The global market for energy storage is experiencing rapid growth, in part because the technology is being included in decarbonization and sustainability programs. It also is being used to support the grid integration of more renewable energy resources, and has been touted as an important piece of electricity transmission and distribution system upgrades.
Enertis Applus+, headquartered in Madrid, Spain, and with offices in a dozen countries including the U.S., is a global consulting, engineering, and quality control firm in the renewable energy and energy storage solutions sector. The company over the past two decades has put together a portfolio of 250 GW of installed power generation capacity, with 15 kWh of energy storage worldwide.
Matthew Towery, senior manager of Energy Storage for Enertis Applus+, recently provided POWER with insight into the global market for storage, providing his take on the issues that will impact that market in the coming years.
POWER: The current decade has been called “The Decade of Energy Storage.” We’re now three years in; do you think growth in energy storage will continue, and if so, at what pace? If you think growth will slow, why?
Towery: Yes, the demand for energy storage will continue to grow. According to the BloombergNEF (BNEF) 2H 2022 Energy Storage Market Outlook forecast, energy storage installations are set to reach a cumulative 411 GW (or 1,194 GWh) of capacity at global level by the end of 2030.This is 15 times greater than the storage capacity that was online at the end of 2021 (27 GW or 56 GWh). The U.S. and China are set to remain the largest markets, representing over half of global storage installations worldwide by the end of the decade.
Want more insight into energy storage? Read “New Technologies, New Sites Supporting Growth of Energy Storage” in the March 2023 issue of POWER.
The growth targets for energy storage in 2023 and 2024 are exponentially higher than in previous years. These targets are largely driven by the Inflation Reduction Act (IRA) bill. However, in order to meet the targets, supply chain constraints will be tested over the next several years. In addition, independent system operator (ISO) markets will need to continue to find ways to expedite or prioritize interconnection applications to avoid delays in committed projects.
The IRA bill unleashed a new demand for storage products and their constituent raw materials. Production of these products is concentrated in only a few countries. However, this should level out in the coming year or two, as more domestic battery manufacturing ramps up, all of which will take time.
POWER: What are the current major challenges for the energy storage sector?
Towery: For projections to become a reality, supply chain constraints and interconnection backlog are the current main challenges. A mix of non-lithium and domestically manufactured lithium batteries will be needed to make the battery supply chain more diversified and resilient.
POWER: Are there new storage technologies being developed that will support the industry?
Towery: Over the past three years, more non-lithium-based technologies (iron flow, zinc, salt, etc.) have emerged and several of them are beginning to scale up, both from a production standpoint and economies-of scale-standpoint. These factors are necessary to compete with lithium-based technologies.
POWER: How important is the siting of energy storage projects? Should they be installed at substations, and/or at various points along the power grid?
Towery: Strategic site selection is very important when planning projects with battery energy storage systems (BESS) and it is very much related to who the target customer will be and the services that the BESS will provide.
Usually, developers look for sites that are near existing substations. However, as more storage assets are connected to the grid, it ultimately changes how the grid is modeled.
Another aspect that needs to be taken into consideration is that regulation in the power sector is undergoing constant changes. Therefore, it is not easy to clearly identify the “perfect siting” for energy storage projects. For example, a project that is sited at a substation in Eastern Texas with a commercial operation date in 2023 is different from a project slated for a commercial operation date in 2026.
In addition, we are seeing an increasing number of developers pursue longer duration storage as part of the interconnection process because they know the project will come to fruition in the 2025 or 2026 timeframe.
POWER: Will there be rapid growth in energy storage for residential, and for commercial & industrial sites?
Towery: Due to the amount of backlog in the interconnection process for utility-scale and high voltage transmission projects, we are seeing many developers target the commercial/industrial market for a more expedited project lifecycle.
POWER: Will utilities drive growth in energy storage, or will more growth come from private (or governmental) investment in storage projects?
Towery: Utilities, private companies, and government institutions will all play a key role in fostering energy storage deployment.
On one hand, the private companies that are leading the energy storage sector are investing a great amount of capital in research and development to lower the costs of this technology.
On the other hand, regulated utilities are constantly evaluating their Integrated Resource Plans (IRP), which will greatly drive the demand for storage. Given the increasing competitiveness of this technology, many utilities are moving away from fossil fuels power plants and switching to renewable energy projects coupled with energy storage. These moves can be through contracted Power Purchase Agreements or Build Own Transfer projects, in which the developer takes the majority of the risk.
Finally, even though the role of the federal government has been limited to set policy and support framework—such as with the IRA—local government groups, including those at the council level, might identify further opportunities for storage requirements, which could add to the investment coming from the utilities.
—Darrell Proctor is a senior associate editor for POWER (@POWERmagazine).