From Science Project to Money Maker: Energy Storage Hits Inflection Point

on September 24, 2019

In 2014, the vast majority of storage projects Greensmith Energy was working on might have best been described as science projects, often dependent on grants or utility R&D budgets devoted to figuring out emerging technologies.

But there was one 20-megawatt project in PJM territory that was unlike all of the others, and not just because of its size. “That was the first project Greensmith ever did in the company’s history that was driven primarily by the financial returns of the project to their customers,” said Risto Paldanius, director of business development for Wärtsilä Energy Storage, Solar and Integration division, who played a key role during the Greensmith acquisition by Wärtsilä in 2017.

It’s a testament to just how much the economics of battery storage and the renewables it supports have improved in less than a few years. Today, potential projects are evaluated primarily on their business case. “If we don’t think the business case is real, we won’t target projects,” said Paldanius. “Close to 100 percent of our projects are commercially driven.”

In 2018, global energy storage deployments grew 147 percent year-over-year to reach 3.3 gigawatts, or 6 gigawatt-hours, according to Wood Mackenzie Power & Renewables. That’s nearly double the average 74 percent compound annual growth rate for the industry from 2013 to 2018. In fact, last year’s deployments made up more than half of the total amount of storage deployed in the past five years, “indicating an inflection in storage demand,” Ravi Manghani, WoodMac’s head of storage research, said when the findings were published in April.

There are other signs of a maturing storage market. For example, customers and manufacturers considering a storage project used to insist on a warranty based on a worst-case scenario.

“Today we are talking about fully flexible warranties that are truly based on the system’s actual operational profile. If it’s one cycle per day, you degrade 20 percent, for example, or for one-and-a-half cycles, you degrade 30 percent. This way, system operational cost is based on actual operations and the warranty matches how the asset owner operates the system,” said Amy Liu, manager of applied technology at Wärtsilä, Energy Storage, Solar and Integration.

For instance, Wärtsilä now knows the small, but noticeable, difference in availability in different size systems. For example, a 6-megawatt project could have an average availability of 97.97 percent, while a 10-megawatt system may have a 98.36 percent availability, and a 20-megawatt system could have an average availability of 98.28 percent.

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Fractal Energy Storage ConsultantsFrom Science Project to Money Maker: Energy Storage Hits Inflection Point