Energize Weekly, March 14, 2018
The prospects for the U.S. battery storage market, both short and long term, appear strong with capacity doubling in 2018 and reaching as high as 50,000 megawatts (MW), according to new analyses.
In 2018, 1,000 megawatt-hours (MWh) of storage is set to be deployed, nearly equal to the 1,080 MWh deployed between 2013 and 2017, according to the U.S. Energy Monitor 2017 Year-in-Review, a study by GTM Research and the Energy Storage Association.
The U.S. energy storage market grew 27 percent in 2017, with 431 MWh installed, the report said. California and Hawaii led the way for behind-the-meter, residential and business installations. Texas followed by California were the top states for utility-scale storage.
“Falling costs and favorable policies will be among the core drivers of the market’s breakout 2018. It’s not hard to imagine that every solar RFP [request for proposals] by the end of the year will include storage,” Ravi Manghani, GTM Research’s director of energy storage, said in a statement.
The analysis projects that the market will reach 3,327 megawatts by 2023 when installations will be dominated by utility-scale, or so-called front-of-the-meter, installations.
The market could reach 50,000 MW if prices on batteries continue to decline, and state and federal policies support the development of storage, according to a study by the Brattle Group.
Both the Energy Monitor and Brattle analyses say that a recent decision by the Federal Energy Regulatory Commission (FERC) will boost the storage market.
The ruling, Order 841, directs wholesale electricity market operators—regional transmission operators (RTOs) and independent system operators (ISOs)—to develop rules enabling energy storage to be bid into regional markets to provide energy, assure capacity and offer ancillary services.
“Policies and regulatory frameworks that level the playing field will further encourage energy storage deployment throughout 2018 and beyond,” Kelly Speakes-Backman, the storage association’s CEO, said in a statement.
At an installed storage cost of $350 a kilowatt-hour, the Brattle analysis forecasts that Order 841 could “unlock” 7,000 MWs of demand in wholesale markets.
“How RTOs implement Order 841 will directly affect storage’s market value,” the study said. The RTOs cover about two-thirds of the U.S.
The market increases to 50,000 MW “if all the benefits can be captured” nationwide, Brattle said.
The Brattle study stated that state policies will also have to play a role, particularly in areas that are not served by wholesale markets.
Six states—California, Massachusetts, Oregon, Nevada, Arizona and New York—have set, proposed or are exploring mandated storage targets, the Brattle study said.
Thirteen other states, and the District of Columbia, have plans, utility commission dockets, studies or programs underway looking at storage and grid modernization.
The utility industry is also seeing prospects for batteries. “Resource planning is beginning to recognize that storage can help utilities improve their systems’ reliability and economics,” the Brattle study said. “Much of the opportunities will depend on utility planning and states’ views on the value of storage.”
The Brattle study noted, however, that storage costs are still relatively high. “Despite the significant potential benefits, storage still faces economic, regulatory, and market barriers that limit its overall market potential,” the study said. “Many important policy, market, and business-model questions still need to be addressed.”
