In general, the deployment of energy storage is good news for renewable energy and especially solar, because it helps stretch out the availability of this energy source, which would otherwise only be accessible during daylight hours.
The new report finds that installations of energy storage — overwhelmingly dominated by lithium ion batteries — grew 27 percent to 431 megawatt hours in 2017. But the growth is expected to be more than double in 2018, up to 1,233 megawatt hours (or 1.233 gigawatt hours), the group predicts.
A gigawatt hour in this context refers to the ability to store or discharge 1 billion watts for the period of one hour. That could be accomplished by installations that store energy for only an hour, but also by installations that store or release a half-billion watts but do so for two hours, or a quarter-billion watts for four hours — and so on. Batteries vary in how much power they are able to discharge at one time, and on how much energy they are able to store.
Either way, the 1 gigawatt hour figure is “a major landmark for the industry to reach,” said Ravi Manghani, GTM Research’s energy storage analyst and author of the new report.
The industry’s forward-looking view might be a little too rosy, but storage is definitely advancing, said Eric Hittinger, an energy expert at the Rochester Institute of Technology, of the latest projection.
“It seems a little optimistic to me,” Hittinger said. “However, I think they, I would agree with them qualitatively that this is an industry that is going to keep growing, the markets are there already and are improving actually over time.”
The enthusiasm is reflected by Tesla, a major battery manufacturer that announced a home storage system, the Powerwall, in 2015. The company said in its latest earnings announcement that in 2018, “we aim to deploy at least three times the storage capacity we deployed in 2017.”
Hittinger noted that prices for storage still remain quite high, limiting uses and deployment.
“The Holy Grail is essentially to be able to have this large-scale bulk energy storage that’s just moving energy, many megawatts across days or even weeks,” Hittinger said. “There would be dozens or hundreds of gigawatt hours of market there, but only if somebody can deliver it for maybe $100 a kilowatt hour or so.”
Still, Manghani said that individuals are adding storage in their homes to provide backup systems in the event of power outages and also to use energy from home solar panels in the evening when the sun is no longer shining.
California has been at the center of this activity, thanks to the Self-Generation Incentive Program, which provides rebates for customers to install storage in their homes (or businesses). Other states have also dived in, with Maryland recently launching a tax incentive for installing energy storage systems.
These favorable policies, combined with favorable steps on the federal level by the Federal Energy Regulatory Commission, are one reason storage is expected to grow this year.
Large businesses and institutions are also deploying storage assets. Because these consumers often get billed different rates depending on when they are using power, having storage lets them lower their costs by shifting usage around in time, Manghani said.
“Energy storage is used as a tool to shave off their peak consumption periods,” he noted.
And then there’s the largest sector — utilities. They, too, have to focus on when renewable energy gets used.
“A lot of these systems that we are starting to see come online is utilities looking for not just renewable power, but renewable power during the peak hours,” Manghani said. The hours when power companies typically need to be able to provide the most electricity is in the evening, when people get home from work and start switching on all their gizmos — but that’s when the solar energy resource is fading or even gone.
“There are several of these [contracts] where the developer is deploying storage to store solar generation during the middle of the day and then dispatch these storage assets during evening hours, when the relative value of those electrons or those kilowatt hours is much higher in the evening hours,” Manghani said.
Still, at the scale of the entire U.S. electric grid, a gigawatt hour of energy storage is remains quite small. The United States has the capacity to generate more than 1,000 gigawatts of simultaneous electricity from all of its various types of power plants.
An older, more established technology, called hydroelectric pumped storage, also exists and has served the grid for some time. Here, water is pumped uphill behind a dam and then held there — and released when energy is needed. The United States has more than 20 gigawatts of pumped storage capacity.
President Trump’s solar tariffs could slow down the energy storage market, the new research finds, since energy storage is so frequently paired with solar and the tariffs are already expected to slow the pace of solar installation by raising prices. Raising the cost of solar panels also naturally raises the cost of paired solar-storage systems.
Still, the price of storage must continue to decline as well for deployments to further increase in the long run.
“It’s almost a bootstrapping process here, where the storage industry is going after these high-value, low-market-size opportunities for now, and that builds experience and brings down the cost, so that they can compete for somewhat larger markets that require a lower cost product,” Hittinger said. “And the game is to work down this cost curve.”