Power From The Sun And Reliable Storage Could Spark A Revolution In The Energy Industry

Solar energy may still contribute to the grid even when the sun isn't out, thanks to storage. Also, it can assist even out the peaks and valleys in the flow of solar power into the system. The amount of sunlight reaching photovoltaic (PV) panels and concentrating solar thermal power (CSP) systems varies throughout the year. Seasons, hours of daylight, clouds, dust, haze, and impediments like shadows, rain, snow, and dirt can all have an impact on the amount of energy harvested from the sun. Energy storage can assist integrate solar into the energy landscape in two different configurations: when it is positioned adjacent to a solar energy system (co-location) or when it is located elsewhere (stand-alone).

To lessen their reliance on fossil fuels, boost energy security, and reduce greenhouse gas emissions, governments in the Middle East and North Africa (MENA) have committed to meeting aggressive renewable energy targets. By the year 2030, many Middle Eastern and North African countries hope to have generated between 15 and 50 percent of their electricity from renewable sources. As the price of technology decreases and more attention is paid to green legislation, the climate becomes more conducive to the use of renewable energy sources like solar and wind. However, compared to the global total of 2,799 GW as of 2020, the MENA area has only installed a capacity of roughly 10.6 GW of renewable energy.

Increased integration of variable renewable energy (VRE) systems into power grids will necessitate the use of energy storage systems (ESS). By providing capacity firming and other ancillary services like frequency and voltage management, ESS will improve the adaptability and reliability of power grids.

Further, ESS can play a pivotal role in peak shaving, the process of reducing the impact of energy consumption peaks, and the stacking of a wide variety of ancillary services. Depending on the demands and requirements of the power system and grid, ESS can deliver dozens of services that can be stacked to enhance value. Pay for these services varies widely in response to fluctuating demand. In addition to storage capacity payment, the stacking of services also permits revenue stacking, giving a positive economic case for ESS. Expanding power generation capacity has been a primary priority in power system design for the past few decades. Because of this, the MENA region is in a constant state of competition to increase its power generation, which is now growing at an average annual rate of 7% and relies primarily on thermal energy. Subsidies, population growth, and the ever-increasing requirement for cooling and water all contribute to the ever-increasing demand. It is crucial for MENA countries to slow the rate and pace of adding power generation capacity, and the current trend in power system design is toward reduced peak load.

Thirty energy storage projects are now in development in the region with a target implementation date of 2025. Currently operational ESS include pumped hydro-storage (PHS), which accounts for 55% of the region's ESS installed capacity compared to 90% globally, and batteries, especially sodium-sulfur and lithium-ion batteries, which are projected to increase from 7% to 45% of MENA's ESS by 2025.

Motivations for implementing ESS are context-specific. Most of the countries in the Gulf, including Jordan, Egypt, and Morocco, are driven to increase their use of renewable energy by setting lofty goals. This is especially true with renewable energy-plus-storage auctions or co-location of wind and solar plus storage, both of which are examples of utility-scale front-of-meter (FTM) applications, or grid-scale energy storage connected to the generation sources or the transmission and distribution networks (T&D). Currently, 89% of the region's ESS installed capacity is used for FTM applications. However, substantial power supply deficits give another motivation for ESS in nations like Iraq and Lebanon that experience periodic power blackouts. This is especially true of applications that store electricity on-site, behind the consumer's metre, known as "behind-the-meter" (BTM), which help mitigate the societal and financial costs of power outages.

“In spite of these motivators, ESS deployment in MENA is only at roughly 1.46 GW, compared to a global capacity of 10 GW, or slightly under 15% of the total, which is similar to the battery storage in the U.K. Now, in order to speed up the deployment of ESS and VRE throughout the region, governments, electricity utilities, and finance institutions will need to overcome a number of legislative, financial, and market impediments,” stated Suhail Shatila, Senior Energy Specialist, APICORP.

Combining Solar Energy with Storage has Many Benefits

In order to prevent over-generation and grid reliability difficulties, grid operators may "curtail" certain generation in order to balance electrical loads if storage is not available. On the other hand, there may be instances when there is low solar production but high demand for electricity, such as after sunset or on foggy days. The solution is to use a battery or other kind of storage that can be charged when power generation is high but consumption is low and then released when demand is high. By storing some of the sun's energy, grid operators will have access to that power anytime it is needed, even when the sun has set. Storage can be thought of as a hedge against cloudy days.

