Utility-Scale Battery Storage: An Essential Part of Solar Energy Supply
By Charles Schaffer
Since we first wrote about the utility-scale solar land investment opportunity, there has been a surge in battery storage capacity for the solar projects that eventually occur on that land.
As we reported in 2022, California's statewide electricity demand peaked at almost 49 gigawatts on Labor Day of that year.
To avoid rotating power outages, the California Independent System Operator (CAISO) conducted an extensive campaign in which California residents were asked to minimize their electricity consumption for several consecutive days from 4 PM to 9 PM—the peak usage hours.
Since then, utility-scale solar capacity and battery storage capacity for energy storage have increased. According to Bloomberg, from 2020 to 2024, California added 6.6 gigawatts of battery storage.
More green energy supply and storage is essential for grid reliability and complementing the state’s growing renewable energy resources.
Overall Solar Energy Growth
The growth in solar energy capacity has been expanding rapidly and will continue to do so.
In June 2024, The Economist reported:
In 2004, it took the world the entire year to install a gigawatt of solar power capacity
In 2010, it took the world one month to install a gigawatt of solar power capacity
in 2016, it took the world one week to install a gigawatt of solar power capacity
In 2023, there were single days that saw a gigawatt of solar installation
The article went on to say:
"According to the International Solar Energy Society, solar power is on track to generate more electricity than all the world’s nuclear power plants in 2026; than its wind turbines in 2027; its dams in 2028; its gas-fired power plants in 2030; its coal-fired ones in 2032."
The Supply and Demand Gap
Generally, solar panels are at peak efficiency between 10 AM and 2 PM. However, peak electricity usage (mainly consumer demand) is between 4 PM and 9 PM.
Battery storage is the best way to buffer that gap. Batteries capture energy generated during non-peak usage and distribute it as solar resources go offline.
Battery storage is a subset of energy storage systems (ESSs). The U.S. Energy Information Administration (EIA) considers batteries and other energy storage systems (ESSs) to be secondary generation sources.
The most prominent form of ESS is pumped-storage hydro, such as California's Helms Pumped Storage Plant. During non-peak usage times, water is pumped up to a higher-elevation reservoir. During peak demand, water flows down to a lower reservoir through turbines.
The EIA states, "An increasing number of battery ESSs are paired or co-located with a renewable energy facility [such as solar], which in some cases may be used directly as a charging source."
Utility-scale battery storage plays a significant role in the operation of the electric grid, providing cost savings, environmental benefits, and greater flexibility.
How Energy Storage Systems Are Used
1. An ESS can help solar plants avoid reducing power generation when the availability of those resources exceeds current electricity demand or power transmission line capacity (i.e. curtailment).
2. Pairing or co-locating an on-grid ESS with wind and solar energy power plants can allow those power plants to respond to supply requests (dispatch calls) from grid operators when direct generation from solar resources is not available or limited.
3. ESSs allow for storing and using renewable energy without access to an electric grid (an off-grid system).
How Wattage Correlates With Number of Supported Homes
One megawatt of electricity provides enough power to meet the demand of approximately 750 homes. That means one gigawatt can power about 750,000 homes.
5,600 megawatts of battery capacity can provide enough electricity to power 4.2 million homes for up to four hours before the batteries need to be recharged.
6,600 megawatts of battery capacity can provide enough electricity to power 4.95 million homes for up to four hours before the batteries need to be recharged.
In the meantime, California will have to build 148,000 megawatts of new clean power sources by 2045 to meet its 100% clean electricity goal by that year.
Battery Suppliers
Tesla is the best-known supplier of utility-scale battery storage. Each Tesla Megapack has a 3.9 megawatt-hour energy capacity. Using the math above, a fully charged Megapack can power almost 3,000 homes for one hour.
In some deployments, hundreds of Megapacks store more than one gigawatt-hour of energy.
CATL, a Chinese Tesla supplier, has announced that TENER, a large-scale energy storage system, will compete with Tesla Megapack. Each pack has a 6.25 megawatt-hour capacity.
Ironically, CATL is the world’s largest battery cell manufacturer and Tesla’s biggest supplier.
Smaller battery manufacturers are beginning to target utility-scale applications, For example, EVESCO, part of Power Sonic, has a page about containerized battery energy storage systems.
Looking Ahead
Today, lithium-ion batteries are the prevalent utility-scale battery technology. The next frontier of large-scale battery technology is sodium-ion, which has several advantages over lithium-ion.
Sodium-ion batteries aren't at risk of catching fire after a puncture, excessive heat, or electrical faults. The main chemical ingredient, sodium, is over 500 times more abundant than lithium and can be found anywhere in the world. Sodium-ion batteries charge faster than lithium-ion batteries.
Systems with sodium-ion batteries may gain market share for grid storage & balancing applications within several years.
Even more technologies are being explored to supply the growing storage business. That said, the common thread is that more land will be needed to support states' aggressive clean energy goals involving large solar farms, batteries, and other infrastructure equipment.
If you're interested in investing in a landhold or development capital for utility projects, please set a meeting with me to discuss your investment objectives.
Charles Schaffer
President and Founder, SDC Capital Ventures
Charles has founded and operated several development companies over his 35+ year history to pursue his passion for Alternative Investing where he believes outsized returns can be achieved without a corresponding increase in risk. Under Charles' leadership, SDC has developed and financed over $80 million of commercial real estate and renewable energy projects.
