On 6 March 2020, the Saudis and the Russians unleashed an oil price war targeted to capture market share from each other and to jointly undercut US shale. Instead, the unforeseen consequences of the global pandemic immolated the crude oil market with West Texas Intermediate briefly trading negative (at -$37/bbl) on 20 April 2020 and demand remaining 10% below that of 2019 on a year-on-year basis. Less frequently discussed, however, is the negative impact the pandemic has had on energy demand across the board (whether conventional or renewable) as a natural consequence of the steep drop in demand for inter alia manufacturing and transport (road, seaborne and aviation). Nevertheless, the broad and perhaps most surprising unanticipated effect of the pandemic has been to concurrently elevate concerns regarding climate change and to demonstrate that meaningful cuts in GHG emissions can be achieved through concerted behavioral adjustments and seemingly overnight. If the global community is to meet the GHG emission reduction targets needed to avoid the more devastating impacts of human caused climate change, new business models and large-scale investment in the development and deployment of renewable generation and storage technologies are needed. Over the last decade, the cost of generating wind and solar power have come down significantly, but these forms of renewable power generation are only intermittently available and this can present grids with concomitant instability in supply and demand. Storage capacity is therefore needed to take wind and solar energy as and when it is produced and to inject it into the grid when it is needed.
The most widely used form of power storage (pumped hydro-storage) was first deployed in 1907 and today represents 96.2% of all power storage deployed globally. Pumped hydro-storage involves th e use of produced power to pump water up a hill or mountain and to subsequently release the water to run turbines that re-generate power when required (typically at 80% efficiency). However, the use of pumped h ydro-storage as a scalable solution for intermittent renewable power generation is limited due its significant capital cost and the limited circumstances where it can be deployed, i.e. in locations that are geographically proximate to mountainous terrain and large sources of water. What is needed, therefore, are storage solutions that are scalable and location agnostic as well as forms of renewable energy that are not produced intermittently and are thus amenable to more conventional storage solutions.
Unfortunately, investment in large-scale storage and renewable capacity will ultimately require that the levelized price of storing 1 kw/hour of renewable power continues to drop down to a point where it can effectively compete with the full value chain cost of power generated from hydrocarbons. From a power generation perspective, while hydrogen has the potential to provide an abundant and clean source of renewable energy, it remains too costly to produce and compete with conventional hydrocarbon fuels. Accordingly, both storage and hydrogen hold forth tremendous promise for our collective efforts to reduce GHG emissions, but they will require sustained investment in R&D as well as concerted government policy to support grants, tax credits and other forms of subsidies that will together enable renewables to compete on a shoulder-to-shoulder basis with incumbent hydrocarbon-based energy supplies.
In this OGEL Special Issue, we present six papers that provide perspectives on policies and on legal and regulatory developments targeted to support investment in renewables and storage from the UK, the US, Europe and Australia. Paul Rathbone leads by asking what it would mean to convert our hydrocarbon-based energy economy to renewables. To answer this question, Paul calls attention to the practical difficulties the UK will face in reaching a "net zero" energy future when compared to the UK's current energy consumption and supply trajectory. On the demand side, the biggest challenges will be faced by the transport sector, which currently consumes one third of the UK's total energy, 96% of which is supplied by hydrocarbons. Another third comes from the domestic sector, where 72% is supplied by hydrocarbons. On the supply side, the UK will face challenges in producing and storing enough electricity to meet both consumer and "net zero". Overcoming these challenges will require huge investments in renewable energy generation, storage and distribution infrastructure and this will in turn require clear government policy and sustained changes in societal behavior. A submission on the Australian response to this question is provided by Professor Tina Soliman Hunter and Dr Madeline Taylor who examine how shallow, medium, and deep energy storage systems will become a key part of managing Australia's National Electricity Market's trilemma:
Prof Hunter and Dr Taylor discuss the shortcomings of Australia's current coal-based National Electricity Market (NEM), the lack of mandated federal energy storage targets, and the roles that battery storage systems will play in Australia's transition to a new NEM (NEM 2.0), which will rely more heavily on renewable energy sources to generate power.
