For a while now, Engerati has written about the exponential growth of energy storage developments in the US. [US Energy Storage Market Forges Ahead].
State and federal regulatory policies that encourage renewable sources of electric power to supply the grid are playing a large part in this growth. [Engerati-Energy Storage-Regulatory framework and market design needs]. Storage plays a major role in facilitating the incorporation of renewable energy into the US power grid.
Over 30 states have implemented mandatory Renewable Portfolio Standards (RPS) that mandate generation of renewable energy into the electricity generation mix. [Engerati-California’s Energy Storage Mandate-Will Others Follow?] In addition, the recent announcement of the US Environmental Protection Agency's proposed emissions limits for coal-fired power plants are likely to increase that demand significantly.
According to research carried out by the Global Smart Grid Federation (GSGF), between 2GW and 4GW of energy storage could be developed over the next four years. This is obviously dependent on financial incentives -- including government policies that support grants and favorable tax policies, as well as direct private investment from venture capitalists and other sources.
Energy storage is also becoming increasingly economically viable [“Energy Storage Is There”]
and this was supported by GSGF’s report which reviewed several case studies on the use of battery energy storage in grid operation support. [Battery Energy Storage Is Economically Viable (In Some Cases)
US energy storage market mammoth growth
Based on these drivers, it comes as no surprise that the US energy storage market has just announced its best quarter and best year.
According to the GTM Research/Energy Storage Association’s U.S. Energy Storage Monitor 2015 Year in Review, the US deployed 112MW of energy storage capacity in the fourth quarter of 2015, bringing the annual total to 221MW. This represents 161MWh for the year. The annual US energy storage market is projected to reach 1.7GW by 2020, with a value of US$2.5 billion.
The 112MW deployed in the fourth quarter 2015 was higher than all storage deployments in 2013 and 2014 combined. The impressive 2014 energy storage market figures have probably propelled 2015 figures. The energy storage market grew 243% over 2014’s 65MW (86MWh).
The report breaks down the market into three segments: residential, non-residential and utility. The utility segment, also called front-of-meter, continues to be the bedrock of the US energy storage market. In 2015, front-of-meter storage accounted for 85% of all deployments for the year. Most of these deployments were in the PJM market, where over 160MW of energy storage systems went online in 2015.
The residential and non-residential segments combine to make up the behind-the-meter market. While much smaller, the behind-the-meter market grew 405% in 2015. The report notes that the residential market is geographically diverse but was led by Hawaii for the year. California led the non-residential segment.
GTM Research forecasts that the annual US energy storage market will meet the 1GW mark in 2019 and by 2020 will be a 1.7GW market valued at US$2.5 billion.
Energy storage is changing industry paradigms
Ravi Manghani, GTM Research senior energy storage analyst and author of the report points to 2015, “the year when energy storage really took off and says that while most of the growth was limited to a single wholesale market of PJM, he expects a growing interest for storage in several markets.
“Energy storage is changing the paradigm on how we generate, distribute and use energy. With exponential growth predicted over the next couple of years, energy storage solutions will deliver smarter, more dynamic energy services, address peak demand challenges and enable the expanded use of renewable generation like wind and solar,” said Matt Roberts, Executive Director of Energy Storage Association (ESA). “The net result will be a more resilient and flexible grid infrastructure that benefits American businesses and consumers.”
Today, more utilities are considering storage along with an assortment of traditional and non-traditional assets to meet reliability, capacity and system upgrade needs. The recent renewable tax credits extension is expected to further boost energy storage as more storage paired with renewables will be deployed.
High costs along with early stage technology challenges and market and regulatory constraints have been barriers to wide-scale energy storage adoption but it seems as if these are becoming overcome. As the number of market entrants increase, this is bound to improve.