The growth of the global energy storage market is creating one headline after another, as analysis after analysis predicts new heights of investments and deployments. Coupled with falling technology costs, particularly for lithium-ion batteries, energy storage is expected to play a key part in the global transition toward a more sustainable and reliable power grid.
“Nothing really does seem to be standing in the way of its explosive growth,” Ricardo Rodriguez, research analyst for distributed energy storage at Navigant Research, told Utility Dive.
“[T]he biggest driver of growth going forward — outside of cost — is likely to be the development of new market opportunities and value streams that are opened up by favorable federal and state regulations.” – Ricardo Rodriguez, Research analyst, Navigant Research
The market research company in its latest report identified close to 2,100 energy storage projects globally. And international storage markets are anticipated to grow exponentially over the next decade, a second report from Rethink Technology Research found.
“There are really five primary drivers for storage today,” Rodriguez said. “They are changing rate structures, [electric vehicle] charging integration, solar PV integration, resiliency/backup power, and to some degree, business model innovation. But I think the biggest driver of growth going forward — outside of cost — is likely to be the development of new market opportunities and value streams that are opened up by favorable federal and state regulations.”
Market opportunities for storage
The Massachusetts Department of Public Utilities issued a recent order to allow utility companies to pay commercial property owners if they agree to rely upon their energy storage systems during peak events. The order was a landmark state regulation in the energy storage space, according to Rodriguez.
“I think it was one of the first orders in the nation to incentivize behind the meter battery storage,” he said.
The Navigant report also highlighted the Federal Energy Regulatory Commission’s (FERC) Order 841 and the United Kingdom’s ancillary services markets for creating new value streams for energy storage.
FERC Order 841, which was issued in February 2018, directs independent system operators and regional transmission organizations to establish rules and regulations to open up their wholesale energy, capacity and ancillary services markets to energy storage resources.
Aside from a favorable regulatory structure, utility companies around the country are increasingly betting on renewable energy coupled with energy storage, rather than building new natural gas plants, Rodriguez said. “What we saw in 1Q and 2Q was that a key driver for both utility-scale and distributed-scale storage was traditional generation replacement,” he said.
One such utility is Florida Power and Light Co. (FPL), which in March announced what it says is the world’s largest solar-powered battery storage system — a 409 MW/900 MWh facility set to begin operations in 2021. “The intention behind that project was to accelerate the retirement of two 1970s-era natural gas units that FPL relies heavily upon,” Rodriguez said.