Energy storage is being touted by many energy industry analysts as the key to achieving a global transition to clean energy, by incorporating storage technology and flexibility into future smart grids and into homes. Energy storage is literally all around us in our modern lives. This includes a wide range of technology and techniques for storing energy for use later, from the electric hot water tank at your home of business, to the batteries that start your car, and power your laptop and smartphone.
Energy storage technologies are classified as follows:
- Mechanical Energy Storage – such as pumped hydro
- Electrochemical Energy Storage – such as batteries of various types
- Thermal Energy Storage – such as molten salt
- Chemical Energy Storage – such as energy converted and stored as hydrogen
Electrochemical batteries are a rapidly growing segment of the energy storage market. Batteries are all around us in portable electronic equipment, uninterruptable power supplies (UPS) and beyond. Batteries come in a flexible array of sizes, and are optimized for numerous applications. With costs falling as scale ramps up, these batteries are experiencing rapid growth.
A recent report on energy storage by Bloomberg concludes that Batteries capable of storing power at utility scale will be as widespread in 12 years as rooftop solar panels are now, revolutionizing the way consumers use energy. It further states that the energy storage market may be valued at $250 billion or more by 2040, and expects 25 GW of the devices to be deployed by 2028, about the size of the small-scale photovoltaic industry now. Currently, less than 1 GW of batteries are operating on the grid around the world. By 2040, the industry will mushroom, storing and discharging 759 GWh. There are several larger-scale battery projects in the works, according to S&P Global. They include a 90-MW system in Germany being built by Essen-based STEAG Energy Services GmbH and Edison International’s 100-MW facility in Long Beach, California. Utility-scale storage is the new emerging market for batteries, kind of where electric vehicles were five years ago.
Batteries for Energy Storage
McKinsey Research has found that storage is already economical for many commercial customers to reduce their peak consumption levels. At today’s lower prices, storage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability, providing power-quality services, and supporting renewables integration.
Further, given regulatory changes to pare back incentives for solar in many markets, the idea of combining solar with storage to enable households to make and consume their own power on demand, instead of exporting power to the grid, is beginning to be an attractive opportunity for customers (sometimes referred to as partial grid defection). McKinsey Research believe these markets will continue to expand, creating a significant challenge for utilities faced with flat or declining customer demand. Eventually, combining solar with storage and a small electrical generator (known as full grid defection) will make economic sense—in a matter of years, not decades, for some customers in high-cost markets.