BESS) and will define a number of milestones. A second implementation plan ( ) will start from the milestones defined in this roadmap and the gaps and barriers toward their implementation. Since this roadmap is not yet available, the implementation plan has identified these gaps and barriers by a broad stakeholder consultation through workshops and interviews. On top of this an initial analysis of finalized and ongoing EU and national projects was performed to understand the current and future R&D achievements. As an overarching consideration, the strengthening of the European industrial capability was kept in mind in the prioritization of topics. Based on the confrontation of all inputs (stakeholder views and project monitoring), the following topics were identified as most interesting for near-term R&I projects: 1. Development of technology for scalable, efficient and cost-effective battery energy storage 2. Lifetime estimation and improvement of battery systems 3. Demonstration of distribution grid-connected storage 4. Demonstration of multi-service battery storage 5. Energy system modelling of flexibility options 6. Efficient markets for flexibility These proposed topics involve general concepts of flexibility and markets that would be relevant for all storage solutions or flexibility sources. On the other hand, topics are defined that focus on in-depth technical improvements to the state of the art of battery energy storage systems. Last but not least a number of demonstration topics are proposed that are intended to fill the gap between the large scale demonstration projects and the residential energy storage that is currently demonstrated. POWNL16059

4 Table of contents Executive summary Table of contents 1 Introduction Intended audience Background and objectives Document structure 1 2 Background Towards an integrated SET plan The role of battery-based storage in the EU energy system The status of battery-based storage in the EU today The need for a roadmap and implementation plans 8 3 Process Road mapping and planning process IP process 11 4 Structure Outline structure Link with the existing EEGI Roadmap structure 13 5 Basis for Implementation Plan Monitoring of R&D achievement Identified gaps and barriers 19 6 Selected R&I topics for Topic 1: Development of technology for scalable, efficient and cost-effective battery energy storage Topic 2: Lifetime estimation and improvement of battery systems Topic 3: Demonstration of distribution grid-connected storage Topic 4: Demonstration of multi-service battery storage Topic 5: Energy system modelling of flexibility options Topic 6: Efficient markets for flexibility 31 7 Conclusion 32 POWNL16059

5 Appendix A: Stakeholder consultation 33 A.1 Stakeholder workshop 16 March 2016 in Düsseldorf 33 A.2 Grid+Storage workshops 34 A.3 Stakeholders interviewed 35 A.4 Interview questionnaire 36 POWNL16059

6 1 Introduction 1.1 Intended audience This implementation plan is targeted at decision makers, funding institutions, manufacturers, grid operators, research institutes and other stakeholders. It provides an overview of identified knowledge gaps and barriers with respect to the introduction of battery energy storage systems and a selection and prioritization of R&D topics. 1.2 Background and objectives This implementation plan is a deliverable of the BATSTORM project, a service project initiated by the European Commission in order to support the selection of R&D topics to be funded on the topic of battery based energy storage. In that sense it is complementary with the roadmaps and implementation plans developed in the Grid+Storage project that focus on the integration of non-battery energy storage systems in distribution and transmission grids. It covers the full RT&D chain from applied research to demonstration projects. The selection of topics is based on a thorough analysis of finalized and ongoing research projects and on inputs from a varied set of stakeholders. The interaction with stakeholders will be an iterative and flexible process throughout the entire project. This deliverable D.6 Initial Implementation Plan covers a three-year time period ( ) and will be updated within the coming months based on further project monitoring and consultation to come to D.8 Final Implementation Plan The same approach will be followed for the Initial and Final Implementation Plan which will be delivered within the BATSTORM project so that new insights can be included. 1.3 Document structure The first section sketches the background for this implementation plan and for the subsequent roadmap. In the Process chapter we describe the total road mapping and planning process within the BATSTORM project and the adapted process used for this initial implementation plan. In the Structure chapter, the format of the roadmap and implementation plan themselves is described and linked to the existing EEGI roadmap structure. As will be explained in the Process chapter, the implementation plan is based on an analysis of ongoing projects and stakeholder consultation to identify remaining challenges. Therefore the Implementation plan chapter starts with these topics and finishes with the description of the selected R&I topics. Finally, since this implementation plan is primarily based on stakeholder input, the appendix lists the sources. POWNL

7 2 Background 2.1 Towards an integrated SET plan Europe is one of the leading regions in the introduction of renewable energy sources into the electricity grid in order to counteract climate change and to reduce the dependency on energy imports. The European Commission has clearly communicated its ambition in the SET plan and the associated 2020 climate energy package. It has also implemented several instruments to stimulate research and technology development to cope with the challenges that result from this paradigm shift towards lowcarbon energy. Energy storage (including battery energy storage) will play a vital role in coping with the intermittent nature of most renewable energy sources. This will require the improvement of existing storage technologies, the development of new more cost-effective and more performant technologies and the installation of markets and regulation to stimulate the integration of storage systems in the distribution and transmission grids. In its recent communication Towards an Integrated SET Plan 1, the European Commission set forward 10 targets (most relevant indicated in bold) of which topics #4 and #7 are directly related to the topic of this Implementation Plan: 1. Sustain technological leadership by developing highly performant renewable technologies and their integration in the EU s energy system 2. Reduce the cost of key technologies 3. Create technologies and services for smart homes that provide smart solutions to energy consumers 4. Increase the resilience, security and smartness of the energy system 5. Develop new materials and technologies for, and the market uptake of, energy efficiency solutions for buildings 6. Continue efforts to make EU industry less energy intensive and more competitive 7. Become competitive in the global battery sector to drive e-mobility forward 8. Strengthen market take-up of renewable fuels needed for sustainable transport solutions 9. Step up research and innovation activities on the application of carbon capture and storage (CCS) and the commercial viability of carbon capture and use (CCU) 10. Maintaining a high level of safety of nuclear reactors and associated fuel cycles during operation and decommissioning, while improving their efficiency Reaching the indicated goals will require significant investments in (amongst others) the development of battery energy storage systems. 1 Towards an Integrated Strategic Energy Technology Plan: Accelerating the European Energy System Transformation POWNL

