16 May 2016
The hottest energy trend in the club
Considered the lynchpin for growth of the skyrocketing solar industry, storage is one of the hottest trends in energy today. At the individual meter level, storage can give solar system owners the ability to store and use solar energy even when the sun isn’t shining. On a larger scale, storage helps utilities even out the highs and lows that come with bringing more solar customers on to the grid; solar and storage really go hand-in-hand. The U.S. energy storage market grew 40 percent in 2014. And with the U.S. solar growth rate as high as 34 percent, it’s no wonder solar-plus-storage is getting so much attention. But beyond the hype, what does solar-plus-storage outlook look like today, and where can it be expected to go?
Today, the U.S. solar-plus-storage market is just in the beginning stages of growth. While less than 0.1 percent of 2014 solar installations had storage installed in conjunction with them, solar-plus-storage is expected to see explosive growth this year. The annual U.S. solar-plus-storage market will reach 769 megawatts (MW) by 2020, with a $3.1 billion valuation, according to GTM Research. Consumers are expected to be responsible for half of the total U.S. energy storage market by 2017, with utility- and commercial-scale installations accounting for the rest. California is expected to lead the way with 422 MW of storage by 2020, making up 54 percent of the total U.S. market.
Policy plays a major factor in the rate of growth of solar-plus storage. Due to the ITC’s extension, solar is expected to continue its expansion, and bring storage along with it. Additionally, some states have incentive programs specifically for solar-plus-storage. Several states, including California, New York and Texas, have stand-alone storage or solar-plus-storage incentive programs. One of the largest of these is California’s Self Generation Incentive Program (SGIP). It provides both upfront incentives, and performance-based incentives for behind-the-meter storage systems. The majority of participants in the program are linked with solar projects. The continuing debates in states across the country about net-metering and rate-design reform will impact the sector’s growth from the top down, as well.
From the customer side, the ongoing advancement of innovative technologies in the solar-plus-storage space help spur continued interest in the industry. The costs of certain enabling technologies, namely lithium-ion batteries, continue to plummet, making storage an ever more affordable option. Since 2010, lithium-ion battery costs have decreased by about 23 percent every year. Other technologies such as flywheels, compressed air, liquid metal, lead acid, and others have different lengths of discharge duration and commercial maturity, but all are trending toward decreasing costs. Importantly, it is not just the storage technology itself that is contributing to decreasing costs in the sector. Other elements such as power conversion, hardware, management systems, and installation costs as a whole account for 40 to 60 percent of the total cost to the customer. As these costs decline, the benefits will continue to increase.
Storage’s benefits to customers are already expanding: once almost exclusively used as a source of back-up power, storage now has multiple value streams to offer. When combined with software, storage can be a major boon to customers. It enables time-of-use shifting, reducing costs for consumers and particularly for businesses with high demand charges. Software-enabled solar-plus-storage can also take demand response to a new level by automating it without disrupting business-as-usual for customers.
From the utility side, the benefits of behind-the-meter solar-plus-storage continue to multiply as well. In aggregate, behind-the-meter storage can provide additional capacity and support ancillary services for utilities. Solar-plus-storage offers a lower-cost option to support operations compared to traditional grid capacity resources such as peaker plants.
Front-of-the-meter utility scale solar-plus-storage is also an effective means of supporting the grid. The storage mandates California has developed is helping spur the growth of this segment of the market, and some utilities are planning to build their own solar-plus-storage plants. Wholesale markets and utilities, are finding innovative ways to enable unconventional energy resources to meet growing energy needs.
Those watching the solar-plus-storage market should expect to see continued rapid growth in the coming years. In just four years, the annual U.S. solar-plus-storage market is expected to reach $3.1 billion. With 660 MW, the behind-the-meter market is set to be the largest segment of the market, at 82 percent or $2.6 million. And California will likely remain the leader, especially in the behind-the-meter segment. While still at a nascent stage, the future of the solar-plus-storage industry is looking very bright.
Florian Wessendorf is the newly-appointed Managing Director of Solar Promotion International, one of Intersolar and ees North America’s organizers. Florian takes also care of Intersolar South America, Intersolar India, and the global Intersolar conference program. Florian has deep expertise in the solar industry. He most recently served as Managing Director of Photovoltaic Equipment at the VDMA (Verband Deutscher Maschinen- und Anlagenbau, German Engineering Federation). In addition to strategy development, his work focused on identifying, evaluating, and promoting current market and technology trends as well as setting up and supporting industry networks. He was also responsible for political and technological advocacy as well as for exhibitions, marketing and PR.