Yernar Bilyalov, Director of Central Asian Renewable Energy Resources LLP

Despite the fact that the physical principles used in ESS have been known for a very long time, and the "lithium" technological revolution in low-power batteries and capacities for wearable technologies started more than a quarter of a century ago, ESS with relatively large capacities (more than 10 kW) and output (more than 10 kWh) became widespread and began to massively change the energy industry less than five years ago. According to RUSNANO, the installed capacity of stationary ESS (excluding HAPP) reached 5 GWt2 worldwide by mid-2017.

According to Navigant Research, by 2025, market for energy storage systems used in grid and system services will exceed $18 billion, and market for storage devices installed in commercial and industrial facilities will exceed $10.8 billion.

By 2017, storage device market for all applications has already reached $2.6 billion and by 2025 will total $82 billion per year with an annual growth rate of up to 60%, of which up to $50 billion per year will be accounted for by stationary ESS connected to power systems.

The energy storage market is one of the most promising high-tech markets in the world, demonstrating exponential growth rates. McKinsey Global Institute has included this type of technology to the list of twelve most important technologies for development of the world economy. According to the forecast of Bloomberg New Energy Finance, for the period 2016-2030, the volume of investments in energy storage systems will exceed $100 billion.

McKinsey reports that the constant drop in battery prices will allow for a rapid increase in capacity of renewable energy sources. According to the McKinsey Global Energy Perspective 2021 report, as many world leaders pursue policies to support decarbonization and lower technology costs, renewable energy will account for about 55% of the world's energy by 2035.

According to analysts of well-known consulting company, demand for oil and gas worldwide may recover when the COVID-19 pandemic finally ends, but will likely never return to the pre-pandemic level of growth, while renewable energy sources combined with batteries are becoming increasingly cost-competitive compared to fossil fuels. McKinsey also predicts that the share of energy consumption accounted for by electricity will grow significantly from 19% today to 30% by 2050, with renewable energy sources dominating from 2030.

In addition, the rapid growth of renewable energy sources, which will account for 55% of the world's electricity generation by 2035, will be achieved through constant fall in battery prices. McKinsey's extensive work in the field of batteries based on a multidimensional analysis of technological innovation, value chain integration, electrification across all sectors, and new financial solutions that reduce the cost of capital, demonstrates the reduction in costs by up to 90%.

Which countries are leading the way in implementing energy storage systems today?

Over the past 20 years, global installations for deploying electrochemical energy storage systems have grown exponentially. In mid-2017, 78% of total storage system deployments accounted for the United States with a capacity of 680 MW, the Republic of Korea (432 MW), Japan (255 MW) and Germany (132 MW).

In the next three to five years, the energy storage industry in these leading countries will be able to boost, which can be compared to the rapid growth models that are evident in solar and wind technologies.

According to Wood Mackenzie's new forecast, global energy storage capacity will grow at compound annual growth rate (CAGR) of 31% by 2030. By the end of the decade, the United States will account for half of the world's installed energy storage capacity. By 2030, the total market capacity will grow to 741 GWh.

China, which ranks second after the United States, is also expected to see exponential growth in total storage capacity. WoodMac expects China to account for 21% of global capacity by 2030.

On the other hand, growth in Europe is expected to be slower than that of its global counterparts.

The UK and Germany will continue to dominate the storage market until 2025. Frequency response auctions remain a key source of revenue. France and Italy are also becoming more active markets, opening up markets for capacity and additional services. Spain and the rest of continental Europe are expected to follow it with potential help from the European Commission and its green recovery plan.

In the next three to five years, the energy storage industry in these leading countries will be able to boost, which can be compared to the rapid growth models that are evident in solar and wind technologies.

It is noteworthy that according to 2017 IRENA report, with reference to the US Department of Energy, Kazakhstan already has a small experience in implementing a RES project based on flow battery technologies.

According to the IRENA Electricity storage and renewables: costs and markets to 2030 report, an additional 1.2 GW of Battery ESS projects (i.e. announced, concluded, or under construction capacities according to the "Global Energy Storage Database") are expected to be added over the next few years. Half of this ESS capacity is built in the US (51.2%). Other major countries on the list include Australia (10.8%), Germany (10.1%) and India (9.1%).

How does it this happen in the EU countries?

In the European Union, the main prerequisites for use of electricity storage systems are decarbonization and decentralization of its generation. Prerequisite: increase in generation of "green" electricity and participation of households in this process.