8 2.2 The role of battery-based storage in the EU energy system According to the 2DS scenario of the IEA 2, the future energy system will be heavily electrified with electricity consumption likely to double globally by Although the growth of electricity demand in the EU will be smaller than the global growth, it is still considerable. Therefore the SET plan foresees in 27% of the energy production in the EU to be renewable by 2050, which will lead to high levels of renewable electricity introduced into the grid. The European grid system is highly performant, but it was designed based on a model of centralized production. With the increased introduction of decentralized renewable energy production into the grid, its limitations are becoming apparent and the necessary means for flexibility will have to be introduced (either geographical flexibility by strengthening the interconnection between regions or temporal flexibility by demand response, storage ). As explained in the IEA Storage Technology Roadmap 3 storage can play a role in several applications in the energy system. In their publication Grid Energy Storage 4, the US Department of Energy shows the picture below, indicating that batteries can be used for several applications in the electricity grid. Table 1: Grid application of energy storage technologies. Source: US Department of Energy, IEA Energy Technology Perspectives 2012; Pathways to a Clean Energy System 3 IEA Technology Roadmap Energy Storage 4 US DoE Grid Energy Storage, December 2013 POWNL

9 2.3 The status of battery-based storage in the EU today Battery-based energy storage in the grid The figure below is taken from the aforementioned IEA Technology Roadmap Energy Storage and shows the worldwide installed grid-connected electricity storage capacity (MW) in Figure 1: Global installed electric energy storage capacity. Source: IEA, 2014 From this picture it is clear that currently there is only one significant type of storage: pumped hydro. However as shown earlier, pumped hydro cannot fulfil all necessary applications and is mainly used for peak shifting and (slow) ancillary services in the traditional view of the electricity grid. From the other storage options, battery are clearly prominent and their share is rapidly growing. Although this is a picture on the global capacity, the European situation is very similar. When looking at the situation of battery energy storage systems in Europe, we see regional differences with a significant number of pilot projects on all kinds of applications and battery technologies as is shown in the map below from a publication by DNV GL 5. Figure 2: Global map of energy storage installations 5 Global map of energy storage installations by April 2016 DNV GL POWNL

10 Most storage project are in the demonstration phase, however two types of projects seem to have reached initial economic viability (under specific circumstances). In a presentation related to their article Making Energy Storage Bankable 6, DNV GL give a back of the envelope calculation of a storage installation that delivers frequency containment reserves (FCR). This is obviously an oversimplification (and possibly slightly optimistic) but it clearly shows that business can already be made with this kind of services as is also shown in other projects in other European countries (Spain, UK, Germany ) Figure 3: Rough estimation of battery energy storage payback period A second type of battery energy storage that is enjoying considerable success is the residential battery energy storage combined with PV (both new systems and retrofit installations) in Germany as shown in the figures below by EuPD Research. Figure 4: Historical and forecasted sales of residential battery systems in Germany 6 Making Energy Storage Bankable DNV GL POWNL

11 Figure 5: The market for battery storage in Germany Industrial capabilities The other side of the coin is the European industrial capability. As shown above, batteries can play a beneficial role in the electricity grids of the future. But preferably this evolution should also benefit European industry and improve industrial capability and competitiveness. With respect to batteries, the current situation shows a mixed picture. Although lead-acid batteries still offer some benefits in the form of lower investment costs, Li-ion batteries are currently the dominant technology for stationary battery systems. In this market, Europe is strong in the beginning (materials) and the end of the value chain (system integration, recycling). However, mainly because of the combination with the CE industry, the vast majority of the industrial activity with respect to the production of Li-ion battery cells and modules is located in Asia as shown in the figure below from the Clean Energy Manufacturing Analysis Center 7 (also showing the announced Tesla giga-factory). The same information can also be gathered from the picture below, showing the top-5 patent-owners with respect to Li-ion battery technology. For other, less mature battery technologies (Li-S, metal-air, redox-flow batteries, Na/Mg/Al- based batteries ), the situation is still much more open. 7 Automotive Lithium-ion Battery Supply Chain and US Competitiveness Considerations POWNL

12 Figure 6: Global production of Li-ion battery cells Figure 7: Top 5 patent owners in Li-ion battery technology POWNL

13 2.4 The need for a roadmap and implementation plans As outlined in section 4.2, the EC has set forward a number of objectives for the European energy system to ensure secure affordable, competitive and climate-friendly energy for citizens and businesses. In order to achieve these goals, a large number of actions will need to be performed with respect to policy, investments, markets, research and technology, education, industrial capability, public acceptance. These actions also span a large amount of domains, among which the further development and introduction battery technology is an important one, as explained in section 4.2. The roadmap, to be developed in the BATSTORM project is intended to provide a framework for these developments, setting a number of milestones. The two implementation plans developed in this project will track the progress towards these milestones and will define a number of actions to achieve them. Although this implementation plan is focused on the definition of a number of research and innovation topics to in order to reach the SET plan milestones, it also intends to be aligned with more general environmental concerns and support the development of European industrial capability. In order to ascertain the support for the actions defined, discussions have been started with a broad set of stakeholders from industry to get their view on the remaining challenges and the necessary actions to surmount them. This stakeholder involvement will be continued in the review an update of this draft implementation plan. This should result in the commitment of the stakeholders to the defined actions in order to ascertain the execution of the agreed implementation plan. POWNL

