In May 2016, Total announced a $1.1 billion purchase of battery maker, Saft. This is the largest investment into energy storage by an oil and gas company to date. Total is not alone in investing in energy storage technology to help support efforts to provide more renewable energy. Several other oil and gas companies have also made similar investments. For example, in March 2016, Statoil announced that it will be investing in an energy storage project, Batwind to support its offshore wind farm, Hywind Scotland, which will include a 1MWh lithium ion battery.
Similarly, Shell Technology Ventures invested in Aquion, a manufacturer of salt water batteries. Aquion systems can store energy from solar panels for use when the sun isn’t shining. Aquion claims that combining batteries with solar panels can help homes reduce the amount of energy purchased from the grid by 36% to 100%. Finally, ConocoPhillips in April 2010 had invested in a pilot compressed air energy storage facility with General Compression. The facility was located in Gaines, Texas and had 2 MW of storage capacity on an on-site win turbine. However, the plant is not believed to be currently operating.
Several energy storage options are being developed. Energy storage can be grouped into five different technologies. First, batteries cover a range of types including solid state and flow batteries. These are able to directly store electricity for later use. Second, compressed air energy storage, which is particularly useful for storing large amounts of energy. This method compresses and stores air in underground caverns. When energy is needed, some of the compressed air is released to turn a turbine and produce electricity.
Third, flywheels store kinetic energy in the form of a spinning wheel. The flywheel is initially spun by a small electric motor when electricity is available or inexpensive. When power is needed, some of the kinetic energy that is stored in the spinning flywheel is used to produce electricity. Fourth, molten salt energy storage uses large mirrors to direct the sun’s light and heat towards a column of salt. The salt is heated and the heat can be released to boil water and turn a turbine when energy is needed, such as when the sun is not shining and photovoltaic solar panels are not generating electricity. Lastly, pumped hydro storage simply pumps water from a low-lying reservoir to a geographically high reservoir and the water is released through a hydro-electric power station when electricity is needed.
Energy storage technology has three major applications. Not including usage for transportation, energy storage technology has three major applications. First, energy storage for peakshaving allows utilities to store electricity for later use during times of high demand. In 2015, almost all of the 220 MW of energy storage capacity was dedicated to utilities. However, by 2020 only about half of total energy storage will likely be for utilities. Second, energy storage can help office buildings and industrial facilities store power from renewable sources for later use. Third, residential applications can use energy storage for electricity generated by solar panels for later use. All three segments are estimated to have a combined energy storage capacity of 1,700 MW by 2020. Figure 1 shows U.S. energy storage capacity in 2015 and 2020.
Figure 1: U.S. energy storage capacity in 2015 and 2020 (Source: GTM)
Oil companies are investing in energy storage for multiple reasons. First, oil companies recognize both an opportunity and a competitive threat in energy storage. Second, oil companies can gain insight into these emerging technologies that can be improved through their own investments and efforts. Finally, oil players can leverage energy storage to support and co-opt with their own operations.
ADI Analytics has looked extensively at battery and energy storage technologies through multiple technology assessment projects. Our research has covered include costs and economics, competitive positioning, growth rates, and market sizes. To learn more about ADI Analytics’ capabilities, please contact us.
-Tyler Wilson and Uday Turaga
