Five major challenges facing storage in 2023


  • Energy Storage Report’s run-down of the major obstacles currently facing the storage industry
  • We also explore potential solutions to the biggest challenges
  • Grid connection and supply chain problems among main concerns 

What will be the biggest causes of headaches for energy storage executives in the coming year?

Here Energy Storage Report brings you a breakdown of five of the most significant challenges facing the energy storage industry.

In addition, we also offer the potential solutions that could help to overcome such obstacles and drive the sector forward.

1. Grid interconnection
At the end of last year, there was a massive 427GW of storage capacity in interconnection queues in the US. And it’s a problem that’s getting progressively worse – solar and battery storage accounted for 85% of new capacity entering the queues in 2021. 
What’s the solution? Firstly there needs to be a more efficient, and cost-effective interconnection process for storage. And secondly, distributed energy resources (DER) interconnection procedures that take into account how storage is typically operated need to be more widely adopted. For example, interconnection rules often require utilities to evaluate the impacts of storage on the grid under the assumption that storage systems will export their full capacity at all times, which is unrealistic. 

2. Supply chain

Supply chain bottlenecks have meant that there has been a notable increase in prices along the energy storage value chain, including the cost of battery cells, in particular, as well as labour costs. Supply chain problems have included logistical challenges as well as increases in the prices of raw materials used in lithium-ion batteries. From a logistics perspective, there have been reports of battery storage components and entire systems themselves not having reached their destination more than two years after being originally shipped due to problems caused by the global pandemic. 
What’s the solution? 
With lithium carbonate prices having gone up by a whopping 500 per cent in just one year, some solar companies are exploring the possibility of making use of non-lithium storage technology.

3. Obtaining lithium for batteries

The battery industry simply cannot rely on long-term supplies of lithium. Projections showing the rapid expansion of the storage market are based on what some consider to be the false premise that the cost of lithium will decrease. The opposite is, in fact, the case – take the example of China, the third biggest lithium producer in the world behind Australia and Chile, where the price of lithium multiplied five times over a 12-month period. There is also likely to be considerable opposition to any future increases in lithium mining due to environmental concerns. 
What’s the solution? The industry needs to better utilise alternative technologies such as zinc batteries, compressed-air energy storage and flow batteries.

4. Cybersecurity risks

Energy storage systems at wind and solar farms usually comprise an energy management system (EMS) and a power plant controller that monitors and controls operations of the storage system in real time. The power plant controller aggregates the data collected from a power conversion system (PCS) and battery management system (BMS). The system of communication between the EMS, PCS, and BMS is vulnerable to cyberattack so steps should be taken to prevent any unauthorised access to the system that could cause significant disruption to the smooth running of operations. 
What’s the solution? Making sure control networks are segmentedusing firewalls, VPNs or proxies, for example, minimises traffic between enclaves and isolates attacks. Also the encryption of data ensures information is kept confidential.

5. Furthering adoption of long-duration storage

The potential of long-duration energy storage is not being fully grasped. Governments are neglecting to provide much-need policy support that would help long-duration storage surmount numerous barriers such as: being ill-defined as an asset class from a regulatory perspective; excessively high initial project costs; customers and investors that are overly concerned with risk; a lack of certainty regarding project revenue; and constraints related to physical infrastructure.
What’s the solution? The establishment of storage capacity and procurement targets, plus the incorporation of storage into grid planning, would provide vital long-term market signals. In addition, there’s also a need for mechanisms that enhance revenues and also provide long-term revenue certainty – these could include contracts for difference, caps & floors, hourly energy attribute certificates, power purchase agreements, and the regulated asset base model. 

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