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Battery storage could make the dream of continuous power supply a reality. It gives utilities the flexibility to store electricity from variable wind and solar power. Like Lego, you can use batteries to put together different pieces to create bigger systems-and innovation is changing the limits to what can be done. Chandrasekar Govindarajulu, expert on battery storage, discusses its potential and the financial and regulatory frameworks that need to be in place for battery storage adoption and use.
This podcast series is produced by Fernando Di Laudo and Jonathan Davidar.
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Transcript
Roumeen Islam: About one third of Haitian households have some access to electricity. The main provider is the national utility, which is struggling to supply even urban households with at least eight hours of electricity a day. Historically, the electricity grids have been powered by diesel, which is expensive and polluting. Yet, today when the sun sets on the Port Au Prince, Haiti, lights blink on at the Sean De Mar Plaza, where 350 solar panels cover the roofs of buildings around the area.
Children play football. Locals and visitors take evening walks. This glowing area stands like an oasis on an island ravaged by natural disaster and poverty. Let's find out how this came about. Good morning and welcome! I'm Roumeen Islam, the host of Tell Me How. And, today I have as my guest, Chandra Govindarajulu, expert in energy who will speak to us about battery storage and its role in the energy transition.
Welcome Chandra.
Chandrasekar Govindarajulu: Thank you, Roumeen. It's my pleasure to be discussing this interesting topic today with you.
Roumeen Islam: It's lovely to have you here. So, Chandra, let me begin by asking you about the fast-rising capacity of solar and wind sources of energy. Are we ready today to let renewables be our main source of energy?
Chandrasekar Govindarajulu: Yes. I would say we're getting ready for renewables to be our main source of energy. Hydropower is the largest source of renewable electricity today. But the main driver of growth is solar. You have seen massive drops in cost of wind and solar energy, like 82% in the case of solar and 40% in the case of wind since 2020. The solar projects are offering some of the lowest cost electricity ever seen by us so far.
Roumeen Islam: I would never have guessed that the drops in cost were that large. It's amazing. But what is driving this phenomenal decrease in the cost of solar and wind energy.
Chandrasekar Govindarajulu: These cost reductions are due to a number of factors, improved technology of solar cells, economies of scale by doing larger projects, supply chain competitiveness in the manufacturing sector, and also the growing experience of the developers who build these projects. Currently, large scale solar can compete well with coal or gas generation during daytime hours in most parts of the world.
Roumeen Islam: I see. So, Chandra, if renewables are so cheap and what you're saying, they are possibly the cheapest source of energy for many countries, why would any countries bother with gas and coal at all?
Chandrasekar Govindarajulu: That's because wind and solar power output is variable and uncertain as one can imagine. For example, output of a solar PV changes in seconds when a cloud passes by - wind also changes its power and direction. So, that's the issue.
Roumeen Islam: They vary a lot. And I guess there are some parts of the world where you get very few hours of sunshine, especially during the winter. So, I guess then you need stability and supply. Otherwise you'd have flickering lights, televisions turning on and off. So, that's the main issue right now, right?
Chandrasekar Govindarajulu: That's right. For a stable operation of the grid, the power system needs to match electricity supply and demand at every instant. And the conventional power systems are already designed to accommodate changes in electricity demand during day and seasons. So, in many countries, coal and gas power plants are providing this flexibility, and therefore are needed.
Roumeen Islam: I see. So, given that the daily variability in sunshine and wind, and sometimes just, I guess the total availability of it, I assume storage capacity or at least linking renewables with alternative sources of energy, is very important to the energy transition. Would you say though, that battery storage is the main constraint to a further acceleration in the use of renewables?
Chandrasekar Govindarajulu: Yes. I would say it's one of the main constraints. Energy storage is essential for providing continuity of renewable energy to the grid, and therefore to bring large amounts of renewable energy, wind, and solar, you need that.
Roumeen Islam: But you know we have hydropower as a large source of renewable energy. So, where does hydropower fit into all of this?
Chandrasekar Govindarajulu: That's a good point. Hydropower is the dominant energy storage technology today. I think over 80% of the storage capacity in the world is due to hydropower. However, there are limitations. The main limitation is it's location-specific. You can't do hydropower everywhere. And also they take a few years to build.
Roumeen Islam: Yes. From what I know of these things, hydropower plants take a very long time to build, right? It's a very complex thing. But then I guess it's important Chandra to know how fast battery production costs are falling. Can you think of cases, say in the last five years, where it's become commercially viable to use battery storage because costs have fallen so much.
Chandrasekar Govindarajulu: The price of lithium-ion battery packs have fallen by over 85% in the last 10 years or so. And this has been driven mostly by growth in the battery production for the electric vehicles market. But these cost reductions have made renewable energy commercially viable in some contexts like the Pacific islands, for example.
Roumeen Islam: These are some important figures. First, you told me that there was an 80% reduction in the cost of production of solar and a 40% in wind energy. And now you're telling me there's an almost 90% decline in the cost of battery packs. So, these are very complimentary technological advances. Very nice to know about things that are changing very fast. Can you give me some other advantages of battery storage that it might be important for our listeners to know about?
