There is a global trend towards longer duration energy storage and even in this segment, lithium-ion batteries are expected to dominate the market over flow batteries and other technologies, an I.H.S Markit analyst has told Energy-Storage.News.

The research firm issued its bi-annual Grid-Connected Energy Storage Tracker to its clients at the end of July, predicting the rise of grid-connected systems from an installed base of less than 4GW today to hit 52GW by 2025.

The company found that 1.3GW was deployed worldwide in 2016, expected to rise by 2020 to 4.7GW and then 8.8GW by 2025, corresponding to annual revenues of US$1.5 billion rising to US$7 billion in that time, a compound annual growth rate of 16%.

I.H.S Markit identified three leading regions that are driving forward in energy storage deployment fastest: California, where subsidies such as the SGIP (Self-Generation Incentive Program) and a mandate for investor-owned utilities to procure 1.35GW of energy storage, coupled with a corresponding growth in PV and other distributed energy technologies have lead the way; South Korea, where utilities, many government-owned, have been procuring large-scale frequency regulation projects directly and are moving on to renewables-integration projects, with I.H.S expecting more than 300MW annual growth from 2018 onwards; the much-talked about Australian market, where high electricity costs and relatively low grid reliability have pushed the solar PV market forward and energy storage is now following, with large-scale storage tenders and high profile projects such as Tesla’s in South Australia and Lyon Group’s 640MWh tender.

By country, six leaders were picked out for now and for the near future: the US, South Korea, Japan, Germany, Australia and the UK. The former will enjoy compound annual growth rates of 21% between 2017 and 2025, with 1.2GW of grid-connected systems forecast to be deployed in 2020.        

In general terms, after a recent period of growth in single-application energy storage deployments, from frequency regulation and other grid-balancing and ancillary services markets to self-consumption of solar PV generation, I.H.S is expecting to see an increase in uptake of solar-plus-storage projects and utility deployment of dispatchable resources to meet capacity requirements.

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Earlier this week the UK government and energy regulator Ofgem published a strategy for a modernised, smart and flexible power system, the result of an eagerly anticipated response to last year’s Smart Power Call for Evidence.

The 32-page document outlines how the Department for Business, Energy and Industrial Strategy (BEIS) considers the domestic power market to mature and includes significant clarity, transparency and guidance for its minded role for storage, as well as potential benefits for the UK’s solar scene.

Business secretary Greg Clark said: “Upgrading our energy system to make sure it is fit for the future is a key part of our Industrial Strategy. A smarter energy system will create opportunities to reduce energy costs, increase productivity and put UK businesses in a leading position to export smart energy technology and services to the rest of the world.”

Breaking the document down into four main sub-sects, the key points of the big unveil are:

Solar asset holders are to receive guidance on how storage can be retrofitted onto their sites without impacting subsidy schemes they may qualify for. The most recent CfD (Contracts for Difference – a government-backed method for investing in low carbon tech) consultation has revealed how storage should be treated on CfD-eligible builds, while Ofgem has updated it guidance on the Renewable Obligation subsidy scheme (RO) accreditation amendment process and provided guidance on how to co-locate storage. This will be followed by new guidance on the feed-in tariff (FiT) and RO schemes for any participants who wish to retrofit battery storage at a later date. This is likely to be of significant importance to owners of solar assets, particularly funds and other long-term holders, who could deploy battery storage en masse once more certainty is provided and the economics make sense.

Storage may not face demand residual charges at transmission and distribution level courtesy of Ofgem’s Targeted Charging Review, published in March this year. Ofgem is expected to announce details on the scope of that review shortly, with a view to provide guidance on the subject by the end of the year.

Primary legislation will be used to amend the Electricity Act 1989 to include an explicit definition of electricity storage, specifically as a generation subset. This will then allow Ofgem to consult on a modified generation licence for storage which it intends to introduce by next summer.

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Utility-scale zinc-iron flow battery maker VIZn Energy claims it can deliver energy storage to pair with solar or wind at a “record low price” of just US$0.04 per kilowatt-hour.

Making an announcement to coincide with Intersolar North America, taking place this week, VIZn said that energy storage could now be added to grid-scale wind or solar PV installations at a lower price than new coal-fired generation in the US, which Bloomberg New Energy Finance has benchmarked at around US$0.06 per kWh.

In addition to the low cost integration of renewables, utility-scale energy storage developers may also be able to benefit from adding various other revenue streams for their projects, such as ancillary services for grid operators, thus creating a revenue stack which could further enhance the economics of their installation.  

A VIZn Energy spokesman today told Energy-Storage.News that the cost given refers to new installations “where both the solar and [energy] storage qualify for the ITC (Investment Tax Credit subsidy)”. As the ITC only applies to energy storage when installed simultaneously alongside a PV power plant, the price could not refer to retrofit installations.

Installing a 30MW, 4-hour duration VIZn zinc-iron battery storage system to a new 100MW solar PV plant could, through a US$0.04 power purchase agreement (PPA), result in a 7% internal rate of return (IRR), VIZn claimed. Energy-Storage.News was told by the company’s spokesman that this IRR included total turnkey costs and ongoing operational costs.

VIZn declined to go into detail on different IRRs for different sizes of solar farm, but the spokesman was adamant that its batteries’ long expected lifespan of 20 years and ability to perform both power and energy applications allowed the company to offer “the lowest possible PPA prices”.

In a press release, VIZn talked up what it saw as competitive advantages over lithium-ion: li-ion batteries tend to be designed to last seven to 10 years in the field, generally able to cope only with one charge-discharge cycle per day, whether that be for energy applications, such as solar load-shifting, or power applications, such as frequency regulation for the grid. Similarly to flow devices from other makers, zinc-iron batteries from VIZn, on the other hand, can withstand two full duty cycles per day without degradation.

