Renewable generation deployments (primarily solar photovoltaic and wind farms) have grown substantially over the last decade and are forecast to continue growing well into the future. That’s thanks to lower costs and technological improvements leading to increased power output.

Indeed, the International Energy Association expects that average annual global renewable installations will be 80 percent higher than coal, oil and natural gas combined between 2017 and 2040. Separately, Navigant Research anticipates that wind and solar PV installations — both in front of and behind the meter — will surpass 1,500 gigawatts cumulatively between 2017 and 2026.

This is good news in terms of sustainability and greenhouse gas reduction activities. However, this massive influx of variable generation capacity can present issues for outdated electrical grids around the globe. Energy storage that supports renewables integration can help solve these issues by maintaining smooth, consistent power flow to the grid. As a result, renewable installations combined with energy storage are expected to make significant waves in the energy market well into the future.

Deployments of this nature can be divided into two large segments. The first category includes utility-scale solar PV and wind power plants (typically larger than 1 megawatt in capacity) combined with energy storage and capable of servicing entire communities. The second category includes behind-the-meter solar PV installations combined with energy storage that generally service individual commercial or residential buildings and are usually less than 1 MW in size.

Renewable, utility-scale power plants tied with energy storage will be a major force in the global energy market — but it is the behind-the-meter installations combining renewables with storage that will lead the way around the world over the next decade.

Consider these forecasts. Annual revenue for energy storage tied to utility-scale wind and solar is expected to reach $9.6 billion by 2026. Revenue for behind-the-meter installations, however, is expected to surpass $13 billion in the same timeframe.

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The list of huge multinational companies seeking to source 100 percent of their energy from renewable generating sources seems to grow on a monthly basis — 63 percent of the organizations on last year’s Fortune 100 list have made a proclamation of this sort.

While many have turned to the U.S. market first to start delivering on those promises, the reality is that they’ll need to look far beyond America’s borders to reach them.

They won’t need to search for long, as evidenced by ongoing investments in clean energy that totaled more than $53 billion during the first quarter of 2017, according to data from Bloomberg New Energy Finance. While that was a relatively quiet period compared with past years, it still brought one of the largest solar projects: Italian energy powerhouse Enel’s 754 megawatt photovoltaic installation in Mexico.

And make no mistake, investments in clean energy aren’t simply altruistic.

While the concerns of each region and market are unique, common themes drive the worldwide transition away from coal-fired power plants to other generating sources and motivating energy companies such as Enel. The utility has set a goal of becoming a carbon-neutral generator by 2050, and it is far less grounded in emotions than economics. 

The reality is that it makes sense to avoid huge capital investments in massive new power plants that will become obsolete before they come online. Instead, companies such as Enel and another market disruptor — Australia’s AGL Energy, which is in the process of closing all its coal plants — are prioritizing investments in digital technologies.

In particular, their focus is on software and hardware that help make intermittent generating sources, such as solar and wind, more reliable. Extending the life of legacy plants during the transition is another priority. These energy companies also are keenly interested in applications and services that help them sense and respond much more quickly to the concerns (and buying habits) of commercial and retail customers.

“There are two major mistakes that this industry has made over and over again, in the past two decades,” said Francesco Starace, chief executive of Enel. “One is to build huge plants that will take years and years to be completed. When I say years and years, I mean more than three years. And second, build generating plants without visibility into whom to sell the energy to, for what price and how long, which is called merchant exposure in the industry. We said, ‘We think that this is one of the worst possible times to [keep making] this mistake.'”

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The market for commercial and industrial (C&I) energy storage has experienced rapid growth as a result of numerous market developments in the past several years. Across the entire energy storage industry, decreasing prices for batteries and other system components have helped make energy storage systems an economical solution for more customers, including building owners and managers. These systems have a unique ability to provide value for both host customers and grid operators.

Traditional benefits

An important factor supporting the C&I energy storage market is that storage fits seamlessly into building energy management and energy efficiency/service contracts that many companies already have in place. It provides a non-disruptive way to reduce electricity expenses by enabling participation in demand response programs by simply switching on the storage device, as opposed to traditional demand response that requires shutting down a load in the building. Storage also can provide several hours or more of backup power for customers’ critical loads — and microgrid functionality if tied to distributed generation resources. Energy storage provides a non-disruptive way to achieve several other benefits, as listed in the table below.