Chandrasekar Govindarajulu: Indeed, that's what makes it so interesting that prices have fallen on solar as well as the battery storage side. So, battery storage has a variety of use cases like smoothening the variable output of the renewable energy project if you are the owner of the project, allowing deferral of transmission and distribution investments if you are the network owner. Also, reliable battery storage is essential if you're trying to scale up mini-grids, which is essentially now emerging as a key solution to provide electricity access for people who don't have any access especially in Africa.
Roumeen Islam: You mentioned some very important issues there. The fact that building these transmission and distribution systems- is a very big investment, takes a long time, and sometimes it's easier to get your electricity some other way. So, could you expand on the significance of battery storage and when is going with renewables with battery storage, the right choice?
Chandrasekar Govindarajulu: The option to invest in battery storage should always be considered alongside alternatives like one would do in any sane investment. You may build infrastructure to connect yourself with the other larger grid or optimize conventional generation. Energy storage itself can come in different ways using thermal energy storage or hydropower as we discussed. So, not just batteries, and the final choice may vary by country.
Roumeen Islam: Of course, we need to customize everything to country context, but Chandra, what do you think are the especial considerations in developing countries?
Chandrasekar Govindarajulu: So, Roumeen, in many developing countries battery storage with the kind of cost reduction that we are seeing, may be the most easily deployable, widely available option to increase the power system flexibility. Building a new transmission capacity could, say, take a long time, like you said, accessing flexible generation, like hydro or gas might not be possible at the same time, you could do this faster with solar and storage.
Roumeen Islam: In that case, I guess it's important to know what the maximum capacity is today for battery storage. How many hours of solar and wind energy can a battery store? I'm assuming this capability has been evolving over time.
Chandrasekar Govindarajulu: That's right, the biggest operating battery today is in South Australia. It's co-located with a wind project and that one is designed for three hours. But typically, you see batteries designed for one to two hours of operation, but you can go up to four hours.
Roumeen Islam: I see. It's still not very long, right? There are many poor countries¡ªactually, even in Washington, I've had an outage of much longer than four hours even in the last year. So, what happens if you have long outages, as we do have in many of our client countries, and you need backup power for longer?
Chandrasekar Govindarajulu: This is an important issue for the storage community. And the industry has been making progress on longer duration batteries using materials other than lithium, such as vanadium batteries. But they are not as portable, say for example, but they are needed. Such longer duration batteries are needed for developing country applications where we have longer outages. There are also other innovative approaches like storing energy in molten salt and converting it back to electricity. Or even I've heard of an option where you can take stones high up 35 stories and then drop them and use that energy to produce electricity.
Roumeen Islam: So, I guess this is all about transforming one form of energy into another again, right? It's from the heat energy that goes into kinetic, and then electricity. I see it's all about transformation. Now, if we go back to what you said about vanadium, you said vanadium batteries are not always portable. I understood they come in very large containers. Is that right?
Chandrasekar Govindarajulu: That's right, because it is not a solid electrode-based battery. There are electrolytes, so you have vats to hold the electrolytes and it makes it a little bit more cumbersome compared to the lithium-ion, which is compact and containerized.
Roumeen Islam: Okay, but really with all these alternatives, I can see that this is a really fast- moving field. And I understand that battery storage allows for versatility in our power systems and how power is stored, but are there other aspects of battery storage that make it a good way to have electricity storage?
Chandrasekar Govindarajulu: Yes. One of the key advantages is that this issue of modularity and containerization, allows for easy transport of these batteries and also scaling up. They come in containers just like the 40-foot or 20-foot containers that we use for moving houses. A typical 40-foot container may have four megawatt hours of battery. So, if a project needs 40 megawatt hours, you just need to ship 10 of those containers. Implementation is very quick due to the nature of the containerization of this product.
Roumeen Islam: That's very nice. I like the idea of little packets of storage, which can differ in energy intensity and differ in duration, and, you can open as many packets as you need. Did I get this right? Like little packets of sugar or spices.
Chandrasekar Govindarajulu: More or less yes, but there is a limit to the number of batteries that can be connected as the costs are still high. And also the technical aspects need to be considered.
Roumeen Islam: So, it's not cost efficient, that's what you are saying, to go for longer.
Chandrasekar Govindarajulu: That's right.
Roumeen Islam: Do you need special policies and regulations to oversee the battery storage market? Because every time a new technology comes on the market, there are so many issues that generally need regulation.
Chandrasekar Govindarajulu: Yeah, and even more so in the case of battery storage. That's because depending on how it is used, battery can be viewed as your generator, it can be your backup, or it can even substitute for your grid infrastructure. Each of these cases may need a suitable framework or a guideline. And for example, if no regulations explicitly state that battery storage can provide grid services, utilities may be unwilling to procure services from a battery storage provider or a system.
Roumeen Islam: Okay. Perhaps you could explain that a bit further. What do you mean by that? What are some specific issues in this respect that regulators are grappling with?
