Up to 20 GW of long-duration storage could be required by 2050 to ensure security of supply, as generation becomes increasingly intermittent. With falling Capex costs and a higher revenue potential, we project a large increase in battery energy storage capacity, driven by 6 and 8 hour systems. This would follow the trend from other markets such as California.
Pumped storage hydro is the main competitor for providing long-duration storage
Exact definitions of ‘long-duration’ energy storage differ. DESNZ defines it as a technology that can discharge at full power for at least 6 hours. Many different technologies are competing to provide long-duration energy storage to the grid. This includes the established technologies of pumped hydro and battery energy storage, as well as newer compressed air and iron-air technologies.
- Battery energy storage (BESS): lithium-ion batteries chemically store energy.
- Pumped storage hydro (PSH): pumps water from a low reservoir to a high reservoir, before releasing it.
- Compressed air storage (CAES): compresses air into geological reservoirs, spinning a generator when released.
- Liquid air storage (LAES): compresses air into a liquid stored in tanks, spinning a generator when decompressed. Highview Power is developing the technology.
- Iron-air storage: ‘rusting’ iron chemically stores energy. Form Energy is developing the technology.
- Vanadium flow battery storage: Energy is stored chemically by reducing and oxidizing vanadium. Invinity is developing the technology.
Other than BESS, pumped storage hydro is currently the only commercially proven technology at scale. In this article, we compare BESS to pumped storage. However, many of these same factors will apply to other technologies.
No new pumped storage plants have come online for almost 40 years
Pumped storage is an established long-duration energy storage technology, with the first plant coming online in Britain in 1963. There are currently 4 plants operational in Britain - with a combined capacity of 2.8 GW and an average duration of 17 hours.
Early projects were developed alongside the first nuclear plants, designed to capture their cheap baseload power when demand was low. Despite their long duration, current price shapes mean that they still mostly follow a 1 cycle per day trading strategy, charging over 2-6 hours overnight and discharging during the evening peak.
Glyn Rhonwy, the first new plant in 40 years, is due to come online next year. We expect a 70% increase in pumped storage capacity by 2050, with an average duration above 10 hours.
Other storage technologies are expected to contribute up to 10 GW of power capacity by 2050, but with new capacity only coming after 2030.
BESS is currently more expensive than pumped storage above 6 hours
Much of the Capex for a pumped storage plant comes from the infrastructure that determines the system’s power, such as the turbines and piping. However, the duration of the system is determined by the volume of water in the upper reservoir.
The natural geography of the site mostly determines this, meaning that projects with a longer-duration don’t cost much more - although suitable sites are limited. A 20-hour plant only costs 30% more than a 2-hour plant. Other technologies aim to achieve similar scaling, with additional energy capacity increasing costs by a small amount.