Renault-Nissan to build energy storage plant from EV batteries to rival power stations

08 June 2017

08 June 2017

The Renault-Nissan Alliance is planning to build a 100MW energy storage plant big enough to power 120,000 homes, which can replace a gas or coal-fired power station, sources told Reuters. It is widely seen as a pilot project that could lead to a major new business opportunity for OEMs.

Following trialling using electric vehicle (EV) batteries for home energy storage, this is a further sign the Alliance is planning to establish an energy storage division. The energy storage plant intentions highlight the Alliance’s growing confidence in the powerful position OEMs will find themselves in following the upcoming electric vehicle revolution.

Energy storage plants – essentially gigantic batteries – help save costs and emissions by charging up in times of cheap excess electricity supply. This is when, for example, wind farms generate too much electricity than needed on a windy day. The storage plants then sell the electricity back to the grid at peak times, when the high demand means the electricity commands a higher price.

This helps solve two key problems holding back efficiency in the energy sector: the need to smooth out the variable energy generated from wind and solar, and the desire to remove the need for gas- or coal-fired power plants to be idling on standby for most of the day, and switched on ad hoc in order to meet times of peak electricity demand.

The Renault-Nissan project both aims to cultivate this demand for a second-hand battery market, as well as encouraging the development of energy infrastructure (which can have 10-year lead times) that will synergise with booming EV sales over the next decade. If successful, the expected high demand for these second hand EV batteries would help drive down the costs of electric vehicles (and raise residual values), and also provide an attractive mechanism for recycling the power cells which contain environment-harming heavy metals.

The plant would be the next stage in the Alliance’s development of its energy business after Nissan built a back-up power storage system for the Amsterdam Arena, home to football club Ajax. Both this previous scheme and the plant project are being undertaken through the Alliance’s partnership with energy storage specialist The Mobility House, based in Munich.

Locations (and thus end markets) reportedly under consideration for the plant include Germany – which makes the economics easier due to the country’s sky-high energy prices (stemming from its shift from nuclear to renewables) – as well as the Netherlands.

The Renault-Nissan Alliance began its moves into the energy storage market after studying an existing energy storage project in the US, which had nothing to do with EVs, whereby California replaced a natural gas-powered plant supplying South California Edison in Los Angeles with a 100MW battery storage system – the same capacity the Alliance is planning for its pilot plant.

The Alliance is not the only OEM entering the field, with Tesla having an established energy storage business, and Daimler, BMW, Volkswagen Group and China’s BYD also exploring the potential applications of second life EV batteries. For example, BMW is collaborating with Swedish utility Vattenfall to deliver 1,000 lithium ion batteries to the energy provider for energy storage projects this year.

However, once the learning stage is complete it is likely that OEMs will create their own energy divisions rather than rely on utility providers, as the number of used EV batteries generated begins to swell.

OEMs are strongly positioned to create energy business units, as their EV batteries create a unique potential offering for the sector. Making batteries for large-scale energy storage facilities is currently far too expensive, but the upcoming electric car revolution is set to flood the market with a large number of suitable second hand batteries as electric vehicles come towards the end of their lifetimes. Economies of scale as the EV revolution takes hold will help establish the competitiveness of these second hand EV batteries in supplying both the home energy storage market and potentially also national-level energy storage schemes.

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