The next trillion dollar clean energy business

The global renewable energy sector is growing at a breakneck pace as world leaders invest record sums in expanding clean energy technologies and infrastructure. International Energy Agency (IEA) project that worldwide energy investment will exceed $3 trillion for the first time in 2024. A significant portion of this money is going to solar PV, for which investment has eclipsed all other generation technologies combined.

While this explosive growth in renewable energy production capacity is great news for the climate, it could pose short-term problems for global energy security if mismanaged. Solar and wind power are variable, meaning their output levels fluctuate with the weather, time of day and seasons. Inconsistency of production sites a significant pressure on power grids designed for a steady and easily manipulated supply of fossil fuels and created new problems with energy markets.

In some places, when renewable energy production exceeds demand, energy prices have even dropped below zero. “This lowers the potential for spot market earnings for producers and highlights the need for complementary investments in flexibility and storage capacity,” the AIE reports.

More simply, energy storage is used to capture and store excess energy when supply exceeds demand, and to feed that energy back into the grid when demand exceeds supply. This stabilizes inputs and outputs to the network, also dampening market volatility through a process known as arbitrationamong other key energy security services. In other words, energy storage is the backbone of the renewable revolution.

Indeed, energy storage heats up to “the next trillion dollar clean energy business” according to a recent Economist report. Markets for energy storage are growing rapidly in United States, Europeand China. Emerging markets have lagged far behind in energy storage investment, but globally energy storage will be a massive and very profitable industry.

Law firm Morgan Lewis describes the storage sector as “the technology that will cash the checks written by the renewable energy industry” and went on to describe that “the global energy storage market will continue to grow rapidly, at around 387 gigawatts (GW). ) of the new energy storage capacity expected to be added by 2030 – a 15-fold increase in global energy storage capacity compared to the end of 2021.”

It is estimated that in order to achieve zero emission targets, the installed capacity worldwide of battery storage it will need to grow to more than a terawatt (TW) by 2030 and nearly 5TW by 2050. For context, last year capacity totaled less than 200 gigawatts (GW). The writing is on the wall, and investment in battery storage is on the rise, set to top $50 billion in 2024, according to the AIE.

While investment in energy storage is booming, there is still some uncertainty about the best methods of energy storage. The sector is relatively nascent and many promising technologies are in research and development stages. Currently, pumped waterproofing completes more than 90% from the globe’s current high-capacity energy storage, but creating new hydro-pumped facilities is expensive and requires specific topographical conditions.

Lithium-ion battery storage is growing rapidly and is currently preferred as a much less expensive and more flexible option. However, lithium-ion batteries are only capable of short-term energy storage, measured in hours, while true energy security will require the ability to store renewable energy for weeks and months at a time. However, lithium-ion battery technology is improving and they are now extremely cheap on the market remains oversaturated even with the storage demand boom.

As investment in energy storage increases, technologies will continue to improve, and as technologies continue to improve, investment and employment will in turn increase, creating a positive feedback loop for what will surely be a fast growing sector for a long time.

By Haley Zaremba for Oilprice.com

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