Energy storage, rooftop solar panels and LEED construction used to be expensive, customized options for wealthier homeowners, but they are rapidly going mainstream. The combination of experience, economies of scale and advanced technology is making it possible for more home buyers — and renters — to live a low-carbon life. A case in point is a new Google Home-enabled partnership between two leading companies in the sustainability field, the global cutting edge energy storage company sonnen and the U.S. builder Pearl Homes.

So, what comes next? The new partnership demonstrates what can happen when developers look beyond the benefits to individual home buyers, and design properties with an eye on the connected, distributed energy landscape of the future.

Public policy and sustainable building

Before getting into the details of the new partnership, it’s important to take note of the public policy context.

Pearl and sonnen are pairing up to build a residential development called Hunters Point in Manatee County, Florida.

The name Hunters Point is strictly neutral, but there is no mistaking the sustainability mission. Hunters Point is being billed as a “Net-Zero-Plus and Climate-Positive’ community.”

That kind of climate action pitch might not touch a particular chord among prospective buyers in some areas. It will, however, resonate in Manatee County.

Manatee County hosts the Florida west coast city of Bradenton, and is also close to Sarasota, Tampa and St. Petersburg. The county of 385,000 people has a clearly defined sustainability policy:

Being sustainable remains in the forefront of decision making for Manatee County as leaders balance the environment, the economy, and the human/social needs of our community. As science, technology, and information change on the issues of sustainability, we adjust our path but consistently take steps toward this goal.

The European energy storage market is nearing the global top spot for deployment, according to a new report from Wood Mackenzie Power & Renewable.

The research firm cites interest from major utilities and a patchwork of favourable policies.

“By investing in energy storage, these companies are able to diversify their portfolio and improve their customer offering by including a clever piece of technology alongside a necessary service,” said, Rory McCarthy, senior research analyst, Wood MacKenzie. “Although there are obvious gaps across Europe as policy makers struggle to keep pace with new technology, energy storage deployments continue to ramp up. Europe is now a very real contender for that global top spot in terms of total deployments,” he added.

The report, ‘Europe Energy Storage Landscape 2018’, looks at all scales of energy storage. Germany is a top performer across all three with the UK close behind in all but the residential sector.

“As it stands, the UK and Germany lead the way for utility-scale policy and storage development. Frequency markets are the only real game in town, however, they are limited in size,” said McCarthy. “As these markets become increasingly crowded, we have seen prices plummet to levels which will make for lower-than-anticipated project returns. For example, in the German frequency market, a June 2016 auction cleared at €23/MWh, while in July this number sat at just €8 – a 65% reduction.

“We are witnessing a glut of developers enter the market across all segments. There are solar developers diving into a new complementary technology area, which has been driven by a European solar subsidy cull and tough market conditions. Additionally, major utilities who see the strategic value of this most flexible asset have the balance sheets to enter into ultra-low bid auctions and accept the unattractive returns that will go alongside these in the near term,” added McCarthy.

The report found that the levelized cost of electricity for solar-plus-storage in Germany had fallen dramatically since 2013 but remained some way above of the €0.30/kWh that consumers pay.

The market for energy storage is rapidly gaining momentum around the world. The growing cost-competitiveness of carbon-free energy sources, coupled with improving technology and more environmentally conscious government policies are driving a demand boom for batteries in both the transportation and utility power sectors. But just how big is this boom expected to be?

Bloomberg New Energy Finance (BNEF) predicts that the global energy storage market will grow to a cumulative 942GW by 2040, attracting a whopping $620 billion in investments. This makes sense, given that combined wind and solar power generation capacity is expected to eclipse that of natural gas shortly after 2040 – at least according to the International Renewable Energy Agency (IRENA). And those renewable energy stations, which produce power intermittently (the sun is not always shining and the wind is not always blowing), will require adequate storage to make them economically viable.

That’s to say nothing of battery-powered electric vehicles (EVs), where the global fleet has been expanding at a compounded annual growth rate (CAGR) of 52% over the past 5 years. That rate is expected to level off to about 25% between now and 2025. There are currently 3 million EVs on the road today, and an estimated 1.2 million of them were sold in 2017. That’s around 1.5% of all car sales last year.

The Market Driver

Fall in costs of lithium-ion (LI) batteries are a key driver of increasing demands for battery storage. Lithium-ion is the leading battery storage technology to date, though alternatives are beginning to crop up. The price of LI batteries fell 80% between 2010 and 2017 ($/kWh) with costs projected to fall another 52% between 2018 and 2030. Head of Energy Storage at BNEF expects to see ‘energy storage growing to a point where it is equivalent to 7% of the total installed power capacity globally in 2040.’ Nothing to sneeze at considering all (non-hydro) renewable power accounted for 8% of worldwide electricity production in 2017.

