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Energy storage, a new challenge for renewable energy producers

Victanis Advisory Services GmbH
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Market Review of Renewable Energy in France

In the context of the gradual phasing out of power purchase obligation mechanisms, the issue of renewable energy storage places the sector at the heart of critical long-term economic and strategic challenges.

A renewable energy market at the crossroads

Greening the energy mix: essential in a time of rapid change

Climate change, the scarcity of fossil resources and the acceleration of the phasing-out of nuclear power are all motivations that make renewable energies (RE) a priority in state energy policies.

In response to increasingly stringent regulatory requirements and growing public pressure, change in the energy situation seems to be gathering speed for all those involved in the value chain, whether they are producers or consumers.

Adapting economic models to market rules

At the European level, the "Energy-Climate" bill due to come into force next summer intends, among other objectives:

  • in the long term, to adapt the electricity market to renewable energies by sending better "price signals" to "activate and fully exploit the potential for flexibility that demand can offer" and
  • in the short term, to make markets "closer to real-time" thus facilitating the integration of RE

These guidelines reinforce the movement towards tariff deregulation begun by the gradual replacement of "Fit-inTariffs" (FIT) by the "Power Purchase Agreement" (PPA).

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The integration of renewable energies (RE) into electricity grids: a challenge for all those involved

The challenge of intermittency and the location of resources

These measures, which accompany the development of direct sales of renewable energy to manufacturers under OTC contracts, are increasing the attractiveness of green electricity, the costs of which are falling steadily and should be on a par with those of conventional electricity between 2022 and 2025.

The emergence of aggregators as relays for small renewable energy producers sheds light on the significant challenge facing the sector over the coming decade: that of overcoming the intermittent, unmanageable and remote characteristics of these energy sources.

Optimisation through smart grids

With a projected mix of 69% solar energy, 18% wind energy, 6% bioenergy, 3% hydroelectricity and 2% geothermal energy expected by 2050, the question of their connection to the electricity grid is key.

With this in mind, activities aimed at turning these networks into "Smart Grids" by strengthening regional interconnections, tariff incentives (promotion of self-consumption and off-peak consumption) and the use of smart meters, static compensators and even virtual power plants is multiplying.

RE storage solutions: an essential part of the energy transition

The inevitable rise in RE storage solutions

Essential, too, is the development of storage technologies, given the increased requirements for flexibility, demanded by network managers (to smooth out RE injections according to need), and mobility required by new uses (e.g. electric vehicles).

Currently, 98% is provided by hydroelectric dams. However, these do not fully meet the requirement for correlation between production and consumption that the market expects.

The storage of renewable energies thus presents a substantial challenge within a vast field of research ranging from solar to wind, hydro, geothermal and biomass:

  • mechanical storage such as hydroelectric dams, compressed air energy storage (CAES), pumped hydroelectric energy storage (PHES) and flywheel energy storage systems (FESS) are among them;
  • thermal storage or "thermal energy storage systems" such as thermodynamic solar power plants or concentrated solar power (CSP);
  • electromagnetic storage; and
  • electrochemical storage including hydrogen-based systems through:
    • fuel cells which allow electricity to be fed into the grid;
    • methanation which allows either feeding into the gas network or use by a conventional gas power plant producing electricity; and
    • direct use through a specific gas power plant producing electricity from water electrolysis.

Mobile or stationary: the strategic challenge of "green" batteries

More mature than other technologies over periods of a few hours, and appreciated for their flexibility and responsiveness, batteries represent the main focus of research and investment in renewable energy storage.

Lithium-Ion technology has thus become widely established in recent years due to its capacity for miniaturisation, popular in the portable electronics market, as well as its high efficiency and robustness, which allow, for example, the use of energy produced by a wind turbine once the wind has dropped, or by a photovoltaic panel the night after it was generated.

With its ability to withstand several thousand low-level charging and discharging cycles, it can also be used in two ways: in an electric vehicle at the beginning of its life and in a domestic or wholesale electricity storage system in the second phase of its life.

Although it is continually improving, this solution is still not well suited to long-term storage, for which other solutions such as Sodium Sulfur or Redox-Flow (flow batteries) are in full development.

Batteries, considered by the European Commission as a strategic value chain, are the subject of a dedicated action plan (the European Battery Alliance - EBA) as part of the Energy Union.

In this respect, the European Union (EU), whose market could represent up to €250 billion per annum from 2025, thus aims to "boost investment and innovation as part of a strengthened industrial policy strategy aimed at building an integrated, sustainable and globally competitive industrial base".


A multiplicity of approaches and issues requiring considerable expertise

With only a 3% market share in global battery cell manufacturing and the ambition to provide "secure, sustainable, competitive and affordable energy", today, the EU is the most attractive market in terms of investment in renewable energy across their entire value chain.

In particular, in terms of storage, the paths they are following are promising, both in terms of hydrogen-based "Power to gas" technologies and batteries. For more information, please do not hesitate to consult our article on electric mobility and the benefits of electric cars.

Each type of renewable energy storage (RES) has its own strengths and limitations which must be assessed according to the project. working alongside you, Victanis' teams are the ideal partners to undertake such analyses to take advantage of a burgeoning market safely and successfully.

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