Transition from centralised power to distributed energy by 2018

Big switch: Distributed energy to overtake centralised power by 2018 http://reneweconomy.com.au/big-switch-distributed-energy-to-overtake-centralised-power-by-2018-2018/ By Giles Parkinson on 13 June 2017 [good graphs]

Energy storage has reached a tipping point, so much so that around 320GW of new large scale power plants that might have been planned in the 10 years to 2023 will now no longer be needed.

According to a new report from Deutsche Bank, the growth of distributed energy – locally provided renewables such as rooftop solar and battery storage – will soon outstrip new centralised generation capacity additions across the world.

In fact, it could happen as early as 2018, marking a fundamental shift in the nature of the world’s energy systems, recognising that the old centralised model will be quickly replaced by a system based around localised energy production and storage.

Deutsche Bank estimates that the market for stationary energy storage – used in electricity grids – will rise six fold in the next five years, from 1GW and $4 billion, or 40GW or $25 billion by 2022. Note the big fall in spending per GW as the price of storage plunges.

“This increased penetration of distributed generation should drive the need for intelligent distribution networks comprised of nanogrids, microgrids and virtual power plants (VPPs),” the Deutsche analysts write.

To put the 320GW into context, it is more than six times the installed capacity in Australia’s electricity grid, and about 14 times the size of its coal fleet. It represents the once-anticipated new build of coal fired power stations in India, that many say will no longer happen.

The shift in emphasis from centralised to distributed energy has long been predicted, although it is given scant attention in the latest Finkel Review. Some analysis, such as that by the CSIRO, predict that half of all generation will come from consumers by 2050.

Deutsche Bank says the global shift is likely to be accelerated by moves to reduce the scope of solar feed in tariffs, encouraging yet more consumers to add battery storage.

“Regulatory environment will likely be a critical driver of storage adoption rates and contrary to consensus views, detrimental solar policies could potentially act as a significant growth catalyst for storage sector.” (Meaning low feed in tariffs will encourage more people into storage).

It notes that in several European countries, the difference in the price of feed-in-tariffs and price paid for electricity from the price of power consumed from the grid is significantly wide. It didn’t mention Australia, but that is also significant difference.

This shift is being accompanied by big cost reductions in battery storage, particularly in the cost of lithium ion cells.

It lithium-ion cell costs have already plunged from $US900/kWh in 2010 to $US225/kWh in 2015 – a similar trajectory to solar, and are tipped to fall to $US150/kWh by 2020. Tesla/Panasonic li-ion costs are already below $US200/kWh for cells and around $US225/kWh for the entire battery pack.

In says that in California, for example, combining a solar-panel system with a commercial-scale battery installation (500kWh) can deliver a 20 per cent return on investment with state subsidies, and still 12 per cent without subsidies, from peak shifting alone.

June 14, 2017 - Posted by Christina Macpherson | 2 WORLD, decentralised

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