The global energy storage market will grow thirteen-fold in six years, and the United States will remain the market leader, according to a new report. The Global Energy Storage Outlook 2019 predicts that China will also be a key player in the rapidly expanding storage market, which is expected to consist of 158 gigawatt hours of stored energy by 2024.
According to the Wood Mackenzie study, the rapid expansion of energy storage around the world will require investments totaling $71 billion by 2024, excluding hydro power. Taken together, the U.S. and Chinese markets will account for 54 percent of globally deployed storage resources five years from now.
“Over the last five years, the world began to experiment with storage; in the next five, storage will become a key grid asset,” explains Ravi Manghani, head of storage research at Wood Mackenzie. He identifies 2018 as the key turning point; 50 percent of all energy storage deployments over the past five years took place in 2018.
Many technological and financial factors have been central to the energy storage revolution. Prices for batteries have dropped dramatically, and improved production techniques allow more powerful batteries to be constructed in smaller sizes.
The growth in the U.S. storage market is also being driven by policy initiatives at the state level. California, Hawaii, New York, and Massachusetts all contributed significantly to a doubling of the U.S. energy storage market in 2018, when 350 megawatts of storage were installed. Researchers expect the market to almost double again in 2019, and triple in 2020.
In Hawaii, regulators recently approved the construction of six grid-scale solar-plus-storage facilities. These plants are set to become increasingly important for the storage market, since they enable excess energy produced by solar panels during the day to be stored in lithium ion batteries for use during peak demand in the evening.
According to IHS Market, solar-plus-storage facilities will be cost competitive with gas and coal power plants by 2023. This may lead to a further acceleration in the storage market if utilities opt to install batteries rather than gas burners when they build new peaker plants.
Not all the credit can go to individual states. The Federal Energy Regulatory Commission (FERC) also gave a big boost to the energy storage industry with Order 841, which calls on regional grid operators to make plans to integrate storage into their markets. Final implementation of these plans is expected by late 2019.
Utilities are also responding to demand by expanding their storage procurements. In February, Arizona Public Service tabled a plan to install 850 megawatts of storage by 2025. One month earlier, Hawaiian Electric Company presented a plan to regulators that will increase its energy storage by 1048 megawatts.
“This is all about recognizing value, and utilities are on the bleeding edge of recognizing storage’s value right now,” says Daniel Finn-Foley, a senior storage analyst at Wood Mackenzie. “When they do look at it, guess what happens? They pick it.”
Other observers note that while the FERC rules will encourage a substantial increase in utility scale storage projects, significant changes may take a while. Kaileen Gamache, senior council with Norton Rose Fulbright, explains that while the FERC has set a December 3, 2019, for the plans related to energy storage to be in force, industry consultation may delay the process. She stresses that industry comment on the operators’ proposals is an important stage in the process but adds, “it may mean that there is still a long stretch of continued uncertainty for storage developers.”
Other countries to watch
While the United States leads the way in energy storage market growth, Wood Mackenzie’s study also notes that China’s expansion is rapidly proceeding. In 2017, the government in Beijing set a 10-year target to establish an energy storage industry, and pilot projects collectively totaling hundreds of megawatts have been put into place.
One project in the northwestern province of Gansu will see the installation of 720 megawatt hours of storage at a total cost of $174 million.
Beyond these two major markets, the Wood McKenzie study also points to Australia, Japan, and South Korea as offering substantial energy storage growth over the next five years. Like China, the South Korean storage market has largely been steered by government planning. On the other hand, Australia’s strong residential solar market has created the conditions for battery storage to play a crucial role in ensuring the stability of energy supplies. Australia was the world leader in residential battery storage during 2018.
Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views, and at the Canadian Labour Institute.