A Big Year Ahead for Energy Storage

While energy storage is catching on fast around the world, there are still a number of obstacles in its way.
Published: Wed 02 Apr 2014

Last year saw a number of large developments for grid-scale energy storage. We are expecting the same for 2014.

Energy storage-a recognized solution

The California grid storage mandate-to attain 1.3GW of grid storage by 2020-was a huge leap forward for the storage industry and it looks as if a number of other states and countries are following their example: [California’s Energy Storage Mandate-Will Others Follow?]

  • Puerto Rico has stated that all new utility-scale renewable energy projects include storage equal to 30% of capacity.

  • New York announced in January that it will create incentives to reduce the load on the grid by 100 MW, partly by storing electricity at the building level. It is offering subsidies of US$2100 per kilowatt for battery storage and US$2600 for thermal storage.

  • Ontario made a public announcement that it will start procuring 50 MW of energy storage by the end of 2014.

  • Germany began offering nearly US$35 million in energy storage subsidies in the middle of 2013. For homeowners, the subsidy amounts to 30% of the cost of the storage is installed in a house with solar panels.

  • Japan recently announced it will give nearly US$100 million in subsidies to homeowners and businesses for energy storage. The government will pay up to two thirds of the cost.

The overall market for grid-scale energy storage is growing quickly. "People are turning to storage as a solution," confirms Haresh Kamath, program manager for energy storage at the Electric Power Research Institute (EPRI). By 2020, EPRI estimates the price of lithium-ion batteries will be one fourth when it was in 2010.

Subsidies will drive energy storage

The introduction of subsidies for consumers and businesses installing energy storage in Japan and Germany is expected to drive the installation of systems and help bring costs down-just as they did for solar PV during the last 10 years. This is according to Sam Wilkinson, research manager for Energy Storage at IHS Research. Wilkinson adds that Japanese and German subsidies fuelled the growth of solar power so there is an expectation that energy storage with follow a similar path.

On the customer side, many are adopting storage solutions as part of their renewable power, distributed generation and commercial energy management plans. Without storage, the benefits of renewable energy cannot be fully realized. However, there are a number of obstacles standing in the way of energy storage development.

Competing on the market

In many cases, energy storage solutions are still proving to be costly and this is proving to be a major obstacle for further development. Developers need to prove that advanced batteries, thermal energy storage, and a whole host of other technologies can compete economically.

The Department of Energy has set a target of US$250 per kilowatt-hour for advanced energy storage. This is a goal which still seems to be out of reach for commercially available systems.

It is for this reason that the other side of the cost-benefit equation be explored. Developers need to uncover new ways for storage systems to pay for themselves over time.

While energy storage systems are capable of carrying out a vast variety of tasks for the grid and its customers, regulatory and economic obstacles must be overcome to allow them to tap these multiple opportunities.