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Utility-scale zinc-iron flow battery maker VIZn Energy claims it can deliver energy storage to pair with solar or wind at a “record low price” of just US$0.04 per kilowatt-hour.

Making an announcement to coincide with Intersolar North America, taking place this week, VIZn said that energy storage could now be added to grid-scale wind or solar PV installations at a lower price than new coal-fired generation in the US, which Bloomberg New Energy Finance has benchmarked at around US$0.06 per kWh.

In addition to the low cost integration of renewables, utility-scale energy storage developers may also be able to benefit from adding various other revenue streams for their projects, such as ancillary services for grid operators, thus creating a revenue stack which could further enhance the economics of their installation.  

A VIZn Energy spokesman today told Energy-Storage.News that the cost given refers to new installations “where both the solar and [energy] storage qualify for the ITC (Investment Tax Credit subsidy)”. As the ITC only applies to energy storage when installed simultaneously alongside a PV power plant, the price could not refer to retrofit installations.

Installing a 30MW, 4-hour duration VIZn zinc-iron battery storage system to a new 100MW solar PV plant could, through a US$0.04 power purchase agreement (PPA), result in a 7% internal rate of return (IRR), VIZn claimed. Energy-Storage.News was told by the company’s spokesman that this IRR included total turnkey costs and ongoing operational costs.

VIZn declined to go into detail on different IRRs for different sizes of solar farm, but the spokesman was adamant that its batteries’ long expected lifespan of 20 years and ability to perform both power and energy applications allowed the company to offer “the lowest possible PPA prices”.

In a press release, VIZn talked up what it saw as competitive advantages over lithium-ion: li-ion batteries tend to be designed to last seven to 10 years in the field, generally able to cope only with one charge-discharge cycle per day, whether that be for energy applications, such as solar load-shifting, or power applications, such as frequency regulation for the grid. Similarly to flow devices from other makers, zinc-iron batteries from VIZn, on the other hand, can withstand two full duty cycles per day without degradation.

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At least two global technology leaders could set up Gigafactories to manufacture lithium-ion cells in India in the next couple of years, according to the head of the India Energy Storage Alliance (IESA).

This focus is being driven by opportunities in both stationary and electric vehicle (EV) applications in India, particularly with the government goal of making all vehicles electric by 2030.

As is well known, the Indian government has already extended a red carpet welcome to US-based storage, solar and EV specialist Tesla to set up a Gigafactory in India, but there are similar discussions ongoing with at least two other major manufacturers with Gigawatt-scale manufacturing already installed elsewhere, Dr. Rahul Walawalkar, IESA executive director, told Energy-Storage.News.

There are also a couple of early stage companies with whom IESA is working at present to help set up their first Gigafactory, meaning there are at least five companies looking seriously at this kind of energy storage manufacturing scale in India.

Tesla chief Elon Musk had raised concerns about having to source local equipment in India, but the Indian Ministry of Trade and Commerce has clarified that the foreign direct investment (FDI) policy does not mandate manufacturers set up in India to source components domestically. However, no Tesla plans have been confirmed.

There are plenty of other international players getting involved. Japan’s Panasonic, which has sold over 130MWh of Li-Ion batteries for the telecoms market and distributed applications, is now setting up a battery assembly facility with India seen as one of the firm’s key growth markets.

Other giants like China’s BYD are also considering entering India. With a focus on electric mobility, in 2016, the firm announced that it was looking to set up a factory to make batteries in partnership with BK Modi’s Smart group. BYD is also looking at various manufacturing options in India with Indian insulator and transformer specialist Goldstone Infratech. Similarly Chinese lithium-ion battery maker Zhuhai Yinlong New Energy has plans for an EV manufacturing plant in Punjab, which would be the first such factory by a foreign firm in India.

French battery maker Saft also entered India back in 2013 to make advanced rechargeable nickel batteries.

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While the global energy storage industry has continued its pace of rapid growth during the past year, well-established markets remain highly concentrated in specific regions of the world. In fact, Navigant Research expects the top five country markets to account for 56% of the new energy storage capacity forecast to be built in 2017. Over the coming years, this dynamic will change, as the industry is already seeing significant geographic diversification.

Navigant Research’s latest Country Forecasts for Energy Storage reports explore the growth trends for energy storage at the utility-scale and distributed levels in 26 countries around the world. This article highlights the leading countries for energy storage identified in those two reports, explores the factors shaping these markets, and explains how these and other factors can be used to determine where and when new markets will emerge.

The economics of new energy storage projects are improving in countries globally, driven by:

• Falling hardware costs
• Increasing electricity market deregulation to increase competition
• Increasing investor confidence in energy storage technology
• Improving storage system value due to advanced software capabilities

Although there are many overarching drivers in this industry, the specific dynamics of individual markets vary considerably. There will be a varying mix of storage technologies and applications in different countries, depending on local conditions. One key factor differentiating markets is the attractiveness of storage in different market segments, specifically the split between front-of-the-meter (FTM) and behind-the-meter (BTM) systems.

A major focus for Navigant Research is understanding the specific dynamics of energy storage markets to forecast when and where significant growth will occur. Factors such as electricity market structure, retail rates, and renewable energy deployments (among others), have resulted in energy storage markets taking shape in unique ways in different countries. For example, some countries have seen major growth in utility-scale FTM storage deployments, but little to no activity on the BTM side. Alternatively, other countries and regions have seen growing popularity of customer-sited BTM storage systems, but much less demand for FTM projects. 

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