Market Players

China, US, India, Japan, Germany, France, Australia, South Korea, and the UK lead the energy storage markets, together accounting for two-thirds of 2040’s installed capacity

The major players operating in the battery energy storage system market include ABB (Switzerland), LG Chem (South Korea), NEC (Japan), Panasonic (Japan), Samsung SDI (South Korea), AEG Power Solutions (Netherlands), General Electric (US), Hitachi (Japan), Siemens (Germany), and Tesla (US). Keep an eye on these companies as battery deployment and investment continue to rise.

The China Energy Storage Market is set to grow from its current market value of more than $700 million to over $6 billion by 2024; as reported in the latest study by Global Market Insights, Inc.

China energy storage market size is set to witness robust growth on account of rapidly growing ancillary service industry coupled with ongoing investments toward smart-grid infrastructure development. Furthermore, rising deployment of energy storage devices aimed toward enhancing the grid stability as a countermeasure to the effects of extensive penetration of intermittent power from renewables will augment the industry size.

Declining technology costs in conjunction with development of new technologies and advancement of existing systems will positively influence China energy storage market size. Lithium ion batteries has witnessed a drop of over 50% in per unit cost in last few years and will continue to follow the trend. Reformative business scenario along with improving economies of scale across battery manufacturing industry will further stimulate the industry size.

Shifting focus toward limiting carbon emission to curb the consequence of global warming coupled with rising implementation of supportive legislative endeavors will boost China energy storage market growth. Nonetheless, ongoing reduction in government subsidy on renewables may impact the industry, but the subsidy benefits losses may be compensated by reducing technology prices.

China flow vanadium energy storage market is projected to exceed USD 3 billion by 2024. Ability to offer virtually unlimited storage capacity, long scale duration, rapid response time, and negligible self-discharge are some of the key features which make the technology suitable for large scale renewable integration applications over its available alternatives. Furthermore, vast reserves of vanadium in the country may imply lower prices, minimal currency risks and ease of availability for the manufacturers, which will propel the industry growth.

Eversource Energy is working out a lease agreement with Provincetown, Mass. to site a 25-megawatt energy storage facility at the town’s transfer station. The energy will be used to “increase reliability and supplement the electric infrastructure for Cape Cod and Martha’s Vineyard,” according to the Cape Cod Times.

The newspaper reports that the 7,600-square-foot facility would help build more redundancy in the Outer Cape’s electric system, where there currently is little room for expansion. In other areas where there are back-up systems, Eversource can re-route power when lines are down. But in places like Provincetown, which is prone to blackouts during bad storms, that isn’t possible because of its location at the tip of a peninsula.

According to Eversource, the new battery storage system could help reduce power outages from Wellfleet to Provincetown by 50%.

Eversource is also planning a 5-megawatt energy storage project to help Martha’s Vineyard handle high peak loads in the summer.

The two Eversource projects approved by the state will be its first storage facilities. The company has been authorized to recover $55 million to pay for them through rates in the future

Energy Initiatives on the Massachusetts Islands

In September, the Otis Microgrid project, the first of such a broad scope for a Department of Defense installation, announced it will provide electrical capabilities almost exclusively based on renewable energy while ensuring a high-level of grid security. The energy security and resiliency provided by the microgrid is critical to the 24/7 mission of the 102nd Intelligence Wing, a military intelligence unit located at Otis Air National Guard Base on Cape Cod.

A transformation in the energy sector has begun. The momentum toward low-carbon energy generation — driven by our need for secure, affordable and sustainable energy supply — will see the days of fossil fuel domination fade into obscurity. As natural gas and renewables continue to dominate new capacity additions, one of the components that has kept renewables from becoming the dominant technology to date has been intermittency. The intermittency of solar and wind has always been a challenge for grids, especially ones with high renewable penetration levels. At Sonnedix, where we build, acquire and operate solar power plants, we are aware of this challenge. But this is changing, and energy storage has a major role to play.

Energy storage has many forms and technologies such as pumped hydroelectric (gravitational), batteries (electrochemical), flywheels (kinetic), compressed air (mechanical) and thermal. The dominant form of energy storage today is pumped hydroelectric storage, with around 96% of global installed energy storage capacity, but this has an inherent weakness — it needs to be located near a water source. Given this constraint, the market demand for other technologies is ever increasing, with batteries most likely to be the next major technology.