14 3 Process 3.1 Road mapping and planning process The figure below describes the process that will be followed to develop a roadmap and two implementation plans. The process on the left shows the generic process as described by the IEA in its publication Energy Technology Roadmaps, a guide to development and implementation 8. As shown in the figure, the process starts from a set of goals. Based on these ultimate goals, a number of timed milestones is derived that establish a credible path toward these goals. From these milestones a number of gaps and barriers are identified that stand between today s practice and the achievement of the defined milestones. Finally a number of actions is defined to tackle these hurdles, after which these actions are prioritized and planned in time. Figure 8: generic (left) and applied (right) road mapping process The right side of the above figure applies this generic process to the task at hand: developing a roadmap and implementation plans for battery energy storage systems. In this case, the set of ultimate goals is taken from the SET plan. This plan defines three levels of targets: The high level targets of the 2030 climate energy package: o A 40% cut in greenhouse gas emissions compared to 1990 levels o At least a 27% share of renewable energy consumption o At least 27% energy savings compared with the business-as-usual scenario The EC communication Towards an Integrated SET plan 9, defines ten derived actions to accelerate the energy system transformation and create jobs and growth as indicated above. These ten actions are grouped into five topics and per topic the EC is developing an issue paper with more specific and quantified targets POWNL

15 The BATSTORM road mapping process will use these three sets of targets as the ultimate goals. From these overall targets that are aimed at the entire European grid and industry, a number of battery energy storage system (BESS) related targets will be derived. This will be based on the roles that BESS can play in the overall electricity system and the contribution they can make to the SET plan targets. The socio-economic analysis that is part of the BATSTORM project will be a major input to this translation. It will outline the possible roles of BESS in the electricity system and asses the value. This analysis will be confronted with the stakeholder input to come up with a definitive set of milestones that will be documented in the roadmap. The next step in the process will be to identify the current state of the art and the gaps and barriers to achieve the milestones that were put forward in the roadmap. Therefore the BATSTORM project performs an extensive monitoring of past and ongoing projects to identify the topics that are already covered by these projects. The identified gaps and barriers will then be confronted with stakeholder input. Using this analysis, a number of actions will be derived. These actions are then prioritized and arranged in a timeline. This prioritization is again discussed with the stakeholders and consolidated in the two implementation plans ( and ). Note that the roadmap and the implementation plans have a different content: the roadmap will outline the derived targets for battery energy storage systems, whereas the implementation plans will contain the action plans to reach these targets. The figure below describes the separate processes involved in developing the roadmaps and implementation plans in the BATSTORM project, their dependencies and time order. Figure 9: Road mapping process timeline POWNL

16 3.2 IP process Obviously the initial implementation plan at hand could not be entirely based on the process outlined above since the roadmap, the socio-economic analysis and the project mapping are not fully available yet. Therefore this implementation plan has primarily followed a bottom-up approach: Project monitoring was executed as a quick scan of an initial set of projects: EC funded projects and national projects encountered in the Grid+Storage workshops. In the current analysis we focused on the scope of the projects without in-depth analysis of the detailed results. Gaps and barriers were identified based on literature review and stakeholder interviews. A full overview of the interviewed stakeholders and the interview questionnaire is given in the appendix. Derived actions and priorities were established in cooperation with stakeholders, both in the Grid+Storage workshops (as result of the round tables) as well as in a dedicated BATSTORM workshop, organized in parallel with the Energy Storage Europe conference in Düsseldorf on 16/3/2016. POWNL

17 4 Structure 4.1 Outline structure As explained in the previous section, the roadmap and implementation plans are based on an analysis of remaining challenges. Therefore they will be structured along a first axis that deals with the type of barrier or gap that is to be solved by additional research and innovation. On this axis, we distinguish between the following four categories: 1. Technical characteristics of the storage system 2. Markets and investments 3. Regulations and standardization 4. Public acceptance A more detailed structure can be used where needed (e.g. detailing the technical characteristics into reliability, lifetime, reaction time, etc.). Additionally, the roadmap and the implementation plans will be structured along a second orthogonal axis dealing with the intended service to be delivered by the battery energy storage system. The services are grouped into four categories: 1. Grid/utility services 2. Generation and ancillary services 3. End user services Industrial 4. End user services Domestic Where needed these services can also be detailed (e.g. frequency containment reserves, time-of-use energy cost management ), but for the implementation plan topics this general structure is used. Combining these two orthogonal axes, we get the structure shown on the left that will be used to structure the roadmap and implementation plan topics. On the vertical axis the different types of services are shown On the horizontal axis the types of hurdles are shown This structure is used both to identify the remaining gaps and barriers, as well as to indicate the existing knowledge in the project monitoring. POWNL