In order to promote further decarbonisation, Directive (EC) 2018/2001 on promotion of use of energy from renewable sources dated 21 December 2018 provides for achievement of 32% of RES in EU countries by 2030. Accordingly, the use of "green" energy in the European Union will continue to grow. In addition, demand for residual capacities, in particular for energy storage, will increase.

To simplify their application, the EU adopted the Directive on General Rules for Internal Electricity Market 2019/944 in June 2019. The document is part of EU's "Clean Energy forAll Europeans" legislative package. It provides for measures for transition to clean energy, as well as increasing the flexibility of energy system and participation of consumers in the energy markets.

Directive on General Rules for Internal Electricity Market 2019/944 defines an "energy storage system" as: the deferred final consumption of electricity at a later time than when it was generated, or conversion of electrical energy into a form of energy that can be stored, storage of such energy and its further conversion into electrical energy, or use as another energy carrier.

Directive provides for a broad definition of "energy storage systems", covering both conversions to electrical energy and conversions to other energy carriers. This is a broader definition than that offered in other EU countries, where the definition only involves a reconversion to electricity.

Electricity storage systems in the EU countries are used for following purposes:

·                using without limiting borders in order to promote competition and supply electricity at the best price;

·                stimulating the purchase of electricity from storage systems by providing a regulatory framework and providing incentives for purchase of electricity storage services;

·                non-discriminatory participation in purchase of auxiliary services of electricity storage systems.

In addition, according to Directive on General Rules for the Internal Electricity Market 2019/944, system operators shall not own, develop, manage or operate electricity storage systems. In the new electricity market, energy storage services must be market-based 

·                using without limiting borders in order to promote competition and supply electricity at the best price;

·                stimulating the purchase of electricity from storage systems by providing a regulatory framework and providing incentives for purchase of electricity storage services;

·                non-discriminatory participation in purchase of auxiliary services of electricity storage systems.

In addition, according to Directive on General Rules for the Internal Electricity Market 2019/944, system operators shall not own, develop, manage or operate electricity storage systems. In the new electricity market, energy storage services must be market-based and competitive. Therefore, cross-subsidization between electricity storage services and regulated distribution or transmission functions should be avoided.

Development of storage systems in Russia

In 2017, Russia's starting position in formation of ESS market has improved due to the launch of targeted work in this direction. Working group under the Ministry of Energy adopted a Concept for development of energy storage systems market in Russia, formed the projects of road maps "Development of energy storage systems market in Russian Federation" and "Improvement of legislation and elimination of administrative barriers" for NTI "Energynet", which contains initiatives to regulate the use of ESS.

An important achievement was approval of Action Plan ("road map") on April 28, 2018 to improve legislation and eliminate administrative barriers in order to ensure the implementation of NTI in direction "Energynet". In particular, the document contains measures to remove barriers in the use of energy storage devices.

Within the framework of Russian Investment Forum 2018, Rosseti PJSC presented a draft Strategy for development of digital power grid complex of Russia until 2030, one of the priorities of which is to ensure the readiness of the grid infrastructure for development of practice of using ESS, RES, and distributed generation.

Establishing NTI Competence Center for New and Portable Energy Sources at the premises of Institute of Problems of Chemical Physics of the Russian Academy of Sciences and Skoltech has begun. Within the framework of newly established Institute of Arctic Technologies of MIPT, applied laboratories for energy storage technologies and hydrogen technologies have been opened. Approved and launched NTI projects important for ESS market in Russia: development and testing of Internet of Energy architecture and creation of kinetic (solid-state) energy storage system (SSSPS) "Energozapas".

Development of storage systems in Ukraine

SPP and WPS are characterized by unstable electricity production, which depends on weather conditions. Therefore, for stable operation of an energy system with a large number of RES, it is important to provide residual capacities.

However, their lack also cannot be a surprise. In accordance with the Law of Ukraine "On Market of Electric Energy" and Rules of Supply Safety, the Ministry of Energy and Environmental Protection was entrusted with the duties of monitoring the safety of supplies:

·                publish a report on results of monitoring the safety of electricity supply every two years until July 31;

·                conduct an annual risk assessment of safety violation for the next year.

However, Ministry of Energy and Environmental Protection still has not yet provided conclusions on the risk assessment.

Due to uncertainty of auctions for producers of electricity from renewable sources and reduction of "green" tariffs from 2020, at the end of 2019, there was a significant increase in the number of RES facilities. According to NEC Ukrenergo, as of January 2020, the installed capacity of renewable energy facilities was 4.97 GW, where: 76.29% - SPP; 20.85% - WPP; 2.87% - biofuel stations.