The traditional challenge facing energy storage has been cost. The expansion of the electric vehicle and consumer electronics sectors has driven down lithium-ion battery prices by as much as 20% year on year, with a corresponding increase in the number of battery deployments. The U.S. alone saw a 46% uplift in energy storage deployment from 2016 to 2017. As costs continue to decrease and regulatory policy barriers diminish, I think we can expect to see a wave of energy storage applications being deployed in the near future.

Challenges aside, energy storage is discussed so frequently in the context of renewable energy due to the synergy the two technologies have. While renewable energy (specifically wind and solar) are non-dispatchable intermittent sources, their penetration levels on public grids will be curtailed. Energy storage allows intermittent renewable energy to compete on a level playing field with traditional power resources and allows renewables to be a major component of utilities’ future integration plans. There are estimates that as much as 45% of all new capacity additions will be renewables between 2016 and 2040. Looking to 2050, as much as 65% of the global generation will be via renewables, with solar and wind accounting for 48% of the global mix.

Japan’s Mitsubishi Electric has won a contract from global engineering company Chiyoda Corporation for its BLEnDer RE energy storage system.

The energy storage system, along with power conditioners (PCS), will be installed at Kita-Toyotomi substation in Hokkaido, Japan.

The substation is owned by North Hokkaido Wind Energy Transmission company.

Claimed to be the largest in the world, the energy storage system will have a maximum output of nearly 240MW and 720MWh storage capacity. It is expected to become operational by March 2023.

In October this year, Chiyoda was awarded an engineering, procurement, and construction contract for the battery energy storage system project.

The company is responsible for the design, engineering, and construction for the grid reinforcement pilot project for wind turbines.

The project is led by North Hokkaido and backed by the Ministry of Economy, Trade and Industry’s Agency for Natural Resources and Energy.

North Hokkaido has plans to introduce transmission facilities and high-capacity energy storage systems for the project.

This will connect groups of large-scale wind turbines totalling more than 500MW to the grid in northern Hokkaido.

The booming renewables industry in Texas should, in theory, create a role for energy storage plants to manage its variability.

Years into the Lone Star State’s wind and solar deployment, though, little grid storage has arrived, and future prospects look bleak.

Early projects have delivered some 89 megawatts of storage into ERCOT’s grid, said Cheryl Mele, chief operating officer of the Electric Reliability Council of Texas, the grid operator. Another 1,800 megawatts have entered the interconnection queue, which by no means guarantees they will ever be built.

Lack of a winning business model makes it unlikely mass deployments will begin anytime soon. That could leave significant value on the table for Texas ratepayers.

“When you look at the amount of renewables we do have, certainly storage would have some value in being able to respond quickly,” said Mele, speaking at Wood Mackenzie’s Power & Renewables Summit in Austin Wednesday.

“If we start to see a gap between our forecasted load and our forecasted intermittent renewables, the batteries can respond very quickly,” Mele added. “They can cover a bit of that gap while you’re waiting for other resources to ramp up.”

Here are the major obstacles facing the young energy storage market in Texas, with some provisional solutions to get this technology into play.

Utilities can’t own it

Texas power market deregulation separated competitive generation from regulated wires utilities.

That implicates storage because it qualifies as generation in this market; that means it has to compete with gas generators, and wires utilities are not allowed to own it, lest their ownership undermine the bedrock of competitive markets.

That said, batteries don’t actually generate; they store electricity generated elsewhere and release it at useful times. The discharge of power resembles generation, but batteries can readily function as transmission or distribution assets.

November 19 (Renewables Now) – Gresham House Energy Storage Fund plc (LON:GRID), launched recently by UK asset management firm Gresham House Plc (LON:GHE), announced on Friday that it has wrapped up the acquisition of its 70-MW seed portfolio.

The fund has paid a total of GBP 57.22 million (USD 73.6m/EUR 64.4m) for five operational energy storage systems, namely Staunch in Staffordshire, Lockleaze in Bristol, Littlebrook in Kent, Rufford in Nottinghamshire and Roundponds in Wiltshire. The particular assets were developed by Gresham House and Noriker Power Ltd.

Gresham House Energy Storage Fund has closed the transaction on November 13, using proceeds from its GBP-100-million initial public offering (IPO), conducted earlier this month. It noted that these assets support its targets for a dividend and total return.

The fund’s goal is to invest in an exclusive pipeline of utility-scale energy storage systems in Great Britain.

(GBP 1 = USD 1.29/EUR 1.13)