New York’s plan to invest $200 million in energy storage could help boost demand for what new energy storage company Fluence, a creation of Siemens and AES Energy, sees as a growing market.

New York’s goal to build 1.5 gigawatts of energy storage by 2025, announced on Jan. 2, is part of its plan to generate half of its electricity with renewables by 2030, including enough power from offshore wind farms to power more than 1.2 million homes.

The state’s energy-storage target and regulatory support could be a blueprint for other states as they consider projects, said Ray Hohenstein, market applications director for Fluence, which was formed Jan. 2 and is based in Arlington, Va.

“The size of the target is an important recognition of the value of storage in the eastern U.S.,” Hohenstein told Bloomberg Environment. “Our hope is that it inspires and charts a path for other states, particularly in the eastern U.S., to be similarly ambitious in size and speed of storage adoption.”

If the state meets its energy-storage goal, New York is expected to represent about 15 percent of the total U.S. energy-storage market in 2025, Logan Goldie-Scot, head of energy storage analysis at Bloomberg New Energy Finance, told Bloomberg Environment.

Fluence was created as a way for AES Energy, which has experience developing projects in the U.S. and Latin America, and Siemens, which has European experience, to capture the global energy-storage market, Fluence Chief Operating Officer John Zahurancik said.

The company sees a quickly growing market in the U.S., as utilities to turn to batteries to help them replace aging power plants, used only during peak electricity demand. The batteries would be built alongside new wind and solar projects, he said.

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Two California energy storage providers say they are deploying networks of systems in Japan to help the country use more renewable energy.

Stem Inc., a California firm that provides energy storage solutions, said it’s deploying a network of systems with Mitsui & Co. Ltd., marking its first foray into Asian markets. The companies, which gained an endorsement from Japan’s Ministry of Energy, Trade and Infrastructure, will install a “virtual power plant” made up initially of aggregated storage systems that will supply 750 kilowatt-hours of capacity to the grid.

Sunverge Energy Inc., based in San Francisco, said it also is partnering with Mitsui to install dozens of energy storage units. The systems have been deployed in the service area of Tokyo Electric Power Co. and will use Sunverge’s energy-management service.

The projects are designed to help even out the fluctuations in solar and wind power in Japan as the country works to deregulate its electricity markets and ramp up renewables. Stem said it already has battery systems in California, Hawaii, Texas and New York.

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U.S. energy-storage capacity surged 46 percent in the third quarter, mainly due to a single big project in Texas, the biggest source of wind power.

Power companies and developers added 41.8 megawatts of storage systems, including a 30-megawatt utility-scale project in Texas, according to a report Thursday from GTM Research and the Energy Storage Association. California added 8.4 megawatts of residential and commercial systems. The industry installed 28.6 megawatts in the third quarter of 2016.

Driven by regulatory demands and sharp price declines, energy-storage is becoming more common. Prices for lithium-ion battery packs have fallen 24 percent from 2016 levels, according to Bloomberg New Energy Finance. Utilities including Exelon Corp., Duke Energy Corp. and American Electric Power Co., meanwhile, are increasingly receptive to storage projects, which potentially will facilitate wider adoption of wind and solar power.

GTM forecasts that 295 megawatts will be in operation in the U.S. by year-end, up 28 percent from 2016. And more is coming. GTM projects the U.S. energy-storage market will be worth $3.1 billion in 2022, a seven-fold increase from this year.

“Energy storage is increasingly acknowledged in utilities’ long term resource planning across the country,” Ravi Manghani, GTM Research’s director of energy storage, said in a statement.

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An energy transition is underway. Solar and wind are being added in ever-greater numbers. Electric vehicles are becoming more commonplace. Meanwhile, policy makers are grappling with the right mix of policies to pay for it all.

Bloomberg New Energy Finance’s conference on the future of energy in Asia assembled industry executives, policy makers and bankers tackle some of the big questions surrounding energy.

“The past tells us a very clear lesson, and that is that we have underestimated the pace of the energy transition,” BNEF analyst Kobad Bhavnagri said as the conference started in Shanghai.