18 4.2 Link with the existing EEGI Roadmap structure The existing EEGI roadmap (part of the current ETIP Smart Grids and Storage) covers a much broader area than the BATSTORM roadmap in the sense that it covers all smart-grids related topics. It uses a one-dimensional structure with two levels as shown below. The functional objectives with an explicit link to storage are highlighted in green TSO innovation clusters Cluster Name ID Functional objective T1 Definition of scenarios for pan-european network expansion C1 Grid architecture T2 T14 Planning methodology for future pan-european transmission system Towards increasing public acceptance of transmission infrastructure C2 Power technologies T3 T4 T5 Demonstration of power technology to increase network flexibility and operation means Demonstration of novel network architectures Interfaces for large-scale demonstration of renewable integration T6 Innovative tools and methods to observe and control the pan- European network C3 Network operation T7 T8 Innovative tools and methods for coordinated operation with stability margin evaluation Improved training tools and methods to ensure better coordination at the regional and pan-european levels T9 Innovative tools and approaches for pan-european network reliability assessment T10 Advanced pan-european market tools for ancillary services and balancing, including active demand management C4 Market designs T11 Advanced tools for capacity allocation and congestion management T12 Tools and market mechanisms for ensuring system adequacy and efficiency in electric systems integrating very large amounts of RES T15 Developing approaches to determine and to maximize the lifetime of critical power components for existing and future networks C5 Asset management T16 Development and validation of tools which optimize asset maintenance at the system level, based on quantitative cost/benefit analysis T17 Demonstrations of new asset management approaches at EU level POWNL

19 4.2.2 DSO innovation clusters Cluster Name ID Functional objective C1 C2 C3 C4 Integration of smart customers Integration of DER and new uses Network operation D1 Active demand for increased flexibility D2 Energy efficiency from integration with smart homes D3 DSO integration of small DER D4 System integration of medium DER D5 Integration of storage in network management D6 Infrastructure to host EV/PHEV D7 Monitoring and control of LV network D8 Automation and control of MV network D9 Network management tools D10 Smart metering data processing Network planning D11 New planning approaches for distribution networks and asset mgt. D12 Asset management C5 Market design D13 Novel approaches for market design analysis Joint TSO/DSO innovation clusters Cluster Name ID Functional objective TD1 Increased observability of the distribution system for transmission network management and control TD The integration of demand side management at DSO level Joint TSO/DSO TD2 into TSO operations activities TD3 Ancillary services provided through DSOs TD4 Improved defence and restoration plan TD5 Methodologies for scaling-up and replicating These functional objectives are grouped into clusters, based on the tasks and responsibilities of grid operators. Battery energy storage systems are obviously not an objective in themselves, but rather a means to reach the stated objectives. For example, these systems can increase network flexibility, or can be an additional option when planning grid extensions. As such the challenges and progress to be made with respect to battery energy storage systems cannot always be assigned to a single or a few of these objectives. POWNL

20 Our classification consists of 4 types of challenges: Challenges and topics with respect to markets can be fitted into T10, T12 and D13. Challenges and topics with respect to public acceptance can be fitted into T14. At the DSO level, it is not entirely clear where this would fit. Challenges and topics with respect to technology can be fitted into T3 and D5. Challenges and topics with respect to regulations can be fitted into a large number of functional objectives, depending on the type of challenge. On the other axis, our classification consists of 4 types of applications: Grid/utility services and ancillary services can be delivered both to TSO s and DSO s and hence fit into the C2 clusters of both TSO s and DSO s. End user applications to residential users fit into D2 and D3. End user applications to industrial and commercial users fit into D4. POWNL

21 5 Basis for Implementation Plan In the previous chapters, the process and structure for creating the roadmap and implementation plans was described. This chapter deals with the actual selection of research topics to be included in the implementation plan. As explained in the Process chapter, this selection is based on two complementary inputs. A first input is the project monitoring delivered D5 Technical Analysis. This project monitoring provides an overview of projects that were finished recently or are still ongoing and the knowledge that will be gathered if these ongoing projects are successful. The objectives of these projects are mapped using the structure that was explained earlier in order to identify areas where additional research and innovation may be needed. Based on workshops with stakeholders and stakeholder interviews (see appendix) a number of gaps and barriers were identified for the large-scale introduction of battery energy storage systems. These challenges are grouped by the type of challenge (as described above). Obviously some of these challenges will be on the boundary of categories. E.g. in regulated markets, the market and regulations categories obviously touch. 5.1 Monitoring of R&D achievement The project monitoring gives an extensive overview of a number of EU- and nationally funded R&I projects with respect to storage and more specifically battery energy storage systems. The projects are categorized by application area and hurdles addressed, and counted. Results are presented in matrices in sections and From the classification into this general structure, a number of conclusions can be drawn EU funded research and innovation projects From the project monitoring of EC funded projects (FP7 and H2020) we obtain the following information, as presented in Figure 10: The majority of the projects (69%) is focused on grid system and generation and ancillary services. Only a limited amount of effort (20% an 11% respectively) deals with services to domestic, commercial or industrial end users and hardly any of these focus on a combination of services. The majority of the projects is focused either on technical (33%) or market-related (35%) challenges. Very little projects (9%) deal with public acceptance and virtually none with public acceptance when delivering industrial end-user services. A more detailed analysis can be found in the Report Technical analysis (D5). POWNL

