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Liou, J.J.H.; Liu, P.Y.L.; Huang, S. Barrier Factors to Installing Energy Storage Equipment. Encyclopedia. Available online: https://encyclopedia.pub/entry/50905 (accessed on 18 May 2024).
Liou JJH, Liu PYL, Huang S. Barrier Factors to Installing Energy Storage Equipment. Encyclopedia. Available at: https://encyclopedia.pub/entry/50905. Accessed May 18, 2024.
Liou, James J. H., Peace Y. L. Liu, Sun-Weng Huang. "Barrier Factors to Installing Energy Storage Equipment" Encyclopedia, https://encyclopedia.pub/entry/50905 (accessed May 18, 2024).
Liou, J.J.H., Liu, P.Y.L., & Huang, S. (2023, October 29). Barrier Factors to Installing Energy Storage Equipment. In Encyclopedia. https://encyclopedia.pub/entry/50905
Liou, James J. H., et al. "Barrier Factors to Installing Energy Storage Equipment." Encyclopedia. Web. 29 October, 2023.
Barrier Factors to Installing Energy Storage Equipment
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This entry is adapted from the peer-reviewed paper 10.3390/math11194223

Using green energy is an important way for businesses to achieve their Environmental, social, and governance (ESG) goals and ensure sustainable operations. Currently, however, green energy is not a stable source of power, and this instability poses certain risks to normal business operations and manufacturing processes. The installation of energy storage equipment has become an indispensable accompaniment to facilitating green energy use for an enterprise. However, businesses may encounter significant barriers during the process of installing energy storage equipment.

energy storage system ESG sustainability

1. Introduction

The adoption of clean and renewable energy and a reduction in the consumption of fossil fuels are essential trends for the transformation of the global energy supply. The goal of controlling increases in global temperature is, or should be, the aim of concerted efforts in all countries [1]. Increased awareness of the needs for environmental protection and a reduction of carbon emissions are essential for the sustainable development of economies and businesses. The development of clean and renewable sources of energy is a crucial policy direction for sustainable development in all countries. Today, under the encouragement of governmental policies, the technological development and application of renewable energy such as solar energy [2], wind energy [3], ocean thermal energy [4], and biomass energy [3] have become widespread, allowing for the diversification and utilization of varied sources of renewable power. Despite its non-polluting characteristics, renewable energy still has some disadvantages, such as unstable power quality and supply due to its randomness, intermittency, and volatility [5]. For example, the production of solar power is limited by the hours of sunlight, the sunlight intensity, the amount of cloud cover, and the wind speed [6][7]. Wind power is limited by the season and changes in the weather, so it cannot be supplied stably over a long period of time [8][9]. Energy storage systems are a solution to instability in the supply of renewable energy bringing the advantages of backup power, voltage control, and power supply support [10]. However, in practice, the rate of businesses installing energy storage equipment is still low.

2. Barrier Factors to Installing Energy Storage Equipment

2.1. Development of Energy Storage Equipment

The increased use of renewable energy has become an important goal for countries interested in energy transformation and reducing their dependence on fossil fuels. However, providing a continuous and stable energy supply is also important for sustainable economic development. How can companies strike a balance between the dependence on fossil fuels and the variability of renewable energy? Energy storage is a viable solution. At present, most of the literature on energy storage equipment focuses on the development of materials and technologies for the storage of electricity. For example, Faisal et al. [11] mentioned that the types of energy storage technologies that have been developed so far include batteries, compressed air energy storage, flywheel energy storage, superconducting magnetic energy storage, hydrogen storage, hybrid energy storage, and other projects. The application modes developed for energy storage systems have also been discussed for electricity supply applications, ancillary services, grid support applications, renewables integration applications, and end-user applications [12]. The power generated by wind power is intermittent and fluctuating, resulting in instability. Pontes et al. [9] used energy storage equipment to overcome the problem of the instability of wind-generated power. The use of an effective energy storage systems has the advantages of balancing demand and supply, improving power supply quality, smoothing the intermittency of renewable energy, and providing auxiliary services for regulating voltage and frequency on the grid [13]. Energy storage has become an important solution for government and businesses for energy transformation, but the rate of installation of energy storage equipment by enterprises is still very low.

