Recent trends and advancements in technology and business models clearly indicate that storage has solidified its position as a viable solution for a more resilient and efficient grid system. Energy storage has proven that it can offer the grid improved stability with fewer disruptions, smoother distributed energy and electric vehicle integration and decreased emissions, while providing cost savings and flexibility to behind-the-meter storage users. Considering this progress, the “Proven. Ready for Business.” theme for the Energy Storage Association (ESA) Annual Conference and Expo that kicks off this week in Boston is an appropriate one.
As we look ahead to the ESA conference, we’re reflecting on last year’s event, “A Vision for Energy Storage in 2025,” which calls for 35 gigawatts (GW) of storage by the year 2025. As the industry gathers to discuss progress towards the ESA Vision, let’s take a look at the top four energy storage trends on our radar:
I: Performance Guarantees
As more energy storage projects are commissioned, we expect the huge amount of performance data collected from them to become increasingly useful for system designers, project developers, grid operators and, perhaps most critically, financiers and insurers. The first insurance products offering performance guarantees to energy storage systems will de-risk projects and unlock a significant amount of capital for project finance. The combination of performance guarantees, decreasing equipment costs and incentive programs (discussed below) mirrors similar developments in the solar industry over the past five to ten years, and we expect to see more zero-down Power Purchase Agreement (PPA) offerings for storage in markets across the country.
II: Lithium Ion Batteries
The price of lithium increased 61 percent from 2016 to 2017 due to the increasing demand for electronic devices, electric vehicles and energy storage systems. Storage systems with capacity of 100 MW-hours or more require the same amount of lithium as several thousand electric vehicles. The long-term outlook for the supply is good, as USGS estimates there are 47 million tons of available reserves and annual global consumption is currently around 41,500 tons. But as prices increase, there are short-term uncertainties and complexities with the supply chain that could lead to shortages or surpluses.
We’re keeping an eye on emerging technologies that will help address these uncertainties. Companies like Canada’s MGX Minerals are developing new technologies to help drive down costs by enabling more stable, sustainable and efficient supply chains for battery metals, including lithium, from waste byproducts such as oil sands wastewater and petcoke. “In this fundamental shift we are in between fossil fuels and renewable energy, we get these hybrid models,” said CEO Jared Lazerson of the company’s approach. The company’s modular process results in a low-cost, quick, high-recovery process that is easily scalable and shortens the lithium extraction process from nearly two years to less than 24 hours
III: Government Mandates and Targets
According to an ESA white paper, grid outages cost the U.S. economy as much as $150 billion in 2017, largely due to expensive back-up power resources and slow response times that left residents and businesses without power. With grid reliability and other benefits of storage coming into focus, states are taking notice and implementing new policies to expand energy storage within their borders. A few stand-out policies and targets we’ll be keeping an eye on:
- At the beginning of the year, New York pledged to deploy 1,500 MW of storage by 2025 in support of its goal to achieve 50 percent renewable energy by 2030. The target aims to remove traditional storage market barriers while attracting companies to bring their energy storage business to the state.
- California regulators recently approved new market rules for storage. Utility Dive’s Robert Walton explains that these rules seek to “enable the resources to stack incremental value and revenue streams” through multiple venues, including the wholesale market and grid. More broadly, the California Energy Commission’s Energy Storage Roadmap identifies policy, technology and process changes needed to address sector challenges.
- Maryland’s Energy Storage Standard seeks to capitalize on declining costs and emerging technologies to enable the deployment of storage for both utilities and customers.
- In support of a recommendation to increase Arizona’s renewable energy target to 80 percent by 2025, the state’s utility regulator recently proposed the goal of installing 3 GW of energy storage by 2030. Electrek points out that on a per-capita basis, this number is equivalent to California setting a 17 GW goal by 2030.
IV: Private Company Innovations
Private companies are making headlines with investments and innovations related to energy storage. Just last week, BP announced that it will use Tesla battery technology to support a 25 MW windfarm in South Dakota. The oil industry giant currently operates 13 windfarms across the country, and this will be its first installed storage system.
Google’s Alphabet also announced that it aims to invest in battery storage solutions in 2018 such as stand-alone battery farms, behind-the-meter installations or systems in support of renewable energy similar to the BP project.
When ESA announced its Vision for Energy Storage in 2025, the U.S. had just 500 MW of installed capacity. Growing this number to 35 GW in less than 10 years is certainly ambitious, but leaders were quick to cite the procurement and installation of more than 70 MWs of energy storage in less than six months after the catastrophic Aliso Canyon gas leak. With a strong commitment from stakeholders, and given these recent energy storage trends, it’s possible to find the technology and financing to deliver on these ambitious targets, even without a large-scale disaster like Aliso as a motivating force.
Based on recent investments, project announcements, policies and more, here at Antenna Group we’re confident that storage will continue to dominate headlines and will soon be receiving the levels of investment, policy support and interest outside energy industry circles that renewable energy resources received at a comparable stage in their evolution.