Opportunities Abound for the Government of Malawi to Attract Investment in RE+Storage Projects
This blog post was written by Dr David Jacobs and Toby Couture, who supported the LEDS GP with this technical assistance.
The market for grid-scale battery storage technologies is booming worldwide with the growing awareness of the many benefits and services that batteries can provide.
Many government and utility officials around the world continue to think of battery storage simply as a form of storage that can be “filled up” and “drawn down” as needed in order to adjust to changing patterns of power demand. However, as experience with battery storage systems grows in markets ranging from California and South Australia to India and China, a more multi-faceted view of the role of grid-scale battery storage is emerging.
Battery storage systems can help make the outputs of solar and wind powerplants more predictable and reliable, whilst also providing a wide range of services to the grid, including frequency response, voltage control, and primary and secondary reserve (see figure below).
Moreover, battery storage can help reduce curtailment, providing benefits both to renewable energy (RE) producers, as well as to utilities (IRENA, 2019).
A flurry of recent auction results of solar+storage systems shows that the economics of combining renewable energy projects with storage (RE+storage) are now attractive in a growing number of countries around the world.
Recent auction results for RE+storage projects show unsubsidized prices for solar+storage in particular between USD 4-8 cents/kWh, as seen in India’s recent auction for “round the clock” power supply (see Table below) (Gupta, 2021).
As the economics continue to improve, some jurisdictions with high and growing shares of variable RE, such as Hawaii, have even announced that all future procurements of solar photovoltaic (PV) energy will be combined with storage (Colthorpe, 2021). While this may not be feasible or necessary for jurisdictions like Malawi, it underscores the scale of the transformation that has taken place in the costs of RE+storage in recent years.
A recent analysis, prepared for the Government of Malawi as part of the support provided by the LEDS GP, provides an overview of the main uses for which the Government of Malawi can procure battery storage systems. The analysis focuses on five main functions, or use cases:
- Replacing firm, fossil fuel-based generation capacity
- Delivering power during peak hours
- Reducing the curtailment of variable renewable energy (VRE) resources
- Providing ancillary services
- Deferring transmission and/or distribution grid investments
This analysis also highlights some of the key lessons in auction design from which countries like Malawi can draw in order to design and implement their own RE+storage auctions.
While auctions designed for battery storage share several features with regular RE auctions, there are certain aspects that need to be taken into consideration, including establishing clarity over what exactly is being auctioned, what level of availability the RE+storage installations need to provide, and whether any locational or other restrictions apply.
This brief report is intended to help governments like Malawi procure RE+storage projects in the coming years to help meet their overall energy access and climate-related objectives. This way, even relatively small countries with limited grid interconnections with their neighbouring countries can move towards high shares of renewables, thus paving the way for faster and more secure decarbonization of the electricity system in the coming decades.
- IRENA (2019). Utility-scale batteries: Innovation landscape brief. International Renewable Energy Agency, Abu Dhabi, https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Sep/IRENA_Utility-scale-batteries_2019.pdf
- Gupta, U. (August 10 2021). “Indian developer signs PPA for 400MW round-the-clock energy supply,” PV Magazine, https://www.pv-magazine.com/2021/08/10/indian-developer-signs-ppa-for-400-mw-round-the-clock-energy-supply/
- Colthorpe, A. (October 21 2021). “Hawaiian Electric wants all solar in next procurement round to be paired with battery storage,” Energy Storage News, https://www.energy-storage.news/hawaiian-electric-wants-all-solar-in-next-procurement-round-to-be-paired-with-battery-storage/
View the full report here.