22 Figure 10: Categorization and count of EU funded BESS projects by application area and hurdles addressed. Application areas (top to bottom) include generation and ancillary services; grid system application; residential end-use; industrial end-use. Hurdles (left to right) include technical barriers; market-related barriers; regulatory barriers and public acceptance. Of course this doesn t mean that equal effort should be spent on each of the areas of the matrix. It is understandable that with the introduction of a new technology like stationary batteries, significant effort needs to be spent on technological innovation, whereas the effort spent on e.g. public acceptance can probably be lower and shared with other technologies. Nevertheless these figures provide guidance when combined with the challenges identified via stakeholder interviews and workshops. In case both inputs are compatible (i.e. a gap or barrier is identified and limited effort has been spent on it), then it is probably a good idea to promote further R&I in this area. In case a gap or barrier is identified in an area where significant effort has been spent already, this warrants further investigation to understand whether this specific topic has been covered already or whether it is the subject of an ongoing or future project. Detailed analysis of (expected) project results is needed in this case, which is part of the technical project monitoring within the BATSTORM project and which will be considered for the final implementation plan and the initial and draft implementation plans Recent EU-funded R&I project calls Besides the project monitoring, we also looked at the Horizon 2020 work programme part 10 Secure, Clean and Efficient Energy. Within this work programme the call Competitive low carbon energy and more specifically the specific topics under the heading Towards an integrated EU energy system (LCE01-LC05) are relevant in the context of BESS R&I. Although at this stage no information is available on the projects which will receive funding or which will be submitted later this year or next year, some general observations can be made. LCE1 and LCE2 respectively focus on the maturation and demonstration of technologies for the distribution grid, including storage. Within LCE1, funding is foreseen for the development of energy storage systems (including BESS) that provide services to the distribution grid and the consumer at affordable costs, while LCE2 focuses more on the demonstration of these services with already mature storage systems (including BESS). Within these two calls, we can thus expect projects which respectively advance innovative BESS technologies or demonstrate current BESS service delivery. LCE3 is a call which asks support to define the R&I strategy for smart grid and storage, quite similar to the scope of the BATSTORM project. The LCE4 call has a quite similar focus as LCE2 (i.e. demonstration of POWNL

23 technologies), but this time for the transmission system. This call mentions the demonstration of large scale storage (GWh scale), but at this stage it is not clear whether batteries (potentially managed in a distributed way) could play a role at this scale. Finally, LCE5 asks for different tools for the coordination and integration of the European energy system. These tools (e.g. grid and energy system planning tools), should take into account all relevant technologies such as storage (including BESS). In conclusion, it can be expected that BESS related projects have been or will be defined within the LCE1 and LCE2 calls and that BESS-related aspects (coordination and planning) will be part of the projects defined in LCE National-funded projects When we look at the projects with national funding, we see a very similar picture to the EU-funded projects (Figure 11): 76% of all projects are focused on grid or generation and ancillary services. However in the national projects, the focus is more on generation and ancillary services than on grid services. Again the end-user applications account only for 5% and 19% for industrial and residential applications respectively. The vast majority of the projects (58%) is focused on technical issues. 25% of projects addresses market issues. Regulatory (15%) and public acceptance challenges (3%) are focused on to a much smaller extent. Figure 11: Categorization and count of nationally funded BESS projects by application area and hurdles addressed. Application areas (top to bottom) include generation and ancillary services; grid system application; residential enduse; industrial end-use. Hurdles (left to right) include technical barriers; market-related barriers; regulatory barriers and public acceptance. POWNL

24 5.2 Identified gaps and barriers From the Grid+Storage project workshops, the BATSTORM dedicated workshop in Düsseldorf and the interviews performed in the BATSTORM project, the following remaining challenges were identified, grouped per type of challenge Technical challenges TC1 High battery system costs: In comparison to other technologies which can provide similar system services, batteries are currently still too expensive. The reason for this can be seen on different dimensions: Battery chemistry: Research on cheaper materials or usage of less expensive materials (also due to mixing) is necessary. Other components of the battery system (converters, temperature management, ) are a significant factor in the system cost and provide opportunities for cost reduction. Overall efficiency: For some applications (e.g. ancillary services) there is an issue with the overall efficiency. Although the battery technology itself is often highly efficient, the auxiliaries significantly decrease the overall system efficiency. This is an issue in a marketdriven environment where the losses are subject to price-differences on the market. Non-standardized interfaces between batteries and convertors give rise to high customization cost. Also between the power electronics and the energy management system a more standardized interface would be beneficial. Production lines: With re-organization and forming of new production lines the cost of production could decrease (economies of scale). TC2 Battery system lifetime prediction and improvement Actual battery load (cycles) can differ significantly from standard testing cycles depending on the service to be delivered and therefore the specified battery lifetime is not a good estimate for the actual lifetime (can be either longer or shorter), adding to the uncertainty for investment decisions. At a current state creating a homogeneous state of temperature in a battery pack is not possible. This has effects on the life time of a battery. In order to reduce the temperature gradient a sophisticated temperature management is needed. Additionally the research on chemistries that have a high stability over a wide range of temperatures is a challenge. TC3 Little experience with grid integration: Demonstrator projects are needed to bring battery-based energy storage systems up to the maturity level that is expected by the very risk-averse network operators. Especially challenges are still seen within the following topics: Stability: Fast penetration of power electronics could cause stability problems on the electricity grid (e.g. in case of large scale deployment of batteries). Control: Compulsory smart meters are seen as a threat as they are too slow for the control of a storage system. POWNL

25 5.2.2 Market-related challenges MC1 Missing or non-transparent markets For several services that batteries and other storage installation can deliver to the electricity system there are simply no markets (e.g. balancing power). This makes it economically impossible for a third party to offer services. To support the integration of renewable energy in the energy system, the need for more and diversified flexible resources in the energy system (e.g. flexible generation, storage, demand management, ) is recognized. Not all flexible sources (e.g. storage including BESS) have access to the different markets though and clear and fair reward schemes are very often lacking. Markets are complex and not harmonized across the EU. E.g. in some countries there is a market for ancillary services whereas in others there isn t. This makes it very complex for investors to understand the market rules and estimate the feasibility of investments in BESS. The current grid codes sometimes already include a number of mandatory services (e.g. voltage support, ) that consequently are not be remunerated. From the storage provider point of view, this represents a missed opportunity to valorize the storage system. The increased service quality (e.g. fast reaction time) delivered by batteries is often not remunerated. Sometimes battery system performance is even downgraded to conform to the performance delivered by fossil-fueled flexibility sources for certain services. MC2 Complex and outdated market design Investment decisions in batteries for e.g. ancillary services are highly uncertain. There is no guaranteed income since the market circumstances cannot be predicted on the mid- and long term and contracts terms are too short (typically one year). In order for a battery to be profitable, it can be used for several services (e.g. arbitrage, frequency control reserve ). However market regulations and contracts often restrict the use of a battery in multiple markets at the same time e.g. due to requirements with respect to availability. On the one hand the need for flexibility increases with the integration of RES; On the other hand the integration of RES lowers the market spread, thereby reducing the profitability of flexibility including BESS. Current market mechanisms thus don t incentivize investments in flexibility MC3 Outdated decisions on flexibility portfolio There seems to be a common view that in the long term, a diversified portfolio of sources of flexibility would be needed to realize long term targets. A system view at EU level of the flexible portfolio needed in different EU regions in the long run is currently lacking, hampering current R&I decisions. POWNL

