Electric Vehicles Are Creating A Fast Lane For Battery Energy Storage Systems

The zero-emissions electrical grid of the future will require a lot more renewable energy production. And once that energy is produced, it will need to go somewhere – or go to waste.

That’s where batteries come in.

In California, the forefront of renewable energy adoption, battery power now makes up 6% of the state’s maximum on-peak electricity capacity, according to Bloomberg. While that figure may seem small, it’s 60 times greater than it was just five years ago – and batteries surpass the production of either wind or nuclear power in the state. This dynamic is poised to repeat elsewhere. For example, Texas already has about 2,300 megawatts of batteries installed in its grid today. And the recent passage of the Inflation Reduction Act is expected to spur the addition of an estimated 2,300 large-scale battery plants to the U.S.’s grid by 2030.

Internationally, the story is much the same. From Latin America to Europe to Southeast Asia and beyond, demand for utility-scale battery projects, which today typically provide four to six hours of electricity at maximum draw, is on the rise. In fact, the market is expected to double this year and again in 2023.

“We’re just on the cusp of what’s going to happen with batteries.” – Tom Cornell, Senior Vice President of Energy Storage Solutions, Mitsubishi Power Americas

This period of intense growth in batteries has been possible due in large part to electric vehicles (EVs). “With every major auto manufacturer in the world supporting lithium batteries, the supply has gone up and the cost has come down,” says Tom Cornell, Senior Vice President of Energy Storage Solutions at Mitsubishi Power Americas and Chairman of Oriden, the renewable development company of Mitsubishi Power.

Of all the global lithium currently being produced, 90% is going into electric vehicles. The other 10% goes to storage applications like those Mitsubishi Power has deployed in California, Texas and New York, and will soon deploy in Chile and Ireland. By 2030, however, some analysts expect that ratio to be more like 50/50. “We’re just on the cusp of what’s going to happen with batteries,” says Cornell.

The growth of a symbiotic relationship

With automotive giants Volkswagen, Ford and BMW forecasting that EVs will make up 50% or more of their global sales by 2030, the need for charging infrastructure is likely to grow quickly. So is the need for grid-scale storage solutions, which can extend the life of EV batteries. Once they can only reach 80% of their maximum charge, they can no longer power cars. But they’re still useful elsewhere: Those used EV batteries can store and dispatch power to the grid for another 10 years, creating a healthy supply of carbon-free power.

Meanwhile, the growing market for grid-scale batteries has spurred improvements in lithium iron phosphate (LFP) technology. Because these batteries do not use nickel or cobalt, metals which are expensive and difficult to source in environmentally friendly ways, manufacturers like Tesla and Ford have expressed interest in them.

The carmakers aren’t done innovating, either. Solid-state battery technology is poised for a growth period, in part funded by investments from Volkswagen, Ford and BMW. Driven by concerns about access to key materials and technologies that have historically been produced predominantly in China, automakers and other players have also been extending the battery supply chain into the U.S., Europe and other regions. These moves further boost supply and drive down the price curve.

“We’ve got to decarbonize our sources of energy. Batteries will undoubtedly be a big part of that equation.”

Batteries will play a key role in the grid of the future

With automakers and grid-scale battery energy storage systems building out a larger combined market, batteries’ economics and performance are likely to continue to improve rapidly. Their widespread adoption could change the way we supply power in fundamental ways, according to Cornell.

In Texas, Mitsubishi Power’s battery energy storage systems can react to drops in voltage in less than a second – within 240 milliseconds, to be precise. That fast frequency response means the batteries can help stabilize the grid if wind generation drops suddenly. On the other side of the ledger, batteries offer a way to take advantage of excess power generated by solar and wind installations that currently goes unused. And because batteries can be installed almost anywhere, independent of a power plant and most infrastructure, they could potentially change the way we transmit power.

For one thing, the more electric vehicles we put on the road, the more pressure we put on the electrical grid to charge them. “Building out an infrastructure for rapid charging,” says Cornell, “will be much more easily handled by deploying battery banks at charging stations than by upgrading the electrical grid to handle that demand.”

The bottom line is we have to decarbonize our sources of energy. “We’re moving rapidly to do that,” Cornell says. “Keeping up that pace of change is going to mean changing the way we deliver power – and batteries will undoubtedly be a big part of that equation.”

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