Interview Recap: Unpacking The Role Of Energy Storage With Lars Stephan (Fluence)
Lars Stephan is part of the growth team at Fluence, a global leader in energy storage products, services, and digital applications for optimizing energy storage and renewable assets. Lars's role involves understanding market dynamics, customer needs, and policy shaping, particularly focusing on the European market.
The Energy Transition and Flexibility
Lars emphasized that the energy transition is about decarbonizing energy systems, which looks different across various countries. For instance, France focuses on reducing dependence on nuclear power, while Germany aims to phase out coal and gas generation. The transition involves integrating a significant amount of volatile renewable energy sources like wind and solar, necessitating flexibility in the grid.
Flexibility is crucial because renewable energy generation does not always align with energy demand. This flexibility can range from intraday adjustments to longer-term seasonal storage. New technologies, including energy storage and demand-side response, are essential for providing this flexibility.
The Evolution of Energy Storage
Energy storage has evolved significantly over the past decade. Initially, batteries were primarily used for primary frequency response. Today, they play a role in capacity markets and are increasingly participating in day-ahead and intraday markets. The cost of batteries has decreased dramatically, making them more viable for various applications.
Lars highlighted the need for different market mechanisms to incentivize energy storage, particularly for long-duration storage. While current tenders focus on storage up to eight hours, future needs may require even longer durations. The challenge lies in defining the needs and creating appropriate market mechanisms to support them.
Behind-the-Meter Storage
Lars also discussed the role of behind-the-meter storage for industrial customers. Behind-the-meter storage can provide flexibility by optimizing energy consumption based on intraday price fluctuations and improving solar auto consumption. It can also help manage local grid constraints. However, the primary use case remains optimizing the customer's energy consumption rather than providing grid services.
Common Misconceptions About Energy Storage
Lars addressed several misconceptions about energy storage, such as the belief that batteries must cover the entire energy load during periods of low renewable generation. He clarified that the purpose of energy storage is to balance the grid and integrate renewables, not to act as a backup power source for the entire system.
Critical Success Factors for Battery Investments
For companies considering battery investments, Lars emphasized the importance of evaluating the total cost of ownership rather than just the upfront cost. Factors such as round-trip efficiency, degradation, and auxiliary load consumption should be considered. It's also crucial to have a flexible performance warranty and a software platform that can adapt to changing market conditions.
Lars highlighted the importance of fire safety, ESG requirements, and supply chain due diligence. Ensuring the battery system integrates well with the company's operations and provides a sound financial case is essential.
Conclusion
Our conversation with Lars Stephan provided deep insights into the evolving role of energy storage in the energy transition. As battery technology continues to improve and market mechanisms evolve, energy storage will play an increasingly critical role in ensuring grid flexibility and integrating renewable energy.
We thank Lars Stephan for his valuable input and look forward to future discussions on this important topic.