Emerging technologies, cost reductions and supportive policies will make 2016 a breakout year for energy storage. The industry will see major announcements from utilities and developers regarding major contracts and execution of large-scale projects, transforming the electricity grid as we know it. As we look to 2016, here are some trends that we expect to see:
Utility scale storage in PJM to cap out
The utility scale storage in PJM (Pennsylvania, New Jersey and Maryland) will cap out. PJM was the first market to implement “pay for performance” frequency regulation tariffs and as a result is a leading market for utility-scale energy storage, seeing 100 MW installed since Q1 2013 (GTM U.S. Energy Storage Monitor, Q2 2015).
However, PJM is reportedly evaluating putting a 300 MW cap on storage products and has resources greatly exceeding this cap already in the interconnection queue. These developments may put a damper on development in PJM and drive storage innovators to look elsewhere for utility-scale opportunities.
California’s continued dominance
Not surprisingly, California will continue to dominate grid-connected storage. With 1.325 GW of energy storage procurement in the pipeline, CA represents the single largest market for grid-connected storage over the next five years. Just recently, Convergent Energy + Power announced that it had been awarded a 10 MW, 40 MWh storage project with PG&E using Eos’s Zynth battery technology.
Additional CA IOUs—SDG&E and SCE—will soon announce the big winners of the energy storage RFP issued earlier this year, shaping the technology and development landscape for years to come. California mostly requires longer duration energy storage for locational capacity (i.e., 4-hour peak shaving to qualify for resource adequacy) although increasing penetration of renewables may soon require that storage shave morning and afternoon peak load pursuant to the infamous “duck curve.”
Rise of behind-the-meter storage
This year will mark the rise of behind-the-meter storage as California continues to lead with market for residential and commercial battery systems with >11 MW installed since Q1 2013 (GTM U.S. Energy Storage Monitor, Q2 2015), although Hawaii and Arizona are close behind. California’s lucrative 2016 Self Generation Incentive Program (SGIP) will be oversubscribed within hours of accepting applications even with a 10 percent reduction on the standing $1.46/W incentive.
2016 will also be a breakout year for New York City, potentially the largest market for behind-the-meter storage, as safe battery technologies work their way through streamlined permitting processes to cash in on $2.1/W payments for participation in Con Edison’s demand management program.
Utilities take a stand on net energy metering
Utilities in California, Hawaii, and Arizona will continue to fight against over-subsidization of roof-top solar PV installations and ratepayer inequality caused by Net Energy Metering (NEM) tariffs, where excess PV generation is sold to utilities at artificially high retail rates.
Utilities will attempt to cover costs through demand charges, interconnection charges, and perhaps more innovative rate structures such as NEM 2.0 where excess PV is compensated more appropriately at wholesale rates. A challenge for roof-top solar represents an opportunity for storage, as battery systems will allow customers to store and self-consume excess PV generation to defer costly retail energy usage.
Emerging technologies challenge lithium
There were major announcements in the Li-ion industry including Tesla launching its residential battery solution, the PowerWall, and major Asian manufacturers —Samsung, BYD and LG Chem — planning to build Gigafactories to bring down the cost of Li-ion through greater economies of scale. 2016 will see major announcements from emerging technology players, such as Eos Energy Storage, who is ramping up manufacturing to meet increasing demand for long-duration, high-throughput energy storage.
Energy storage goes global
International markets for grid-connected energy storage will heat up in 2016. Commercial and industrial customers in markets with low grid stability and high per capita infrastructure costs are looking at energy storage as a zero-emissions, zero-noise, and now cost-effective power reliability solution. India, South Africa and Australia show the greatest promise outside of Europe. In some of these markets, especially remote regions with little or no grid-connection, solar + storage will soon displace diesel fuel as the primary power source of choice.
2016 promises to be an exciting year for energy storage -- the next frontier in the industry. The energy storage market is growing fast with GTM Research and the Energy Storage Association projecting significant growth over the next five years, resulting in an 858 MW annual market by 2019– 13 times the size of the 2014 market, and four times the size of 2015 market.
Author: Philippe Bourchard joined Eos after 5 years of in-depth experience leading emerging technology and regulatory initiatives within the utility energy industry. While working previously within Southern California Edison’s Advanced Technology Organization, Philippe co-authored SCE’s Smart Grid Deployment Plan and managed a $3 million portfolio of diversified R&D and technology evaluation projects. Philippe also completed SCE’s 2-year Marketing Analysis & Planning Strategy (MAPS) rotation program where he lead keystone projects within the arenas of Advanced Technology, Demand Response and Regulatory Policy & Affairs. In this rotational capacity, Philippe lead development of General Rate Case testimony for SCE’s Plug-in Vehicle Readiness Program and helped to propose and implement customer demand response programs leveraging newly implemented smart metering and home area network technology platforms. Philippe previously worked as a research analyst for E Source—an energy research and consulting firm– where he specialized in demand-side management programs, smart grid technologies, and corporate greenhouse gas consulting. Philippe brings an interdisciplinary background in chemistry and environmental sciences and graduated with a B.A. from Pomona College.