The global energy storage market is on the cusp of a long-running investment and deployment boom, according to one of the world’s most influential energy analysts.

Bloomberg New Energy Finance (BNEF) this week announced an upgrade to its forecasts for the behind-the-meter (BTM) and grid-scale energy storage sectors, confirming that in response to falling costs it had “significantly increased” its projections for the sector.

The latest annual report on the global energy storage market predicts global energy storage capacity, excluding pumped hydro storage, will soar over the next two decades from less than 20GW to nearly 1,000GW by 2040.

Specifically, BNEF said it now expects the market to grow to a cumulative 942GW/2, 857GWh by 2040, attracting $1.2tr in investment over the next 22 years.

It added that the emergence of “cheap batteries” will provide a knock on boost to the renewables market, as it will allow wind and solar projects to provide power when the wind is not blowing or the sun is not shining.

“We have become much more bullish about storage deployments since our last forecast a year ago,” explained Yayoi Sekine, energy storage analyst for BloombergNEF and co-author of the report, in a statement. “This is partly due to faster-than-expected falls in storage system costs, and partly to a greater focus on two emerging applications for the technology – electric vehicle charging, and energy access in remote regions.”

The tumbling cost of batteries is set to drive a boom in the installation of energy storage systems around the world from now to 2040, according to the latest annual forecast from research company Bloomberg New Energy Finance (BNEF).

The global energy storage market will grow to a cumulative 942GW/2,857GWh by 2040, attracting $1.2 trillion in investment over the next 22 years. Cheap batteries mean that wind and solar will increasingly be able to run when the wind isn’t blowing and the sun isn’t shining.

BNEF’s latest “Long-Term Energy Storage Outlook” sees the capital cost of a utility-scale lithium-ion battery storage system sliding another 52% between 2018 and 2030, on top of the steep declines seen earlier this decade. This will transform the economic case for batteries in both the vehicle and the electricity sector.

Yayoi Sekine, energy storage analyst for BloombergNEF and co-author of the report, said: “We have become much more bullish about storage deployments since our last forecast a year ago. This is partly due to faster-than-expected falls in storage system costs, and partly to a greater focus on two emerging applications for the technology — electric vehicle charging, and energy access in remote regions.”

Logan Goldie-Scot, head of energy storage at BNEF, added: “We see energy storage growing to a point where it is equivalent to 7% of the total installed power capacity globally in 2040. The majority of storage capacity will be utility-scale until the mid-2030s, when behind the meter applications overtake.”

Behind-the-meter, or BTM, installations will be sited at business and industrial premises, and at millions of residential properties. For their owners, they will perform a variety of tasks, including shifting grid demand in order to reduce electricity costs, storing excess rooftop solar output, improving power quality and reliability, and earning fees for helping to smooth voltage on the grid.

A year after Massachusetts awarded $20 million in energy storage grants, the first project is online and showing promise to help shave peak demand, save customers money, and pave the way for more solar power.

Municipal utility Braintree Electric Light Department (BELD) paid for most of the $2.6 million battery installation using its reserve funds and some of its business customers invested additional money in exchange for lower demand charges.

But it was a grant from Massachusetts’ Advancing Commonwealth Energy Storage (ACES) program that helped make the numbers add up for the pilot project. The program is part of the state’s Energy Storage Initiative, which has a goal of deploying 200 megawatt-hours of energy storage in the state by 2020, up from the current level of seven megawatt-hours.

In 2016, the state commissioned a report on the use of energy storage in the state and strategies to expand its deployment. Among the recommendations was a grant program to provide at least $10 million to demonstration projects that would identify and resolve obstacles to storage deployment, explore business models, and help developers gain experience working through the kinks of the process.

This proposal became the ACES program. In December 2017, the state announced $20 million in grants — twice the original target sum — to 26 projects planned for commercial sites, utilities, hospitals and education institutions.

The battery storage industry is at a pivotal moment, said Eric Hittinger, an assistant professor of public policy at the University of Rochester with a focus on electricity production. Like solar a decade ago, storage technology is getting better and cheaper, and is widely perceived as having strong potential, but there is still some uncertainty about it, he said.

“People see it as a tech that can provide a lot of value,” he said. “But it’s perceived as a little bit risky — people are not sure how to use it, where to put it, what the business model is.”

The PJM Interconnection has made a temporary change in the rules for its frequency regulation market that could mean lower revenue and market participation for energy storage.

The proposed rule — which still requires approval by federal regulators — addresses price spikes, or “price excursions,” observed by PJM staff.

Reinstates floor value

PJM stakeholders endorsed a rule change that would reinstate a floor value of 0.1 for the “benefits factor” the regional transmission organization uses to compensate for different types of frequency regulation resources.

Two types of resources can participate in PJM’s frequency regulation market: Reg D for fast responding resources, such as batteries, and Reg A for conventional resources, such as gas turbines or hydropower. PJM has only one market for frequency regulation, however, so the benefits factor is designed to create equivalence between offers from the two types of resources.

PJM set the benefits factor floor value at 1 in December 2015, but modified it in January 2017 and then effectively removed it in August 2018.