A significant increase in RES was predictable, given the following: in October 2012, according to the decision of the Council of Ministers of Energy Community D/2012/04/MC-EnC "On implementation of Directive 2009/28 / EC and Amendments to Article 20 of Treaty establishing the Energy Community" Ukraine has committed itself to achieve the RES share of 11 % by 2020; in October 2014, the National Action Plan for Renewable Energy for period up to 2020 was approved, taking into account the target of 11 % share of RES; the law on introduction of auctions and reduction of "green" tariffs from 2020 adopted in April 2019 also encourages investors to complete renewable energy projects by the end of 2019.

On February 13, 2020, the Verkhovna Rada Committee on Energy and Housing and Utility Services considered the draft law "On Amendments to the Law of Ukraine on Electric Energy Market" (on security of energy supply, balancing of energy system and energy storage system)".

This draft law was registered by the People's Deputy Yu. A. Kamelchuk on December 12, 2019 under the number 2582. For electricity market participants, the latter aspect is very important, since the lack of regulation of storage systems does not allow the introduction of these technologies in the market of Ukraine.

Draft Law No. 2582 contains a narrower definition of an Energy storage technologies as a complex connected to a transmission or distribution system for the purpose of selection, accumulation, including by converting (physical, inertial, chemical, hydrogen and other technologies) previously produced electrical energy, its storage and further output.

The main innovations that are specified in the draft law No. 2582 include the following:

·                a new participant of the electric energy market is being introduced - operator of the storage system;

·                competitive procedures for construction of generating capacities are supplemented by electricity storage systems;

·                activities of the storage system operator are subject to licensing for storage systems of more than 5 MW.

An interesting condition for participation of the operator of storage system is provided for the operator of the transmission system. Thus, the latter cannot be an operator of the energy storage system with a few exceptions. In particular, it is possible for transmission system operator to operate an energy storage system with a total capacity of up to 250 MW in cases where such services is not available on the market and solely for the purpose of providing dispatching services (in particular, to ensure operational security, balancing and other measures aimed at meeting the requirements of integrity of the transmission system).

In October 2019, NEC Ukrenergo signed two memoranda for implementation of projects related to storage systems:

·                Memorandum of cooperation with the French transmission system operator RTE on establishment of a 200 MW storage system.

·                Memorandum with the European Bank for Reconstruction and Development on implementation of electricity storage systems project.

These memoranda provide for installation of 240 MW of electricity storage systems by the transmission system operator.

In the course of the research, 15 thousand charge and discharge cycles were carried out. Thus, when charged twice a day, the battery life will be 20 years.

Experience in implementing energy storage projects in Kazakhstan

According to publicly available sources, a pilot project has been implemented at Kapchagai solar power plant with a capacity of 2 MW using the EnergyPod energy storage system in order to stabilize energy generation during weather changes. Capacity of the Energy Pod installation is 20 kW, the output is 50 kWh. This volume is enough to provide electricity to ten standard private houses (100-200 sq.m.) for 5-6 hours.

Regarding the technology of application, provided data specify that the installation is able to fully discharge and charge, that is, it has a 100% depth of discharge. In the course of the research, 15 thousand charge and discharge cycles were carried out. Thus, when charged twice a day, the battery life will be 20 years. The technology itself belongs to the American start-up ’Primus Power’.

The project was implemented by Primus Power LLP and financed by Kazyna Capital Management JSC jointly with the Russian-Kazakh Nanotechnology Foundation (RKNF) for the amount of about $7 million.

In addition, implementation of the first such project in Kazakhstan opens the way for further development of energy storage systems, which should not lag behind the global trends in the industry. While energy storage around the world is still an emerging market, energy analysts note that stakeholders - whether end-users or large equity investors-are interested in continuing to invest in the sector, and it seems they will not be deterred by the effects of the pandemic and the economic recession.

References

1.       Electricity storage systems market in Russia: development potential. Expert and analytical report, Moscow, RUSNANO, 2018;

2.       Energy Storage for the Grid and Ancillary Services // Navigant Research, 2Q 2016;

3.       Annual Revenue for the Commercial and Industrial Energy Storage Industry Is Expected to Reach $10.8 Billion by 2025 // Navigant Research, 2013;

4.       Disruptive technologies: Advances that will transform life, business, and the global economy // McKinsey Global Institute, May 2013;

5.       Global Storage Market to Double Six Times by 2030 // Bloomberg, 2017. November;

6.       Electricity storage and renewables: costs and markets to 2030, IRENA

7.       Decree of the Government of the Russian Federation No. 830-r of April 28, 2018.