“Nobody has any idea”: economist on whether battery storage will work

There is a lot of money at stake, as Ontario opens up to contracts for Battery Energy Storage Systems

Small Battery Storage facility operated by Shell

November 14, 2023

As of today, there are at least 24 known proposals for Battery Energy Storage Systems or BESS in response to the Independent Electricity System Operator (IESO) current Request for Proposals.

The idea is that power is purchased from the grid in times of surplus (e.g., overnight excess unwanted wind power), stored, then sold back to the grid at higher prices when peak power is needed.

The rush to proposal stage has been so fast that one person in the Rideau Lakes area told us, “Last week I didn’t even know what a BESS was. This week, I’m going to meetings and writing letters to my MPP and municipal government!”

In the City of Ottawa where there were five proposals for the rural areas, two city councillors have commented that the technology is very new, they were not comfortable with the lack of information about the proposals in context of the risks associated with large lithium batteries, and declined to support the proposals.

(Wind Concerns Ontario has commented formally on gaps and inadequacy in the current process, particularly with regard to the information being given to municipal governments and the community engagement process.)

On another front, do BESS make any financial sense?

Certainly there is money to be made for the project developers, many of whom are also in the business of developing wind and solar power projects. According to global consulting firm McKinsey & Company, the future is rosy:

“…this has created a significant opportunity. More than $5 billion was invested in BESS in 2022, according to our analysis—almost a threefold increase from the previous year. We expect the global BESS market to reach between $120 billion and $150 billion by 2030, more than double its size today.”

On the other hand, we saw electricity bills jump by 250 percent in Ontario during the wind power Gold Rush 2009-2014. What will happen thistime?

Ottawa energy economist Robert Lyman says, we need to know more.”

His comment, exclusive to Wind Concerns Ontario:

Any plan to power an electrical grid with wind and solar generation and to eliminate the backup security of supply provided by fossil fuels like coal and natural gas must address the cost and feasibility of the battery storage needed.  The only battery storage technology that is widely available for grid scale storage is lithium-ion.

The US federal government’s National Renewable Energy Laboratory produces periodic reports on the current and projected costs of utility-scale batteries of the lithium-ion type. The most recent edition, from June 2021, gives the current average cost as approximately US $350 per kilowatt-hour. It projects declining costs over time, but those projections are speculative and do not recognize the actual trends in recent battery costs. For example, in 2020-2021, the average costs for lithium ion battery installations in New York state was US$464/kwh and in 2022, the price for contracts actually awarded increased to US$567/kwh.

Storage is expensive

Storage is extremely expensive and if generally used will drive up electricity costs significantly. They are by far the largest part of the costs of an electricity system that relies upon wind and solar generation for essential supplies. They also give rise to the need for much more transmission facilities, which also adds to the costs, although these costs are rarely if ever made public in advance. 

Lithium-ion batteries provide backup capacity for relatively short periods, usually measured in hours. However, variations in the demand for and supply of electricity due to weather or other events can occur over periods of days, weeks or even whole seasons. Lithium-ion batteries are incapable of providing such service yet, “long duration” battery technologies do not yet exist and are still at the research or pilot project stage.  

Does the darn thing work? And how much will it cost?

The system-wide addition of lithium-ion batteries could increase electricity bills by up to 20 times depending on how much storage is needed. Research on possible long-duration batteries is at the earliest stages, and nobody has any idea what, if any, technology might work or how much it might cost. 

 Before the province of Ontario starts building several battery-storage plants, it might be a good idea to build one pilot to find out if the darn thing works and is affordable.

Robert Lyman, Ottawa

Public meetings are still being held across Ontario as part of the BESS proponents’ mandatory community “engagement” process. Concerns being voiced include the risk of fire and the need for emergency preparedness, noise, loss of productive agricultural land, lack of experience with BESS, risk to aquifers, loss of property value for neighbouring owners and the cost to electricity consumers and business.

Deadline for proposal submission to the IESO is December 12, 2023. Municipal approval is mandatory for a successful contract award.


What's your reaction?


  • Ike Bottema
    Posted November 14, 2023 1:01 pm 0Likes

    Excellent article.

    Of course much more could be said the most significant would be an exploration of capacity duration, i.e. the maximum amount of energy that can be stored at any given time. That too implies a cost. Of course there’s also the maximum charge/discharge cycles {i.e. lifetime) to consider. That consideration is itself impacted by the maximum charge/discharge rate which directly impacts battery lifetime.

    All to say, battery technology and i’s application to grid supply is a complex subject that most people are completely unaware of. I fear most municipal utility operators are unaware of the many battery storage pitfalls and their lofty goals of electricity supply using battery technology will not be met, leaving ratepayers and taxpayers holding the bag.

    • admin
      Posted November 14, 2023 9:13 pm 0Likes

      The IESO process has been rushed, and many municipalities are feeling that…it’s working against the proponents who are encountering communities saying, What is this???

  • Ray Brown
    Posted November 14, 2023 10:03 pm 0Likes

    The world is being run by idiots,if you look at data you will see that recorded temperatures were the highest in the 40s and early 50s before the industrial revolution,man is not the reason for global warming, it is normal, we are lucky it is warmer rather than cooler, a little cooler and we would be in serious trouble food wise, it is time to do something about these morons that don’t have a clue about the real world.

  • Denise Holt
    Posted December 17, 2023 12:03 pm 0Likes

    I say that this proposal is ridiculous. How do other people decide for your community something nobody wants but is FORCED on you. It was very underhanded and cowardly that Capstone only informs the people that is most affected by this only approximately 2 weeks before the proposal date to even inform us of this proposal. Not the Courtesy of time. Unfair and underhanded to only give us about 1 week before a zoom meeting. First of all that is not enough time for us to learn or appropriately respond. Second a zoom meeting REALLY!!!! We deserved a public meeting face to face. Third you have this meeting on a Friday night between 6 to 8 on the busiest month of the year right before Christmas. Why did you pick the most inconvenient night, time and month. Families are likely just getting supper and getting young children to bed or sports for older kids not to mention Christmas parties. Fourth some people like me are seniors and not into technology (we had to download zoom just for this meeting) and also our shoddy internet service. This is total BS and was so Nasty and unfair and underhanded. I’m very disgusted and this impacts my life in a very negative way . . . Stress, anxiety and sleeplessness. SO NOT RIGHT!!!!!!!

    • admin
      Posted December 18, 2023 7:05 pm 0Likes

      Please write to your MPP with your concerns about the IESO process. The IESO laid out a series of minimum requirements which in many cases, proponents took to be the maximum.
      There was no place in the engagement process for response to community concerns such as yours i.e., existing mining tunnels and fragile karst topography.

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