According to the fourth-quarter 2017 Energy Storage Monitor from GTM Research and the Energy Storage Association, the energy storage market in the United States is going to grow by a factor of nine between 2017 and 2022, with the behind-the-meter market, both residential and non-residential, accounting for up to half of the market by 2021.
While there is growth in both MW capacity and MWh stored, the research finds that the latter is growing faster, i.e., duration at storage facilities is increasing. Meanwhile, battery storage technologies, primarily lithium-ion, are dropping in cost by 50% every 3-4 years.
In dollar terms, the report estimates the energy storage market will be worth US$3.1 billion by 2022.
At the same time, a white paper by Wärtsilä company Greensmith argues that the investment case for storage is still difficult, due to risks of limited technology track record and business cases that rely on uncertain revenues. With rapidly changing grid dynamics and the long-life requirement for storage assets, the paper suggests, energy storage owners need to future-proof their investments. (The paper excludes large-scale infrastructure storage, such as pumped hydro and compressed air, from consideration.)
To do that, the paper continues, storage developers must employ technology and project engineering specifically designed for flexibility. Future-proofing also requires commercial agreements and analytical expertise to optimize the operational value of energy storage.
The study identifies a couple of risks, traceable to the technologies’ relative newness:
• Operational lifetime. The U.S. Department of Energy (DOE)’s Energy Storage Database shows that the median operating lifetime of grid-scale battery energy storage systems is 4 years and 9 months. Globally, there are only 14 grid-scale energy storage system (ESS) projects that have at least 10 full years of operating history.
• Market and revenue risk resulting from short term arrangements. The white paper observes that many of the key electricity market services that ESS provide are procured with short-term contracts, while others are procured on a completely merchant basis via day-ahead bidding, compared to the multi-year power purchase agreements for wind, solar and more conventional forms of power. Those terms can change with little warning, the paper suggests, citing some early experience at PJM, which instituted battery-based ancillary services and then changed the operating requirements in a way the already-installed capacity was not designed to meet. Operators adapted to the changed conditions, but at a loss of over 50% of revenue.
The white paper offers some suggestions for “future-proofing” against such uncertainties:
• Design for flexibility. Build in an augmentation plan over the facility’s expected lifetime, allowing for additional capacity, including both new batteries and new inverters, for example.
• Flexible architecture. Rather than a conventional programmable logic controller (PLC)-based energy management system, use a PC-based system. PLCs are hard-wired for a specific task configured in a specific way, while a personal computer (PC)-based controller is built on multipurpose industrial servers and is controlled by software that can easily be reprogrammed to meet changed conditions.
Future-Proofing Energy Storage is available at www.greensmithenergy.com/sites/default/files/documents/greensmith-energy-whitepaper-future-proofing-energy-storage.pdf.