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Opportunities Abound for the Government of Malawi to Attract Investment in RE+Storage Projects

Opportunities Abound for the Government of Malawi to Attract Investment in RE+Storage Projects 1024 512 KM

This blog post was written by Dr David Jacobs and Toby Couture, who supported the LEDS GP with this technical assistance.

View the full report here.

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).

Figure: Overview of the functions of battery storage (Source: Adapted from IRENA 2020. “Electricity Storage Valuation Framework: Assessing system value and ensuring project viability”, International Renewable Energy Agency, Abu Dhabi.)

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).

Jurisdiction (Year of entry-into-service)Project DetailsPrice ($/kWh)Contract length
India “Round-the-clock” auction (2021-22)400MW firm capacity, including solar, wind, and storageUSD $0.04/kWh25 years
Australia (2017; expanded in 2020)Hornsdale Power Reserve: 315MW of wind power with 130MW/129MWh of battery storageUSD $0.055 – 0.066/kWh10 years
Florida (late 2021)Manatee Energy Storage Center: 409MW of solar PV + 900MWh of battery storageN/A (utility-owned)N/A (utility-owned)
Chile (2021 – 2023)Engie Chile:1500MW of renewables with storage in time-differentiated blocks with solar+storage:USD $0.024/kWh40-year concession agreement
Portugal (2021-2022)483MW of solar PV + storageUSD $0.04/kWh15 years
Israel (2022)168MW of solar PV + storageUSD $0.058/kWh23 years

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:

  1. Replacing firm, fossil fuel-based generation capacity
  2. Delivering power during peak hours
  3. Reducing the curtailment of variable renewable energy (VRE) resources
  4. Providing ancillary services
  5. 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.

RESOURCES

Watch this Webinar: Powering Jobs

Watch this Webinar: Powering Jobs 607 384 aflp

Watch this Webinar: Powering Jobs

The off-grid renewable energy industry not only has the potential to connect close to one billion people to clean energy sources and unlock socio-economic potential in so doing, but is also expected to create approximately 4.5 million jobs globally by 2030. Job creation is critical, especially at a time when unemployment has reached record highs across the African continent. To create this magnitude of job opportunities, informed policy interventions are needed. We must better understand the skills required for delivering energy access and leveraging this access for productivity.

In this webinar, Rebekah Shirley from Power for All takes us through the findings from the Powering Jobs campaign, which analyses the energy workforce of the future.

This webinar took place on Tuesday, 6 October 2019.

Speaker biography

Named Africa Utility Week’s 2018 Outstanding Young Leader in Energy, Dr. Rebekah Shirley is the Chief Research Officer at Power for All, where she works to improve access to high-quality data and insights for the energy sector. Her work explores models for integrated energy planning and opportunities for catalyzing decentralized energy markets in sub-Saharan Africa and South Asia. Rebekah earned her PhD from the Energy and Resources Group at the University of California, Berkeley, where she also obtained her MSc in Civil Engineering. She has over 11 years of experience in research, analysis and knowledge management. Rebekah is a University of California Chancellor’s Fellow and has won grants from institutions such as the Department of Energy, the Mott Foundation, and the Rainforest Foundation. She currently resides in Nairobi, Kenya, where she is a Visiting Research Fellow at Strathmore University.

Download Rebekah’s presentation