A new report published by analysis company Bloomberg New Energy Finance has found that cost effective, grid-scale energy storage could be closer than previously thought.

One of the largest barriers to the mass adoption of solar technology has always been the intermittent generation of electricity that is supplied to the grid, as it peaks during the day when demand is typically low. Solutions to capture the intermittent energy generated by solar have always been too costly to implement in any meaningful scale.

However, Bloomberg’s latest paper explains that an expected drop in lithium-ion battery prices over the coming years will render the technology economically viable for large-scale implementation. The research predicts that substantial penetration of energy storage within the grid system will occur in the next five years.

Bloomberg’s report explains that an unpredicted expansion of electric vehicle manufacturing will drive down the cost of lithium-ion batteries much quicker than previously expected. The paper predicts that battery manufacturing capacity will outstrip supply in the short-term, driving the cost of grid-scale batteries down to ~£380/kWh over the next 36 months, from today’s prices of more than £640/kWh.

By 2020, energy storage could be in widespread use across UK transmission and distribution systems. The analysis also suggests that storage systems could be widely implemented on solar installations, capturing all energy generated by the system. 

However, the report warns that a supportive policy needs to be in place to realise the successful rollout and implementation on large-scale energy storage. Current regulatory rules will hinder the wide-adoption of energy storage because, at present, regulated transmission and distribution utilities are not allowed to use storage to sell services to National Grid, even if there is an overall system benefit in doing so.

Shu Sun, Energy Storage Analyst at Bloomberg New Energy Finance, believes that the ramifications of economically viable energy storage for the UK would be incredibly important. It would allow the country to generate a much higher percentage of electricity from renewable sources, and enable industrial and large commercial users ‐and households with smart meters ‐to avoid having to purchase power when it is at its most expensive.

Sun explained: “The prize may be within sight, but there are obstacles that need to be cleared before the UK can attain it. In the short term, we will see a small number of demonstration projects being built in the UK using funding from schemes such as the Low Carbon Networks fund. For more widespread adoption of storage in the transmission and distribution networks, appropriate mechanisms need to be built into RIIO (revenue equals incentives plus innovation and outputs), the new regulatory model which aims to promote innovation and the use of new technologies within the UK power networks.”