26 MC4 Complex, constrained and high-risk investment process While for other technologies (such as solar PV) an automated, often standardized investment process is in place at different banks, such a process is currently missing for battery storage (both for small, residential batteries as well as for large systems). Therefore banks often react reluctant to investment requests. Several banks state that the volume of credit for residential storage systems is too small and therefore banks decided not to focus on an investment process for battery systems. Moreover financing by banks is currently basically impossible, due to lack of certainty in cash flows / business case for battery systems MC5 Grid tariffs In most countries, the fixed cost of the grid is partially paid by taxes on the energy consumption. When consumers produce and consume their own energy (e.g. selfconsumption by means of a PV battery combination), they will use less power from the grid thereby influencing the income of the DSO and TSO. Moreover, in some countries transmission and distribution fees are (partially) energy-based ( /MWh). New consumption patterns like self-consumption cannot be reflected by grid tariffs based on energy off-take only. This doesn t stimulate grid operators to support the introduction of storage. MC6 Long and complex procurement process Non-standardized procurement (technical and performance specification, contract terms with respect to warranty, service ) makes process long and complex Experience on efficient procurement is missing Regulations-related challenges RC1 Lack of definition of battery storage There is no definition of storage in regulations. Storage is treated as either a producer and a consumer, which creates an uncertain investment environment. RC2 Unclear ownership framework Due to the unbundling principle TSOs cannot own or control generation systems. This uncertainty over ownership rights strongly affects the value assessment of energy storage. Additionally operators of batteries or renewable energy plants do not have any responsibility to contribute to the flexibility of the system There is significant debate about the role of the grid operator as owner and operator of storage. Some advocate in favor, when restricted to grid stability services. Other advise against because this would remove these services from the market for independent storage operators. RC3 Double taxation Since some member states impose taxation on both generation and consumption, storage system owners have to pay double grid fees. The situation is different across Europe. If these disparities will not be addressed, a situation where a storage system placed in one state with POWNL

27 favourable rules providing cross-border services in another state with less favourable rules would become reality. RC4 Compensation on curtailment Financial compensation for curtailed energy represents a relevant disincentive for RES producers to install energy storage system RC5 Unclear and non-harmonized standards Domestic energy storage systems need a higher level of safety due to the fact that they are installed in a house. Currently not a lot of safety issues are detected but this may be partially due to the fact that relatively few systems have been installed. Clear and harmonized safety standards should be defined to allow manufacturers to address a European market. Specifications with respect to lifetime are not standardized and it is unclear how to interpret them in the scope of a specific application RC6 Uncertainty about future development of regulations With ongoing changes in the regulation (e.g. definition of grid codes) the EU creates an environment of uncertainty for potential investors. RC7 Long and non-transparent permit procedure The permit procedure for building BESS has a long duration which leads to high costs. Part of the reason is that there is no clear harmonized regulatory framework, with the result that these projects always have to be dealt with individually. RC8 Non-harmonized regulatory framework The regulatory framework is not harmonized in the EU. This leads to additional costs for manufacturers and service providers, having to take into account several different regulations. RC9 Outdated regulatory framework does not reflect system needs The regulatory framework not the energy system benefits currently decides upon the implementation of energy storage technologies. We therefore see the implementation of storage based on the applicable regulatory framework (e.g. home batteries in Germany). A discussion is however ongoing on the correct location and size of battery storage (e.g. home batteries versus grid-coupled batteries). POWNL

28 5.2.4 Public acceptance-related challenges AC1 Safety Public acceptance by local authorities and firefighters can be an issue in some member states due to the lack of standard specifications with respect to firefighting, cooling, ventilation, gases in case of fire, Incidents (especially safety-related incidents) create a negative image for batteries. Batteries are a relatively young technology and safety incidents are keenly reported on. This has to be carefully managed. AC2 Data security Customers are wary about smart meters and about aggregating their storage systems since they have doubts about the data privacy. AC3 Competition with local jobs In some places (e.g. small islands), batteries can be seen as technology that competes with jobs related to the traditional energy supply (e.g. diesel generator). POWNL

