How Batteries and Solar Power Are Disrupting Electricity Markets

How Batteries and Solar Power Are Disrupting Electricity Markets

          
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How Batteries and Solar Power Are Disrupting Electricity Markets

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  • The battery pack may be the least glamorous component in the electricity delivery network, but it is on the verge of transforming electricity markets worldwide.

    Solar power produces plenty of electricity on sunny days, but not during peak usage in the evening or when the sky is cloudy. Storage systems such as lithium-ion (Li-ion) batteries, combined with photovoltaic (PV) generation, can address the intermittency of renewables without the expense of expanding the power grid. Batteries reduce the short-term disparity between supply and demand by storing excess electricity during sunny periods (such as at midday) and then delivering it at times of high demand but little or no sunlight (such as at night).

    Around the world, retail power prices are rising and the cost of PV-generated and stored electricity is declining, creating potential savings for consumers and small businesses. (See Distributed Energy: A Disruptive Force, BCG report, July 2014.) As companies and consumers adopt these new technologies, they are unlocking billions of dollars in potential value while at the same time becoming more self-sufficient. With batteries, consumers and small businesses can use as much as 80% of their PV-generated electricity, compared with 30% to 40% without battery storage. If the cost of generating and storing electricity is less than the cost of electricity from the grid, this can reduce electric bills substantially.

    The proliferation of storage options is disrupting the traditional utility business model and laying the foundation for a cleaner, more reliable energy future. The role of traditional utilities in many markets is shifting from control over all aspects of generation and distribution to one in which utilities are primarily grid operators and service providers. This represents a fundamental shift that will affect investors and participants in energy markets around the world.

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