Was 2015 the breakout year for energy storage?

An article titled ‘The Promise of Energy Storage’ on BERC in February 2015 discussed energy storage, highlighting that energy experts unanimously opined storage to play a critical role in the future of the energy sector. Here’s a look at how 2015 could very well have been the year that energy storage took off (insights from the US Energy Storage Monitor report).

In 2015 Quarter 4, the US Energy storage market saw addition of 112 MW of energy storage capacity, a figure that was more than combined storage capacity installations in 2013 and 2014. In fact in 2015, the US added 221 MW of energy storage capacity as against 65 MW in 2014, representing a colossal grow of nearly 250%.

Picture 1

Source: Energy Storage Association

As discussed in the above mentioned article, energy storage helps in numerous ways such as addressing the limitation of instantaneous consumption post energy generation, addressing a system’s peak energy demands, and enabling better use of clean resources such as wind and solar that have ‘no fuel’ and are dependent on climate’s seasonality. Energy storage will enable more balanced and efficient operations of the grid, and is critical for deploying smart grids and distributed energy systems on a large scale. Here’s a great example explaining what storage does – the Kauai Island cooperative (on the island of Kauai) worked with Solarcity to build a solar project with an energy storage system

Picture 3

Source: Greentechmedia

The above demonstrates the generation vs consumption pattern. Solar energy comes in the middle of the day, and is not there in the evening when the load is at its peak. Thus conventional base-load serving power (a lot of diesel) is required which is polluting and in-efficient. With a storage system, the solar generation in the day charges the battery that provides electricity in the evening, thus resulting in cheaper and cleaner energy.

Several factors have contributed to the increased adoption of energy storage. Advancements in technology (primarily battery systems costs) and better economies of scale are driving costs down. The minimum cost/kWh for utility-scale storage systems fell from $800/kWh in Quarter 1, 2015 to $750/kWh in Quarter 2, 2015 (a ~6% drop). In fact, Tesla announced that it will target producing batteries at $250/kWh that will without doubt further push industry-wide battery costs further down. State incentives and policy played a big role as well. For example, California was the biggest market for non-residential energy storage installations in 2015. California provides incentives such as ‘Self-Generation Incentive Program’ that provides up-front as well as performance based incentives that fund nearly 60% of the storage system’s costs. Further, the extension of renewable tax credits will further support deployment of renewable energy projects that use storage. Policy/government support is expected to continue pushing the storage industry – For the first time, energy storage started appearing in ‘Request for Proposal’s’ from different utilities and grid planning activities across USA. In fact, in 2014 10 states had some sort of energy storage policy-level developments, while in 2015, 20 states had policy work on energy storage.

Picture 2

Source: Energy Storage Association

Going forward, costs are further expected to come down promoting increased adoption of storage technologies – it is estimated that costs for utility-scale energy projects will be 29% lower in 2017 than 2015. Further, the energy storage market in USA will touch 1 GW (1000 MW) capacity in 2019 and by 2020 will be a $2.5 billion market. Energy storage is gradually shifting from the stage where it was a technological barrier to a stage where we are looking at commercial scale-up solutions.

Featured Image Source:Cleantechnica