29 6 Selected R&I topics for Based on the identified challenges and on the topics that are currently studied in the ongoing R&I projects, a selection is made of a number of topics that could be interesting topics for R&I projects in the coming years ( ). From the identified gaps and barriers it may be clear that a significant number of challenges for the introduction of battery energy storage systems are general and apply to any type of storage. Therefore the selected R&I topics below are composed of both battery energy storage specific components and more general components relevant for any type of storage or even other flexibility means (e.g. demand response). The following R&I topics have been selected: 1. Development of technology for scalable, efficient and cost-effective battery energy storage 2. Lifetime estimation and improvement of battery systems 3. Demonstration of distribution grid-connected storage 4. Demonstration of multi-service battery storage 5. Energy system modelling of flexibility options 6. Efficient markets for flexibility Each of these topics can be linked to one or more of the Horizon LCE call topics which have been discussed above (LCE1, LCE2 and LCE5), but the proposed topics in this implementation plan are made more specific taking into account the R&I needed to advance the battery market. The first topic relates to LCE1 as it focuses on the development of new BESS, while the third and fourth topic relate to LCE2 as these topics both focus on the demonstration of existing BESS to deliver certain services to the distribution grid and the consumer. The fourth topic is a bit broader though as all kind of services are considered (e.g. Grid/utility services, Ancillary services and End user services). The fifth and sixth topic are more general and work towards the efficient integration of VRES by adding flexibility within the energy system. These topics can be linked to LCE5, but the proposed topics have a specific focus of respectively long term energy modelling including all flexibility options and efficient markets for flexibility. LCE5 does mention energy system planning tools, but doesn t stress the need for long term scenarios to really identify the role of different flexible technologies. Moreover, the lce5 topic doesn t really focus on markets for flexibility, although market aspects are mentioned. As we see a link between the mentioned LCE calls and the chosen topics in this IP, it is possible that some projects have been or will be proposed in the context of the LCE call which overlap to some extent with the topics selected in this implementation plan, so this certainly a point of attention for the EC and for the BATSTORM consortium. POWNL

30 6.1 Topic 1: Development of technology for scalable, efficient and costeffective battery energy storage Current stationary battery energy storage systems use technologies that were initially developed for mobile and transportation applications. When the market for stationary battery energy storage systems grows, more dedicated technologies will be developed that better address the needs of this application. These technologies will have an impact on all system levels, from materials, over cells and modules, up to the system level and the integration with the application. Cost obviously is an important aspect, with the battery management system and power electronics becoming a major factor in the total cost as shown in the figure below by GTM Research 11. Another aspect that is particularly important for battery energy storage systems (when compared to e.g. EV batteries) is efficiency, especially in a market-driven environment since all losses have to be made up by market gains. Moreover efficiency figures at cell level are misleading, due to efficiency losses in power electronics and auxiliaries (temperature conditioning ), which can become an important factor for certain applications and technologies. Last but not least we want to strengthen manufacturing capability in line with European strengths and capabilities. Therefore we propose the development of a scalable, efficient and cost-effective battery energy storage system with the following characteristics: High efficiency (>85% round trip system-level efficiency measured over a long time) Potential for low cost (< 300/kWh or < 0.1/kWh/cycle at system level, including converters, in 2020) Scalable from 10kW to 300kW Focus on automated manufacturing processes, design for manufacturing at cell, module and system level Design for recycling Topic Main functional objective (EEGI) Supported functional objectives (EEGI) Challenges addressed Funding scheme Expected impact Proposal duration Development of scalable, efficient and cost-effective battery storage D5 D4, D2 TC1, MC10, RC1, RC5 Collaborative project Improving the economic viability of battery energy storage systems by o Contribution to the decrease of BESS cost o Improvement of BESS efficiency Strengthening the European industrial capability 3-4 years 11 The Next Big Opportunity to Drop Balance-of-System Costs: Battery Storage POWNL

31 Figure 12: Battery system cost components POWNL

32 6.2 Topic 2: Lifetime estimation and improvement of battery systems The main cost for a battery system is the investment costs as operational costs are relatively minor. Therefore the extension of the useful life of a battery system can be an important factor in its overall cost effectiveness. Lifetimes are guaranteed by the battery system manufacturer but due to the limited experience with this type of systems these estimates can either be overestimated, which would be an issue for the manufacturer, or they can be underestimated, which would mean the battery system is undervalued. Therefore more experience with lifetime forecasting is needed. Secondly it is known that temperature is the main factor in the aging of batteries. Current temperature management systems are not able to ensure a consistent temperature over the complete battery system. Moreover most temperature conditioning technologies decrease the efficiency of the battery system, which has to be kept to an absolute minimum. Therefore we propose to develop the following technologies: Efficient temperature management Temperature management with consistent temperatures at system level Standardized lifetime testing procedures, which are easy to interpret by investors Accelerated lifetime testing with extrapolation to actual lifetime estimates in the chosen application. Topic Main functional objective (EEGI) Supported functional objectives (EEGI) Challenges addressed Funding scheme Expected impact Proposal duration Development of scalable, efficient and cost-effective battery storage D5 D4, D2 TC2, MC4, RC5 Collaborative research and innovation project Improving the economic viability of battery energy storage systems by o Improvement of BESS lifetime Strengthening the European industrial capability 4 years POWNL

33 6.3 Topic 3: Demonstration of distribution grid-connected storage With the introduction of more renewable energy in the grid and the advent of truly active consumers, distribution grids will have to become smarter. One of the tools to introduce more smartness in distribution grids would be to introduce district-level grid-connected battery energy storage systems or residential battery energy storage systems that can deliver services to the distribution grid, next to end-user services. The challenges outlined above indicate that a combination of the following topics should be covered: Demonstration of a combination of end-user services and distribution grid services, possibly including EV charging Proposal for a comprehensive procurement and installation procedure and contract including the following topics o Safety standards or procedures to convince local authorities and fire brigades without the need for a full risk assessment o Standard performance testing procedures at system level (cf. car industry) o Appropriate sizing of the storage system o Warranty and service Data security / public acceptance of grid energy storage or residential smart meter including aspects of data security Proposal for a standardized battery energy storage interface to the energy management and the grid Business case and impact study on chosen option, either district-level battery energy storage or residential battery energy storage Topic Main functional objective (EEGI) Supported functional objectives Challenges addressed Funding scheme Expected impact Demonstration of distribution grid-connected storage D5 D4, D2 TC3, MC4, MC6, RC5, RC7, AC1, AC2 Collaborative innovation project with a demonstration component Competitive and reliable multi-service delivery by battery storage within the EU energy system bringing benefits to the energy system; Improved public acceptance of distributed battery energy storage systems Improved RES integration by the introduction of distribution grid services Proposal duration 3-4 years POWNL