Here are some of the highlights from Tuesday’s presentations:

EVs are here to stay

Electronic vehicles have become a key element of the energy transition.

BNEF expects 530 million EVs on the road by 2040. Moreover, the researcher expects more electric buses and trucks as that segment of the transportation market becomes more attractive for electrification.

The implications for oil are significant, with the researcher expecting EVs to displace 8 million barrels of daily oil demand by 2040. Meanwhile, China is not only interested in EVs for the domestic market. The world’s most-populous nation is aiming to become a globally competitive automaker by the 2020s — with the latest EV technology.

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Enel SpA is seeking acquisitions in the energy storage business, as developments in battery technology are set to play a key role for the wider adoption of renewable sources.

Europe’s biggest utility by market capitalization sees the U.S., Europe and Latin America as the markets with the most potential, Chief Executive Officer Francesco Starace said in an interview.

“Technologies are fast approaching the point where batteries will be commercially attractive,” Starace said on Oct. 17 on the sidelines of the Open Innovations forum in Moscow. “There are parts of the world where it’s already convenient.”

While green power sources are increasingly seen as alternatives to traditional electricity, the challenge for utilities is to develop sufficient storage capacity to minimize “intermittency” and storage issues associated with solar panels and wind plants. Global storage capacity will then need to triple to 15.7 terawatt-hours by 2030 from around 4.7 this year, according to the International Renewable Energy Agency.

Rome-based Enel, which made a string of acquisitions in the sector this year, is expected to close a new deal this month in the energy management business, according to a person close to the company who asked not to be named because discussions are private.

Enel has already announced a number of deals this year, including the acquisition of software provider EnerNOC in August and of the Tynemouth standalone battery energy storage system project in Newcastle, U.K. in May.

A number of the company’s investors have said they approve of the approach, citing further growth potential.

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There may be an unexpected beneficiary of a trade case that threatens to upend the $29 billion U.S. solar industry: energy storage.

With solar construction slowing in the aftermath of the April trade complaint filed by bankrupt manufacturer Suniva Inc., that’s giving some developers time to change or expand focus.

“The Suniva case actually makes us more excited about storage,” Wayne Chomitz, vice president of project finance at Panasonic Corp.-backed Coronal Energy, said Tuesday at Infocast’s Solar Connect conference in San Diego. “It gives us more time to focus on storage.”

Storage costs have fallen about 40 percent since 2014.

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The secret to switching the global energy system entirely to renewables may lay in the universe’s most abundant substance.

Hydrogen has drawn backing from big energy companies from Royal Dutch Shell Plc to Uniper SE in addition to carmakers BMW AG and Audi AG. They’re supporting research into how the element can be used to store energy for weeks or even months beyond what lithium-ion batteries can manage.

While industry’s investment in hydrogen is small at just $2.5 billion over the last decade, the work offers an answer to the elusive question of how electricity could be kept for use in the future. Batteries increasingly are shifting power from day to night, but they tend to go flat after a few weeks. Hydrogen can be kept indefinitely in tanks. That would allow, for example, voltage collected from solar panels in the summer to be used in winter.

“The years 2020 to 2030 will be for hydrogen what the 1990s were for solar and wind,” said Pierre-Etienne Franc and vice president of advanced business and technologies at the French industrial gas maker Air Liquide SA and initiative secretary of the Hydrogen Council, a trade group promoting the work. “It’s a real strategic shift.”

The technology to use hydrogen as energy storage is well known, although not yet demonstrated in a commercial setting.

Excess power from wind or photovoltaics would drive electrolysis, separating water into its component hydrogen and oxygen elements. The hydrogen captured by that process could, whenever needed, feed natural gas power plants or fuel cells to make electricity. Industrial plants like oil refineries can also use hydrogen for chemical processes.

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Tesla Inc. has partnered with Vestas Wind Systems A/S to figure out how to combine wind turbines and batteries, socking away power during breezy times to use when the air is still.

