With so much focus on EVs, it’s easy to forget about the growing behemoth known as the energy storage sector.
Recent analysis by Wood Mackenzie Power & Renewables and the Energy Storage Association (ESA) shows the deployment of energy storage installations in the US alone doubled in 2018, with 2019 set for another doubling of deployed capacity.
The research found an 80% year-on-year jump in deployed storage capacity to 777 megawatt-hours (MWh) of capacity in 2018, with the forecast calling for 1,681MWh of grid-connected storage to be deployed in the US alone in 2019.
The US residential storage market quadrupled in 2018 year-over-year.
The researchers credit policy intervention at the state level for most of the growth. They point to a series of gubernatorial, legislative and regulatory actions aimed at unlocking the potential of storage, specifically to create a more resilient, efficient, sustainable and affordable electricity grid.
Incorporating energy storage in utility planning processes was another key US policy theme for 2018, with the National Association of Regulatory Commissioners adopting a resolution calling on utilities to include storage in long-term planning efforts. At the federal level, the Federal Energy Regulatory Commission’s landmark and bipartisan Order 841 provided a critical policy signal that triggered discussions on breaking down storage deployment barriers in regional markets.
The report noted 311MW of energy storage were deployed in the US in 2018, with Front of the Meter (FTM) accounting for 47% in megawatt terms.
Critically, more Behind the Meter (BTM) storage was deployed in 2018 in the US than any previous year on record, accounting for 53% of the megawatts deployed in 2018. The US BTM market is expected to pick up an increasing share of overall storage market value and is expected to account for more than half of annual market value in dollar terms by 2021.
Indeed, during 2018, several utilities initiated programs to explore the use of residential storage for grid services, opening a new chapter in residential storage where market players can access diverse new revenue streams beyond backup power, the ESA said.
2018 was also marked by battery supply shortages, as manufacturers committed capacity to the South Korean market to take advantage of incentives.
Consequently, US storage system price declines slowed in 2018, with some products even seeing slight price increases. These shortages are expected to be short lived and to decline from the end of the March-quarter, as several Tier 1 battery vendors bring new production capacity online.
The researchers expect battery-rack prices to fall below US$150/kWh over the next five years.
WoodMac estimates that the annual value of the US energy storage market will exceed $2.4 billion in 2020, rising to $3.8 billion by 2023 as falling costs and favourable policies drive new demand.
This all bodes well for technology metals such as cobalt, graphite and nickel, all of which are needed to make lithium-ion batteries – the current, undisputed leader in the race for dominance as the commercial technology of choice for grid storage.
Yes, vanadium-flow batteries have been catching up, however, that particular tech continues to play second fiddle by a very large margin, since today’s world is a lithium-ion world. Lithium-ion batteries will continue to dominate the grid-storage mix for at least the next decade, if not longer, given the incredible amounts of capital flowing into lithium-ion battery mega-factory build-outs happening in the US, Europe and especially in Asia.
