Concept of Storage-as-Transmission

1. Traditional Approach: Historically, energy storage (like battery systems) has been primarily used alongside renewable energy sources (e.g., solar farms) to store excess energy generated during peak production times.

2. Innovative Approach: The new strategy involves placing energy storage systems at two key locations:

   • Next to Renewable Energy Projects: Similar to traditional methods, one battery system is installed alongside renewable energy sources.
   • Along the Transmission Corridor: Crucially, an additional battery system is installed at strategic points in the grid, particularly near areas of high energy demand, like urban centers.

3. Benefits: This dual-placement approach enhances grid storage capacity significantly (in the range of hundreds of megawatt-hours). It aids in better utilization of the transmission system, reduces the need for additional infrastructure, and lowers operating costs.

Example: The Netzbooster (Grid Booster) Project

• Location: Kupferzell, a major grid hub in Germany's industrial region.
• Capacity: 250 MW battery-based energy storage.
• Objective: To utilize existing transmission and distribution systems more efficiently and reduce the need for traditional grid expansion.
• Completion: Scheduled for 2025.

Market Trends and Impacts

1. Avoiding Transmission Costs: Placing storage at two interconnection points can circumvent expensive transmission costs, particularly in regions like California with high renewable resources and dense populations.

2. Monetization and Incentives:

   • Investment Tax Credits: Under the U.S. Inflation Reduction Act, energy storage projects can benefit from standalone investment tax credits.
   • Additional Revenue Streams: Beyond power purchase agreements, energy storage can generate revenue through other mechanisms like rate-basing.

3. Global Comparison: The U.S., outside of states like California, is seen as lagging in energy storage development compared to countries like Germany, Chile, and Lithuania. The latter countries have been more active, partly due to factors like high energy prices and the impact of events like the Russia-Ukraine War.

4. Diverse Use Cases: Energy storage can be used for multiple purposes, such as merchant power, energy arbitrage, and providing contingency support during events like California’s wildfire season.

5. New Markets in the U.S.: Regions like the Southeast are emerging markets for energy storage, where integration with utility solar projects and high population areas presents new opportunities.

6. Growth Forecasts:

   • BloombergNEF and Wood Mackenzie Forecasts: Predict significant growth in energy storage capacity by 2026 (55 GW and 65 GW, respectively).
   • California's Deployment Rate: CAISO (California Independent System Operator) expects to deploy 2 GW of energy storage assets per year, matching the historic rate of solar installations.

Conclusion

This approach, exemplified by projects like Netzbooster, represents a significant shift in how energy storage is integrated into the grid. It demonstrates a more sophisticated use of battery systems to enhance grid efficiency, manage energy distribution more effectively, and support the growing adoption of renewable energy sources.