2.2. Barrier Factors to Installing Energy Storage Equipment

The possible barrier factors identified in this study after an in-depth literature review are presented in Table 1. In addition to the initial capital expenditure for the installation of energy storage facilities, the cost of installing fire safety facilities, air-conditioning, and cooling equipment, the cost of connecting to the internal power supply, the cost of installation site preparation, and the cost of professional technicians and governmental authorities must also be considered in the cost factor affecting the decision-making of the enterprise managers. Therefore, a “high initial setup cost” is one of the barrier factors for enterprises setting up energy storage facilities [11][14]. The steep costs for the setup energy storage equipment make the return on investment and the length of the payback period of the investment cost the focus of attention for financial executives, and if the enterprises are unable to confirm the management of the return on investment and the payback period for the equipment after purchase, this will affect the purchase decision [5][15]. Regular maintenance is indispensable to keep the equipment functioning properly, so the “maintenance cost” is of concern for business managers. If the known maintenance cost is high or there may be the danger of an unknown maintenance cost, it could discourage the business from purchasing energy storage equipment [16][17]. Currently, the technology for energy storage equipment is still under development and constant improvement so equipment currently on the market may not have the expected service life due to the immaturity of the technology. Although an energy storage system can improve the utilization rate of renewable energy and counter the problem of instability, the low technical and economic benefits may act as barriers that cause the CEOs of the enterprises to resist the installation of energy storage equipment [18][19].
Table 1. List of barrier factors.
Code Barrier Factors Main Cited References
B1 High initial setup cost [11][14]
B2 Return on Investment (ROI) of operations [5][15]
B3 Maintenance cost [16][17]
B4 Low technical economic efficiency [18][19]
B5 The selection of installation location [14]
B6 Lack of certification and standardization system [5][19]
B7 Energy management system [11][20]
B8 Safety in the operation of energy storage equipment [14][21]
B9 Policy support on investment subsidies or tax incentives [19][22]
B10 Lack of knowledge about energy storage equipment [15]
B11 Difficulties in obtaining financing [23][24]
B12 Lack of clear regulatory guidelines [16][25]
B13 Environmental impact of battery recycling [26][27]
B14 Development of alternative technologies [26]
B15 Dynamic impact of energy storage equipment [16][28]
B16 Roles and functions of energy storage equipment [22][29]
B17 Lack of appropriate insurance planning Expert interviews
B18 Protests from surrounding residents Expert interviews
If the government could provide a national certification and standardization system for products, it would help enterprises to make purchasing decisions, especially when it comes to power supply and safety considerations. The lack of national certification and safety standards for energy storage equipment is thus a barrier to enterprise decision-making [5][19]. A complete energy management system must be able to integrate the enterprise’s internal power supply, both dispatch and management, and energy storage equipment should not operate independently of the energy management system. If the equipment cannot be integrated into the existing energy system for unified management, the enterprise will not be able to manage and schedule the use of its limited energy supplies [11][20]. The safety of energy storage equipment and the impact of its operation on human health are also concerns [14][21]. The inability to determine and assess hidden and unknown risks makes it difficult for businesses to make decisions and creates barrier factors to decision-making. Furthermore, management is still under the direction of government policies. Government could provide investment subsidies or tax incentives for equipment renewal and purchase in line with their policies, to prevent costs being a barrier for enterprise decision making [19][22].
There are still no set standards for financial institutions to assess the amount and period of financing for energy storage equipment, and there are still differences on whether energy storage equipment should be considered as facilities for which enterprises are unable to obtain financial support from financial institutions for their purchase. If equipment must be purchased with their own funds, enterprises may experience economic dispatch problems and this may become a barrier to the decision-making process [23][24]. The role and scope of energy storage equipment should be clearly defined to produce a clear regulatory framework which can be followed by enterprises when making decisions [16][25]. All equipment has a life cycle, and the environmental impact of the materials used for the fabrication of the equipment has to be considered after replacement or disposal. The company may be subject to penalties or claims from the authorities due to this impact or damage, which is a management risk that must be considered by the decision-makers, and if the risk is too high, it will be a barrier to decision-making [26][27].
The effect of the incorporation of energy storage equipment in an enterprise’s power grid on the operation of other production equipment or the production yield is a concern of the enterprise’s production managers. If the operation of the energy storage equipment could affect the quality of the product or the stability of the production line this will be a consideration for the managers considering the purchase of energy storage equipment [16][28]. The function and value of energy storage is not limited to the role of power backup, but also the ability to serve as energy arbitrage in energy dispatch management. It also helps to balance off-peak electricity consumption. This is another factor for enterprise decision-makers to consider in the purchase decision [22][29]. In addition, since energy storage equipment is a new product and new technology, property insurers lack past experience for risk assessment and actuarial calculations, affecting planning to avoid the occurrence of force majeure factors that lead to property loss or casualties. Therefore, the lack of proper risk management planning is also a barrier to the decision-making process. Communication and sharing information with residents around the location of the energy storage facility prior to the enterprise making the decision to install an energy storage system becomes an important task. Possible protests by surrounding residents could be a barrier to the installation of an energy storage system. If the residents’ concerns and needs are not reasonably met, the enterprises’ decision to install energy storage equipment may be affected. Therefore, “lack of appropriate insurance planning” and “protests from surrounding residents “are included in the assessment of barrier factors.

References

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Update Date: 30 Oct 2023
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