34 6.4 Topic 4: Demonstration of multi-service battery storage Batteries can deliver different services to the energy system, depending on their location in the system. Batteries are an expensive technology though and when deployed for a single service they are generally not economically viable except in certain very specific situations. One option to increase the value of batteries would be to use them for multiple services and addressing multiple markets. However due to the current grid codes and market regulations this is not always possible. A thorough analysis of multi-service delivery by battery storage is therefore needed to proof that different services can be delivered by the same BESS in an efficient and reliable way. The following topics should be covered: Detailed analysis of multi-service model for BESS, taking into account the different possible locations of batteries in the energy system as this influences the services which can be delivered and hence the value they can bring to the system, including a survey of market/regulatory barriers for this multi-service model and accompanying recommendation to overcome these. Development and demonstration in real life conditions of multi-service energy management system and market platform, including improved forecasting techniques for RES. Investment decision support tool supporting this multi-service set-up and accompanying standard contracts and procurement procedures. Topic Main functional objective (EEGI) Supported functional objectives Challenges addressed Funding scheme Expected impact Proposal duration Demonstration of multi-service battery storage D5 D4, D2, TD3, T10 MC2, MC4, MC6, RC3, RC9 Collaborative innovation project with a demonstration component The research should contribute to: Competitive and reliable multi-service delivery by battery storage within the EU energy system bringing benefits to the energy system; Improved RES integration, by adding flexibility within the energy system and avoiding grid congestion. 3-4 years POWNL

35 6.5 Topic 5: Energy system modelling of flexibility options Different technologies can provide various services to the energy system at different time scales. The regulatory framework not the energy system benefits currently decides upon the implementation of flexible technologies. Thorough energy system analysis and a long term view on future energy system needs to guide policy makers but also grid operators about the future role of certain technologies in the energy system is currently lacking. Current long term energy system models may not be very well suited to take into account the specific characteristics of RES as they generally lack the time resolution needed to take into account short term system needs and often assume perfect information and foresight, whereas short term modelling may neglect some important aspects of the energy system as a whole. The following topics should be covered: Analysis and modelling of the need for different flexibility options to transform the EU energy system into an efficient low carbon system; This should allow to determine the role of battery storage in the future energy system (2050) taking into account all other flexibility options and the identified long term system needs. Batteries can deliver services at different levels of the grid. The correct size and location of batteries (centralized versus decentralized BESS) in the energy system therefore needs to be determined taking into account the specific services to be provided to the system and the characteristics of the networks. Based on the outcome of the energy system modelling, regulatory changes (where needed), appropriate market design and policy measures should be proposed, taking into account system needs for flexibility to reach long term energy targets and the anticipated role of batteries in the energy system. Topic Main functional objective (EEGI) Supported functional objectives Challenges addressed Funding scheme Expected impact Proposal duration Energy system modelling of flexibility options General D3, D4, D5 MC3, RC1, RC2, RC3, RC8, RC9 Collaborative research and innovation project The research should contribute to: The EU long-term ambition to decarbonize the energy system in a technically and economically feasible matter, by adding flexibility within the energy system, thereby improving the hosting capacity of variable, renewable energy sources; Validated contributions of flexibility options including BESS in the (future) energy system to support the integration of energy from renewable sources into the transmission and distribution grid. Guiding policy makers to take appropriate measures to transform the energy system to an efficient low carbon energy system. 2-3 years POWNL

36 6.6 Topic 6: Efficient markets for flexibility To support the integration of renewable energy in the energy system, the need for more and diversified flexible resources in the energy system (e.g. flexible generation, storage, demand management, ) is recognized. Battery storage can deliver various services within the energy system, for both regulated as nonregulated parties. Other technologies might be able to deliver these same services as well. A level playing field should therefore be created in which all flexibility options, including batteries, get equal opportunity to compete in the different regulated and non-regulated markets and follow the same rules. This way markets will value batteries in competition with other technologies, and will deliver the most economical solution. The following research topics need to be addressed: Identification of market barriers for flexibility options in the different regulated and nonregulated markets. Overview of best practices in EU and non-eu markets and proposals for new markets addressing unmet electricity system needs. Cooperation with Japanese and/or US partners would be encouraged. Proposal of appropriate market mechanisms and design creating a level playing field for the different flexibility options taking into account the evolutions proposed in the current ENTSO- E network codes and in line with the objective to reach a single energy market across EU member states. New revenue model and tariffing schemes for grid operators in case of wider integration of BESS (e.g. review of distribution and transmission charges in the case of a wide roll out of self-consumption schemes). Topic Main functional objective (EEGI) Supported functional objectives Challenges addressed Funding scheme Expected impact Proposal duration Efficient markets for flexibility T12 T10, D13 MC1, MC2, MC3, MC5, RC1, RC3, Collaborative research and innovation project The research should contribute to: Ongoing developments regarding EU market harmonization and integration proposed in the current ENTSO-E network codes; Creating a level playing field for all flexibility options, including BESS, to deliver cost-effective services to the EU energy system. 2-3 years POWNL