Comparing the Pace of Solar and Batteries

A short assessment of the potential of batteries and EVs to store solar energy

“How come everything I need always comes with batteries?”, John Clayton Mayer.

Solar power is undeniably undergoing a remarkable expansion, and our projections indicate that this surge will indeed have a substantial impact on day-ahead market prices. Conversely, some experts contend that the daily fluctuations in solar generation can be mitigated by the increasing adoption of energy storage solutions, particularly batteries, and the growing prevalence of electric vehicles, often considered symbiotic partners of solar energy. This leads us to consider whether their perspective is valid: Will the daily fluctuations be largely absorbed or not by the development of electric batteries?

Let’s dig into some numbers.

The objective is not to be very precise concerning the numbers but to give some general ideas.

The incredible speed of solar expansion

First and foremost, it is crucial to emphasize a pivotal aspect of this discussion. The pace at which solar expansion is unfolding defies all historical precedents. Over the last two decades, the cost of solar modules has witnessed an extraordinary decline, so remarkable that even if the price of these modules were to plummet to zero, the overall project cost of a substantial solar farm would merely experience a one-third reduction.

At the end of 2022, the European Union had an impressive 209 GW of installed solar capacity, and the current year alone is poised to witness the addition of over 50 GW more. SolarPower Europe's Medium Scenario projection hints at the possibility of solar capacity reaching a staggering 920 GW by the decade's end, while the European Union has set its sights on achieving 750 GW as part of the REPowerEU initiative.

For the purpose of this discussion, our focal point will be Germany, the continent's largest economy and a vanguard in the renewable energy transformation with its Energiewende policy. Remarkably, within a mere span of 8 months in 2023, Germany has seen a remarkable surge, with the addition of an astounding 9 GW of solar capacity.

Yearly solar installation in Germany.

Stationnary batteries

Stationary batteries are those connected directly to the electricity grid. In the chart provided below, we can clearly discern the upward trajectory of stationary storage in Germany, segmented into three distinct categories: large-scale, industrial, and residential storage.

Rising battery capacity: is that enough?

Although they are on the same graph, it's essential to distinguish between large-scale batteries¹ and home storage, as these are fundamentally distinct assets.

1. Large-scale batteries

Large-scale batteries have already been deployed throughout Europe, playing a pivotal role in the energy landscape. They tap into diverse revenue streams, including power reserves, reserve capacity, ancillary services, and participation in energy markets like intraday and day-ahead trading. It's important to note that large-scale batteries aren't solely designed to store surplus solar energy, except in instances of co-location with solar facilities, and even then, this isn't an absolute rule. Consequently, we should temper our expectations regarding the ability to harness their entire energy potential solely for storing excess solar power.

2. Home batteries

Home batteries are typically small-scale energy storage systems, boasting an average capacity of 8.8 kWh. They are commonly installed in homes that feature solar panels, with the aim of capturing and storing surplus solar energy for later use during the evening or cloudy periods. However, to realize this objective effectively, it's imperative that these batteries are properly configured and managed.

In practice, it's highly likely that a portion of the battery's energy capacity may remain untapped for storing solar energy, primarily due to practical limitations and operational considerations.

Electric Vehicles

In addition to stationary batteries, we have at our disposal a fleet of electric vehicles poised to play a significant role in balancing out solar generation. This prospect is frequently hailed as a promising solution, given the convenience of enabling individuals to charge their electric cars wherever they are located. It's worth noting that this approach assumes that the distribution grids have the capacity to support widespread electric vehicle charging, although we won't delve into grid limitations here.

Now, let's summarize the findings from the market review for Germany, specifically focusing on the number of electric cars at the end of 2022.

In Germany, the average distance traveled per car stands at 14,259 kilometers annually, equivalent to approximately 39 kilometers per day. Considering an average energy consumption of 0.2 kWh per kilometer for electric cars, each vehicle consumes approximately 7.81 kWh daily, resulting in a total electric consumption of 14.67 GWh per day.

