Battery storage could seriously disrupt fossil fuel industry: Report

A new report from global credit ratings agency Fitch Ratings has warned that battery storage is showing serious potential to “displace current technology far more rapidly than anticipated.”

The report, Disruptive Technology: Batteries, notes that one of the key technologies that will be a major factor in how quickly the energy transition unfolds is on the fast-track – a trajectory that puts all sorts of industries, and particularly those centred around fossil fuels, exposed to huge risk.

“Greatly accelerated adoption of battery technology would be disruptive for sectors accounting for just under a quarter – $US3.4 trillion – of corporate bonds outstanding globally,” the report notes.

“An acceleration of the electrification of transport infrastructure would be resoundingly negative for the oil sector’s credit profile,” the report says. “And it could change the economics of ‘peaker’ power plants currently used to meet short periods of peak loads.”

As the report notes, these “peaking” plants have traditionally been gas, and oil fired, with the ability to ramp up and down relatively quickly to meet changing loads.

“‘Peak shaving’ resulting from battery storage of energy would reduce the peak to off-peak price differential and could eventually lower clearing prices to a point where traditional peakers can no longer compete. Mitigating grid reliability concerns will be the main focus of battery technology but the possibility of disruption among peakers is high.”

Disruption wrought by battery storage is also expected to hit electric utilities, and the automotive sector, “potentially polarising the market into winners and losers,” the Fitch report says.

In Australia, we have seen this play out to some degree already, with last week’s news about the March 2017 closure of Victoria’s Hazelwood coal power plant; and then the launch of that other exciting Tesla product, the Powerwall 2 home battery storage system, which has effectively doubled in capacity while halving in cost, all in little more than nine months.

Meanwhile, says the report, most forecasts – including those favoured by the Turnbull government – assume incremental improvements in battery and other renewable technologies, “which still leaves significant room for fossil fuels.”

This gradual change, the Fitch analysts write, allows companies – and governments – to slowly adapt and monetise most of their investments to date. “But the possibility remains for more rapid improvements.”

© 2016 Solar Choice Pty Ltd