The electric storage market for up to 4 hours is poised to grow exponentially over the next few years, enabling penetration of renewable power to higher levels. This established base will then open markets for longer duration storage of 6 hours and more.
Next few years
As costs dropped precipitously over the last decade, the affordability of wind and solar power versus other forms of power lead to favorable policies and impactful levels of intermittent renewable power on many regional grids. This virtuous cycle of lowering costs and increased demand is now spreading to energy storage. Li-ion batteries are being deployed at a sharply increasing rate for durations up to four hours and capacities ranging from a few MW’s to 100MW and higher. Exponential market growth is forecasted in the U.S. and globally for the next several years.
The enablers for this growth are gaining momentum:
- Li-ion battery costs are expected to continue declining for years, driven by value chain build out for the expanding electric vehicle market
- Market rules that recognize the uniqueness of energy storage (consumes and produces power) are being developed. Grid regulators such as FERC and state entities are engaging grid operators to create a fair, functioning electric storage market
- Policies driving renewable power are gaining momentum
- More states continue to add targets of up to 100% renewable power between 2030 to 2050, as well as a growing list of global corporations
- More individual utilities are setting similar renewable targets and accelerating plans for fossil retirements
- More utility IRP’s are including renewable power and storage in their analyses protocol, as costs and environmental benefits gain parity with fossil fuel alternatives
Later in 2020 decade
Looking at California as a proxy for future high renewable penetration grids around the world (approaching 20% by 2020), the intermittency effect of large solar PV penetration and falling li-ion battery costs have combined to make 4 hour storage an economic choice, even over renewal of some existing combustion turbine contracts. Many islanded systems also are poised to pursue up to 100% renewable targets, exemplified by Hawaii now installing 4 hour battery systems as an economic choice to replace high cost diesel power.
From a market perspective, as renewable penetration on a regional grid climbs, from 30% to 50% towards 100%, a need for storage durations longer than 4 hours is anticipated to match electricity supply and demand. However, the cost increase with longer duration fixed electrolyte battery solutions such as li-ion is relatively linear, making longer time frames increasingly expensive.