This partnership is part of a wider global program run by Vestas, the world’s biggest wind-turbine maker. It’s seeking to add energy storage to its wind farms and is working with a number of other battery makers on about 10 projects in total.

Vestas announced its new focus on storage at its latest annual general meeting in April, and the partnership with Tesla was first reported by Denmark’s Borsen newspaper. Chairman Bert Nordberg has said Vestas is seeking a new competitive edge amid consolidation in the industry and after it surpassed General Electric Co. last year to take the biggest market share in the U.S.

“Across a number of projects, Vestas is working with different energy storage technologies with specialised companies, including Tesla, to explore and test how wind turbines and energy storage can work together in sustainable energy solutions that can lower the cost of energy,” Vestas said in a statement on Friday. 

The broader program started in 2012 with a project in Lem-Kaer, Denmark, with atest project to combine wind turbines and batteries. Vestas said it plans to commission additional projects worldwide.

Tesla has recently begun to seek new applications for its batteries beyond its electric cars and Powerwall battery units. Chief Executive Officer Elon Musk signed a deal with the South Australian government in July to built a giant energy storage facility to help balance the grid.

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Battery-making gigafactories are about to arrive in Europe, challenging a lead Tesla Inc.is building at a plant in Nevada and opening the way for a quicker shift toward green power for both cars and utilities.

German Chancellor Angela Merkel on Monday is scheduled to break ground at a 500 million-euro ($543 million) plant to assemble lithium-ion energy-storage units for Daimler AG, which produces Mercedes-Benz and Maybach luxury cars.

The facility 130 kilometers (81 miles) south of Berlin highlights a push by both major automakers and power companies into energy storage. The technology is crucial to drive the next generation of green vehicles and to hold electricity from wind and solar farms for when it’s needed most. With two dominant industries moving in the same direction, the cost of batteries is likely to plunge quickly, according to Bloomberg New Energy Finance.

“As battery costs fall and their energy density increases, we could see cheaper battery-electric cars than their fuel-burning equivalents by 2030,” said Nikolas Soulopoulos, an analyst with the London-based research arm of Bloomberg LP.

Global battery-making capacity is set to more than double by 2021, reaching 278 gigawatt-hours, up from about 103 gigawatt-hours now, according to BNEF. Europe’s market share is expected to almost double over that time from 2.5 percent.

Large-scale factories planned in Sweden, Hungary and Poland, as well as Daimler’s battery assembly plant in Germany, are expected to feed demand from automakers such as Volkswagen AG and Renault SA. That will cut the cost of lithium-ion packs by 43 percent and make electric cars a mainstream reality, the researcher estimates.

For a note from BNEF on when electric cars will rival regular ones on price, click here.

For the utilities, cheaper batteries reduce the cost of storage units that smooth the variable flows of electric power to the grid from renewables. At Enel SpA, the biggest distributor in Italy, pairing a battery with a wind farm helped grid managers improve forecasts for electricity output from the plant by as much as 30 percent.

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Edison International’s utility unit said it has completed the first-of-its kind battery storage and natural gas power systems in Southern California that will help the region backstop increasing amounts of renewable energy and cope with potential shortages after a historic gas leak.

Southern California Edison, General Electric Co. and Wellhead Power Solutions partnered to install 10-megawatt lithium-ion batteries at two of the utility’s gas generators, Rosemead, California-based Edison said Monday in a statement. The plants are designed to fire up during periods of peak demand. The batteries, which can provide instant power while gas turbines ramp up, are expected to reduce fuel use and lead to emission reductions of at least 60 percent, Edison said.

“The new system will help SCE better utilize the resources on the grid, provide enhanced reliability, reduce environmental impact, and reduce cost for our operations and for our customers,” Southern California Edison President Ron Nichols said in an emailed statement.

The installation comes after a months-long leak crippled the state’s largest natural gas storage field near Los Angeles, raising concerns about potential energy shortages. In addition, the state has mandated that utilities get half of their power from renewable sources by 2030. Batteries have been viewed as helping accommodate more green energy by helping utilities manage the unpredictable output from wind and solar farms.

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