When the benefits factor fell to values approaching zero it would skew the results of the equations that PJM uses to score offers in the frequency regulation market. The benefits factor is always present as a denominator in those equations, which also include values for a performance score and a lost opportunity cost.

In cases where the benefits factor fell to less than 0.1 and the lost opportunity cost was above zero, PJM observed regulation market clearing prices as high as $7,000/MWh. Between May 1, 2018 and Aug. 31, 2018, PJM observed 80 intervals where the regulation market clearing price was above $500/MWh and 16 of these hours had marginal benefits factors less than 0.1. By way of comparision, the weighted average clearing price for regulation was $32.99/MW in the first six months of 2018.

Solar, UPS and the Kokam acquisition

The battery boom is coming to China, California and basically everywhere else—and it will be even bigger than previously thought.

The global energy-storage market will surge to a cumulative 942 gigawatts by 2040, according to a new forecast from Bloomberg NEF published Tuesday, and that growth will necessitate $1.2 trillion in investment. Sharply falling battery costs is a key driver of the boom. BNEF sees the capital cost of a utility-scale lithium-ion storage system falling another 52 percent by 2030.

But cost isn’t the only factor. Governments from China to California are spurring demand, as is the rise of electric vehicles and solar power. There’s also been a greater focus on storage for electric-vehicle charging as well as energy access in remote areas.

“Costs have come down faster than we expected,” Yayoi Sekine, a New York-based analyst at BNEF, said in an interview. “Batteries are going to permeate our lives.”

The implications of cheaper batteries are far-reaching, upending multiple industries and helping spur technologies necessary to help fight climate change. Batteries power the electric vehicles that are popping up on our freeways. They also unlock solar power from the exclusive confines of the sun.

Two important markets come into particular focus. China, which is building up its battery-manufacturing capacity, will be a central player in the boom. California, meanwhile, has pushed through a series of measures in recent years that will directly or indirectly spur more batteries, including legislation that would require all of the state’s electricity to come from carbon-free sources by 2045.

Largest single rooftop

CARMEL, Ind. — A recent MISO workshop on storage providing transmission services made clear how much the technology is blurring the once clear lines between generation and transmission.

In opening the Oct. 31 workshop, MISO Director of Planning Jeff Webb jokingly nodded to the industry’s choice of “SATA” as shorthand for “storage as a transmission asset,” saying: “Happy Halloween. Welcome to what we’re calling SATAN’s workshop.”

MISO last month detailed how SATA would be evaluated in its annual Transmission Expansion Plan reliability studies compared with traditional solutions. The RTO is proposing that costs for storage projects selected as a preferred transmission solution would be recovered in local transmission zonal rates while avoiding double recovery for the same service in the energy market. (See MISO Contemplates Storage as Tx Reliability Asset.)

“I don’t expect … that we’re going to have a lot of energy storage resources that we’re going to consider to be the preferred option,” Webb said.

For now, MISO is only proposing a model for storage to act as a transmission reliability solution, solving thermal, voltage or stability issues. Beyond that, Webb said the RTO will have to pick through more complex Tariff issues.

He said it will hold off on discussions around evaluating storage as economic transmission, competitive storage projects and how regional cost sharing for high-voltage transmission projects applies to storage.

The Interconnection Question

MISO has laid out potential paths for interconnecting SATA, including only requiring the MTEP process — not the interconnection queue — for transmission-only assets. An interconnection queue requirement would kick in if a storage owner decides to begin offering market services.

Alternatively, MISO could require entering the interconnection queue for all SATA, even for assets that don’t plan on participating in the energy market, Webb said. Some stakeholders also contend that SATA providing some market services should not be subject to a queue requirement unless it plans to offer capacity.

Clean tech giant Tesla has delivered its Powerpack battery storage system to a tidal power station off the coast of the Shetland Islands in the UK.

Tesla’s Powerpack can store excess energy generated at the tidal power station, which is operated by Scottish firm Nova Innovation, to be used when the turbines stop producing electricity.

Nova Innovation CEO Simon Forrest said: “By storing the clean energy generated by the natural ebb and flow of the tide, we can control the supply of electricity to the grid to match demand. This creates a consistent source of completely predictable power from a clean, sustainable resource.

“Nova’s expertise in smart grid control, renewable generation and energy storage has delivered this game-changing innovation. We now look forward to expanding our services to other markets and renewable projects.”

The scale of the project, said to create “the world’s first grid-connected ‘baseload’ tidal power station”, has not been confirmed. However, the 600kW tidal system has now been connected to the national grid.

The delivery of Powerpack battery storage system was backed by the Scottish Government, which donated £272,606 in funds to the project.

Scotland’s Energy Minister Paul Wheelhouse commented: “This project will utilise both renewable tidal technology and battery storage from one of the world’s pioneers of battery storage, Tesla, to overcome the challenges of current grid constraints and to enable the improved, uninterrupted, provision of low carbon energy not only in Shetland but in other small island communities across Scotland.

“Crucially, however, by undertaking this work in Scotland, we can also play a key role in helping inform the sustainable decarbonisation of energy for communities across the world.”

Tesla has already deployed its Powerpack battery storage system for several renewable solar and wind projects, but this is the first tidal power station using the technology.