Silke Goldberg and Jannis Bille add to the discussion through an examination of the policy and regulatory framework that currently defines electricity storage in Europe and in the UK. An overview of the current EU legislation related to electricity storage, including the New Electricity Directive, the Recast Renewable Energy Directive, the Batteries Directive, and the Clean Energy Package, and other EU initiatives, such as the European Battery Alliance and Building a Strategic Battery Value Chain in Europe, as well as the UK's electricity storage regulatory framework is provided. The authors conclude that progress is still needed in terms of energy storage deployment regulation in both the EU and in the UK; specifically, in terms of greater regulatory certainty and in terms of greater compliance with prevailing regulatory requirements. Patrick K.A. Verdonck and Martha Kammoun next argue that hydrogen is a viable and potentially safe alternative to lithium-ion batteries for providing energy storage under the current regulatory framework. The first part of the paper provides an excellent and accessible overview of hydrogen technology and illustrates the versatile and clean nature of hydrogen as a fuel. For example, it can be used as transportation fuel, as a storage mechanism and fuel for the electricity industry, for heating commercial and residential buildings, as a high energy fuel for industrial processes, and as feedstock for industrial processes. However, hydrogen also has limits as a fuel given that it is rarely found freely in nature. Consequently, it must be separated from its chemical counterpart through either electrolysis or steam methane reforming, both of which in turn require substantial amounts of energy and can, depending on the technology used, have varying degrees of attendant environmental impacts. The second part of the paper addresses the key federal and state energy storage regulations that could potentially benefit hydrogen energy storage, including, at the federal level, U. S. FERC Order 841, various tax incentives, the Growing Renewable Energy and Efficiency Now ("Green") Act and the Energy Storage Grand Challenge. This is augmented at the state level, by various additional energy storage initiatives.
Danielle Garbien and Melanie Goebel observe that oil and gas companies, until recently, failed to use renewable energy and battery storage systems to power their extraction operations due to the high cost of batteries, the regulatory uncertainty and the high costs of implementing energy storage systems. However, recent developments in battery technology as well as recent regulatory changes in the US have together lowered storage costs and now position oil and gas companies to benefit from converting their operations from hydrocarbon-only to hybrid-power, while concurrently reducing their GHG emissions. These are meaningful developments, especially when we recognize that the global oil and gas industry consumes five percent of its total production to power its own operations. Accordingly, many global operations are already starting to integrate renewable energy solutions to take advantage of the reduced cost of batteries, federal tax credits, and FERC rulings on installing hybrid energy storage systems to power their oil and gas recovery processes.
The final submission in this Special Issue is a review of a publication by Louise Dalton entitled "Energy Storage: Legal and Regulatory Challenges and Opportunities. The review has been provided by Sirja-Leena Penttinen who observes that Louise Dalton's publication offers "a concise [accessible] overview of the key policy, commercial and legal principles that underpin the development of different energy storage technologies." It is divided into two parts with the first focused upon the revenue streams (and combinations) available to energy storage providers. The second part focuses upon the variety of contractual issues involved in the development, financing, construction and operation of storage facilities. Ms. Pentinnen recommends Ms Dalton's publication as a concise summary of the key policy, commercial, and legal issues that should be considered in the development of energy storage systems. As the role of renewable energy in the global economy is now set to grow at an accelerated pace, commercially competitive energy storage and renewable, and in particular, hydrogen technologies will be needed to maintain the balance between intermittent supply and demand. As the authors in this Special Issue have forcefully argued, ensuring the commercial viability and ultimately the scalability of these new technologies will require concerted global policies as well as national tax and regulatory support, R&D grants as well as sustained behavioral adjustments on a societal basis.