Furthermore, researchers are actively exploring the concept of Vehicle-to-Grid (V2G), which harnesses the batteries of electric cars to stabilize the grid. However, despite its promise, there are notable constraints to contend with. Firstly, the process of charging and discharging batteries for grid support accelerates battery deterioration. Additionally, successful V2G implementation requires a supportive infrastructure, including the installation of smart meters—a domain where Germany is currently lagging. Finally, regulatory measures like dynamic tariffs need to be adopted to facilitate V2G integration.

Nevertheless, let's entertain the scenario where these constraints are resolved. In our assessment, achieving practical V2G utilization exceeding half of the total energy capacity would be nothing short of remarkable. This would necessitate vehicles being consistently connected to charging points and vehicle owners willingly accepting reduced battery charge levels in anticipation of solar energy surplus—an endeavor far from straightforward. In such a context, we make the optimistic assumption that V2G can effectively use half of the energy content of electric vehicles.

Current storage capacity compared to a sunny day

Once we've assessed the present storage capacity, the next step involves contrasting it with the energy generation on a sunny day. The rectangles in the following illustration represent the energy capacities², as previously outlined, for four distinct technologies: large-scale storage, home storage, the daily charging portion of electric vehicles, and Vehicle-to-Grid (V2G). Notably, the daily charging portion of electric vehicles is factored into the V2G category, under the assumption that these two aspects are mutually exclusive. The orange line represents the generation on a sunny day.

Additional potential in 2023

A noticeable trend is that batteries and electric vehicles are catching up with solar development. An intriguing perspective lies in examining the yearly increments of batteries and electric vehicles in 2023 and contrasting them with the annual additions in solar capacity. Here, we provide the figures for electric for electric vehicles³:

Concerning large-scale batteries, we use data from this source and we consider the same solar generation profile but scaled with the solar addition of 2023⁴.

Final thoughts

Based on the previously presented graphs, several key observations can be made:

1. Current situation: On a sunny day, the existing installed battery capacity, including electric vehicles, is currently not substantial enough to have a significant impact.

2. Battery Growth: The capacity of batteries is steadily catching up with the expansion of solar installations, with electric vehicles leading the charge. Electric vehicle growth is poised to accelerate further, given that the combined market share of electric vehicles (including plug-in hybrids) is still slightly below 25%.

3. Home Battery Growth: Home batteries are also experiencing consistent annual growth, albeit their total energy capacity remains relatively modest at around 6% of solar additions.

4. Large-Scale Storage: Large-scale storage, both in terms of existing capacity and annual additions, currently holds limited significance. Consequently, its influence on daily price fluctuations, as discussed in a previous post, remains marginal.

From these observations, it becomes evident that electric vehicles are a promising avenue for harnessing excess daily solar energy⁵. However, it's crucial to note that the assumptions made in this analysis are relatively optimistic, and real-world constraints are likely to reduce the actual potential. In particular, in the German context, the sluggish deployment of smart meters and dynamic tariff systems may hinder the optimal utilization of electric vehicles for storing surplus solar energy.

In conclusion, the rapid adoption of solar power in Europe, especially in Germany, will yield abundant energy resources. During sunny days, effective storage or use of excess solar energy becomes essential, and batteries, whether stationary or within electric vehicles, will play a pivotal role⁶. Nevertheless, the energy capacity of stationary batteries remains limited when compared to electric vehicles, whether for straightforward charging or through Vehicle-to-Grid technology. To fully unlock the potential of electric vehicles, regulatory frameworks need to adapt, and dynamic tariffs must gain widespread acceptance. However, this transformation represents a long and challenging journey, and the extent to which we can adapt our behaviors to resource availability remains uncertain.

1. For simplicity's sake, industrial storage is included in large-scale batteries.

2. The energy is represented as a surface in such a graph (power over time) since energy is the multiplication of power and duration.

3. Numbers extrapolated from this source.

4. Extrapolated from the current 9 GW installed.

5. This was noted in this previous post.

6. Of course, other technologies might well play an important role such as heat pumps, heat storage, etc.