But what happens when a single storage system is not enough? As C&I building needs evolve and operations become increasingly specialized, having the correct technology that can serve a range of applications will be critical to realizing total system benefits. 

In recent years, battery technology innovations have been focused on software management to maximize round-trip efficiency. While this will continue to be important, behind-the-meter customers could see greater benefits from hybrid energy storage systems. These systems can add advantages on top of what conventional battery technologies offer for C&I customers.

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Clean energy has been on a roll.

Back in 2010, just three states received 10 percent or more of their electricity from non-hydro utility-scale renewables. Today, 17 states are members of the 10 Percent Club, with three states (Iowa, South Dakota and Kansas) leading the pack, with 30 percent or more of their electrons from utility-scale wind. Another three states exceed 20 percent non-hydro utility-scale renewables generation (Oklahoma, North Dakota and California). These leaders are politically diverse, with the top 10 states for renewable electricity generation five red states and five blue states.

As we highlight in this year’s U.S. Clean Tech Leadership Index, state and city leaders are playing an outsized role in the shift towards a cleaner energy mix. Last year, due to a range of economic and policy factors, wind and solar power represented 61 percent of all new electricity generating capacity installed in the U.S. (for the second year in a row).

There’s no doubt that declining costs have been a key driver fueling this rise. In many regions around the United States, utility-scale onshore wind and solar, even without subsidies, beat coal, nuclear and even combined-cycle natural gas on cost for new generation assets.

Another factor affecting the shift to renewables is supportive regional policies and regulations. In 2016, five states upped their renewable portfolio standard (RPS) targets to 25 percent or more; a sixth, Michigan, extended its RPS to 15 percent and a seventh, Ohio, reinstituted its RPS after having frozen it two years earlier. Five states (California, Hawaii, New York, Oregon and Vermont) have targets of 50 percent or greater and new policy innovations such as electric vehicle, community solar and energy storage incentives and mandates are further moving the proverbial needle.

Cities are flexing their clean-energy muscles, too. Five cities in the index are credited for their 100 percent community-wide renewable electricity commitments (Portland, Oregon; Salt Lake City; San Diego; San Francisco; and San Jose). Atlanta joined this elite group in May, too late to be included in this year’s index scoring.

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In the world of electricity, few topics are generating more headlines this year than energy storage. Market watcher Navigant Research figures more than 1,420 projects are under way across the power grid, with a new installation trumpeted almost every week.

“Overall, the global energy storage industry is poised to continue to grow quickly over the next several years,” Navigant analyst Ian McClenny noted in a recent update about the market. “With emerging infrastructure becoming increasingly integrated, dynamic and complex, flexible resources like storage will provide added value to existing and new power-generating assets.”

Although energy storage long has been a technology on the brink — drawing R&D dollars from the likes of Tesla founder Elon Musk, the U.S. military and a growing number of utility pilot projects — there is reason to believe that storage tech has entered a new phase in its evolution.

One statistic that should get you thinking: data from research firm Mercom Capital Group estimates that about $820 million was dedicated to energy storage project financing during 2016. That compares with just $30 million tracked by the company in 2015. 

Several initiatives have captured the attention of mainstream media, rather than just the trade press: “A Big Test for Big Batteries,” proclaimed The New York Times in a January article about three huge grid-scale projects in Southern California. The installations are part of broader investments by San Diego Gas & Electric and Southern California Edison meant to improve the stability of the local grid and make it easier to integrate renewable energy generating resources, including solar photovoltaic farms. One storage farm can offer up to 30 megawatts of capacity for up to four-hour stretches. Utilities in other regions are dabbling.

“It’s fair to say we don’t have long-range experience with this technology to say that it is perfect or a nirvana,” Alice Jackson, vice president for Midwest utility Xcel, told The Times. “It’s something we’ll observe as California goes through its experience.”

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