Japan And US Lead Battery Storage Implementation

The battery storage market is expected to grow to unprecedented levels, driven by a range of factors.
Published: Fri 20 Feb 2015

Battery storage technology is an increasingly attractive solution to support system flexibility with increasing levels of penetration of variable wind and solar generation. [Engerati-Battery Storage For Renewables – A Rapidly Developing Market]

Battery storage market

A new study from the International Renewable Energy Agency (IRENA), ‘Battery Storage for Renewables: Market Status and Technology Outlook’, notes significant growth in the battery storage market in the power sector in recent years. Propelled initially by government subsidies and research and demonstration programmes, many of the technical challenges of battery storage are being overcome. Increased knowledge of how these installations function allow utilities to become more comfortable with their utilization. Cost reductions are allowing batteries to be increasingly competitive in the market. Further, regulations are beginning to move away from an approach to grid services centred on fossil fuels.

Citing figures from Navigant Research, the study gives global 2014 revenue for utility-scale applications (excluding battery storage installed behind-the-meter) as US$220 million. Navigant projects this to increase to US$18 billion in 2023. Annual battery storage capacity will rise from 360MW to 14GW over the same period. For utility-scale projects, battery use for renewables integration in 2014 was expected to comprise 29% of the total. This is followed by peak shaving (20%), load shift (18%) ancillary services (17%) and other applications (16%). Renewables integration is expected to remain a primary application in 2023, providing 40% of cell-based revenue. This will be followed by load shifting application (37%), peak shaving (15%), ancillary services (3%) and others (5%).

Market movers

First movers in the market are Asia Pacific, Europe and North America. Specifically Japan and the US lead the world in battery storage implementation thus far, respectively with 277MW and 191MW operational and 59MW and 106MW announced, contracted or under construction (based on 2013 and 2012 data). However, other countries are also increasing deployment, including Germany (3MW operational, 10MW in development) and China (35MW operational, 18MW in development).

In the US growth has been driven by the country’s 2009 federal stimulus package, the American Recovery and Reinvestment Act (ARRA). It is also driven by regulatory changes helping to integrate and value services provided by battery storage. Other drivers are grid reliability issues in parts of the country, state-level storage mandates and renewable support programmes.

Battery development in Japan was centred on Tokyo Electric Power Company’s large sodium-sulphur installations, prompted by concerns over the country’s reliance on pumped hydropower storage. However, this has changed following the 2011 earthquake and tsunami and subsequent nuclear reactor meltdown, which motivated greater emphasis on renewable energy. Government subsidy programmes have motivated storage development. Business innovation is also driving household battery storage implementation.

In Germany battery storage development has been prompted by the increasing penetration of wind and solar power, both at utility scale and residential level. Likewise in China, where the availability of renewable energies has grown beyond the capacity to be utilised, due to lack of transmission infrastructure.

Island systems

Notwithstanding these developments, the study points to islands and remote areas as one of the most attractive opportunities for battery storage implementation in conjunction with variable renewable energy deployment.

Most islands and many off-grid areas are powered by diesel generation, which is expensive and has high emissions. If initial investment is included, it may cost more than US$0.35/kWh to run diesel generators whilst most utility-scale renewable power generation have levelized costs in the range of US$0.05–0.25/kWh. [Engerati-Renewables Costs Now Competitive With Fossil Fuels] Battery storage technology on islands may be utilized to help integrate renewable energy, reduce reliance on diesel and gas generation, and in some cases lower costs. Many islands operate mini-grids, have weak interconnection and a lack of flexible power sources. This means they would benefit from storage to reliably integrate significant amounts of solar or wind power. This starts in some instances from a 15% share of variable renewable energy generation in the system.

The overall energy storage capacity potential of islands has been estimated at 5.3GWh.

Remote areas also represent significant market opportunities. For example, in 2011, the African market showed the largest annual growth in volume for European battery systems. In 2012-13, an Asian company distributed around 2.7 million lead-acid batteries to customers with solar PV in Bangladesh, Nepal and India. Rural areas in these countries have weak or little grid interconnection.

Further reading

IRENA: Battery Storage for Renewables: Market Status and Technology Outlook

IRENA: Case Studies: Battery Storage