Chandrasekar Govindarajulu: So, the most fundamental issue that needs to be addressed today is bringing some sort of cost recovery structures so investors can get paid. This will vary with the purpose and ownership of energy storage assets by generation, transmission, or distribution. Like I said, they can be used quite variably as a generator or as a backup or as a grid substitute. These issues are related to asset classification and revenue sharing also that need to be addressed.
Roumeen Islam: So, I understand that regulations are just evolving and they're being developed even in higher income countries, because it's a new technology. So, how do poorer countries with less capacity to regulate new technologies manage? For example, we discussed Haiti. How did Haiti manage using and regulating battery storage?
Chandrasekar Govindarajulu: So, Roumeen, I would say the easiest way for countries to incorporate battery storage is making it an integral part of your renewable energy project. Like a solar project is defined as a solar plus storage project. A wind project is defined as a wind plus a storage project. This is how Haiti managed. Also, in India, we have a similar regulations that allow solar plus storage to be defined as a hybrid project. Another easy approach is also existing network operators can recoup their costs through investment tariffs if the regulator allows that. So that's another way to do it.
Roumeen Islam: Okay, that's fantastic. That's good to hear. Which country is actually taking the lead and implementing battery storage and integrating renewables?
Chandrasekar Govindarajulu: So, among our client countries, South Africa, China, India have big programs for integrating renewables and also programs for battery storage. Of course, there's a lot of interest among a range of our client countries to implement storage.
Roumeen Islam: So, that would be all over the globe, right that you've got clients interested in this?
Chandrasekar Govindarajulu: Yeah, from Bangladesh to Somalia and anywhere in between.
Roumeen Islam: And in terms of the main producers of battery storage capacity, are they as widely dispersed? I suspect not.
Chandrasekar Govindarajulu: Yes. You got that correct. The main cell manufacturers are from Japan, companies like Panasonic Yuasa, and so on Hitachi. In Korea, LG Samsung are names well-known to us. And, also China companies like BYD, CATL, all of them in East Asia.
Roumeen Islam: That's actually interesting. Now how about the metals and other resources that constrained battery production? I suspect these are not also spread across the globe or are they, where are they found?
Chandrasekar Govindarajulu: You're correct in a way, because lithium is the most essential raw material for the battery storage industry today. Then lithium deposits are abundant in Chile. And Chile is the main supplier because they have developed this resource over a period of time. So, they are dominant in this area, but there are resources in Australia, US, China, and other places. These are yet to be developed as well.
Roumeen Islam: I see. Okay. Now, I'm going to move on a little bit, Chandra, with this next question. So, we've talked about electricity provision and I'm wondering with battery storage, could renewables provide enough energy for all purposes, for example, heating, cooling, energy for manufacturing?
Chandrasekar Govindarajulu: Yes, but first the existing systems that rely on fossil fuels would need to be replaced. And this takes time. I think it may be several years because there are costs to be borne by consumers because all the infrastructure has to be revamped.
Roumeen Islam: I see, and I suppose also it will matter how much solar and wind energy there is in each location and how fast battery capacity is increasing.
Chandrasekar Govindarajulu: Yeah. And that also, developments and for example, green hydrogen, which would mean that if a country X and in another part of the world can produce a lot of renewable energy that can be transported to the place that doesn't have renewable energy through green hydrogen tankers, they could also benefit from that. So, all those developments are in the future.
Roumeen Islam: Very good. Are there any important issues I've left out?
Chandrasekar Govindarajulu: I think we covered quite a bit of ground, but I think one issue that comes up routinely when I discuss battery shortage with clients is the issue of safety because there have been some fires in some instances involving lithium-ion batteries. So, the standards are evolving on that and operating guidelines are also evolving to address that issue. Also, reuse and recycling come up quite frequently. And it's important that we discuss this at some point.
Roumeen Islam: These are indeed very important and I'm sure quite complex issues again. So, thank you, Chandra. I think our listeners would love to hear more from you on some of these other topics, but we will leave these for another podcast. Thank you.
Chandrasekar Govindarajulu: Thank you. And, do take a look at our new report on battery storage. Indeed, I'm sure our listeners will run to that report now with this very interesting talk we've just had.
Roumeen Islam: Listeners, I hope like me, you have started to become even more intrigued about the possibilities surrounding battery storage. Today we learned a number of things and let me point to some. Firstly, battery storage adds flexibility to the energy system and stability to energy supplied by wind and solar sources. It can be sold in different container sizes and used in different purposes.
Secondly, limited battery storage capacity, constrains a faster move towards wind and solar energy generation, something you all might've guessed. There is a limit to how many batteries you can join together without losing too much in efficiency.
Thirdly, as battery technology evolves, so must the regulatory framework for investments for cost recovery and integration into current energy systems. I think that was a lot for anyone. It was certainly a lot for me. Till next time. Bye for now.
If you have questions or comments, we¡¯d love to hear from you. You can reach us at tellmehow@worldbank.org. Don¡¯t forget to subscribe and thanks for listening!
View all episodes on our Tell Me How: The Infrastructure Podcast Series homepage