Short-term storage can "firm" solar generation, meaning that it will not significantly alter the output of a solar power plant if the amount of solar energy generated is fluctuated often. A tiny battery, for instance, can be utilised to endure a temporary interruption in generation caused by a passing cloud, allowing the grid to continue providing a "solid" and consistent electrical supply.

Backup power during blackouts is possible using solar and storage systems. They are able to maintain vital infrastructure to guarantee the continuity of lifeline services like communication. Microgrids and other distributed energy resources, such as mobile or portable power units, can also benefit from solar energy and energy storage.

Challenges that are spoiling the game

The development of energy storage is hampered by other laws, such as the net-metering technique favoured by flat rates. Under this plan, customers can reduce their utility bills by feeding any excess power they generate back into the system. An incentive to construct small-scale renewable energy, but not BTM energy storage, is provided by a flat-tariff scheme, with the exception of countries with significant blackouts. To promote distributed renewable energy installations that use BTM, a revision of the net-metering scheme is necessary, especially as the share of renewables rises.

Low levels of investment, prohibitively expensive finance, and the need for large subsidies all work together to make it difficult to secure funding for ESS projects. A regulatory scheme that includes ESS as part of T&D will need to provide substantial funding for the grid network. Almost a third of the $805 billion allocated to MENA energy sector projects from 2021-25 goes toward the power sector, making it the sector with the highest level of investment. The transmission and distribution (T&D) networks only receive between 8 and 12% of these funds, with the rest going toward the generation value chain. Since ESS is still a developing and evolving technology, it typically requires more equity funding than traditional power projects. Utility-scale projects become more expensive as a result, necessitating direct government cooperation through state-owned corporations. High risks in these countries increase the cost of financing and limit the ability to borrow money, despite the evident need for ESS and reduced reliance on diesel generators in countries with substantial scarcity. Financial flexibility is crucial for energy storage projects and should be provided by both the private and governmental sectors as well as multilateral development institutions.

Energy subsidies, on the other hand, have weighed down state coffers and slowed the spread of low-carbon technologies in the MENA area, where they total more than $40 billion annually. Due to non-cost-reflective electricity pricing, utilities and, by extension, governments, must foot the bill for energy storage. Governments should therefore encourage public-private partnerships and financial incentives for ESS initiatives.

Investments can be encouraged with the use of policy and market mechanisms like tax credits, accelerated depreciation, direct equity ownership, and carbon credits. Despite the difficulty that MENA governments have had in reorganising the electricity price, it is essential for utility financial performance and the economic feasibility of ESS to implement a more cost-reflective tariff where pricing fluctuates dependent on time of usage.

“When it comes to the marketplace, ESS implementation faces obstacles such as power market design and renewable energy auctions. Electricity utilities in the Middle East and North Africa are mostly state-owned monopolies that are vertically integrated and adhere to the single buyer model (SBM). Since a revenue stacking business model is essential to the economic viability and attractiveness of any ESS project, the SBM reduces the potential for energy storage investments. The ESS business model can be improved by unbundling parts of the power value chain so that several producers can serve multiple off-takers with their solutions,” stated Jessica Obeid, independent energy policy consultant and a non-resident scholar with MEI’s Lebanon and Economics and Energy programs.

Auctions for renewable energy have helped to increase private sector participation in the region of the Middle East and North Africa. These have encouraged investment and created competitive pricing, but they have favoured the most affordable options among those that are technically acceptable. However, the final bid price cannot be the only award criterion for energy storage systems because they also deliver value through layered services beyond storage. For ESS to be implemented, auction design, assessment, and reward criteria must be revised to account for the unique characteristics of each ESS goal. In addition, off-takers (i.e. governments) are sometimes bound by expensive take-or-pay terms in long-term power purchase agreements as a result of these auctions. It's usual for intermittent VREs to cause governments to continue paying for power even during periods of supply reduction. In order to move forward with ESS deployment, auctions of renewables-plus-storage assets are needed to provide off-takers with the ability to purchase dispatchable electricity.