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Four Signs the Moment for Energy Storage has Arrived

January 09, 2018

By Yaron Glazer

GTM Research’s U.S. Energy Storage Summit 2017 took place in San Francisco last month, the third annual installment of the event. Though small compared to annual storage conferences such as Energy Storage North America and that hosted by the Energy Storage Association, GTM’s Summit was well attended and the mood was positive. The storage industry as a whole is clearly on an upward trajectory and thankfully, relatively insulated from the policy headwinds facing the solar industry. There was a general sense that the moment for storage has arrived. Here are four reasons why:

1. Utility interest is expanding across the country.

Industry events focused on storage are generally notable for significant representation from utilities on both sides of the microphone. Utilities are seemingly equally eager to both learn about storage from and share their learnings with other utilities. At this Summit, in addition to the usual representation by the California investor-owned utilities (IOUs) and other early adopters such as Arizona Public Service (APS), the attendance of newer entrants to the space was also notable, including Southern Company, Entergy, Commonwealth Edison, and Oncor. While their exploration is still at an early stage, their interest signals expanding opportunities.

2.     M&A activity in the space accelerated in 2017.

Over the course of this year, Enel acquired Demand Energy, Wartsila acquired Greensmith, and Aggreko acquired Younicos, among others. SMA and AES will launch their joint platform, Fluence, this month. With so many companies positioning themselves for the growth market anticipated over the next few years, there appears to be a shortage of good acquisition targets—even as we’re seeing strong interest in the storage sector from larger energy players.

3.     Li-ion batteries are asserting dominance as the storage technology of choice.

At least for the next five to ten years, Li-ion’s dominance appears nearly assured. Li-ion accounted for 97% of all energy storage installations in the U.S. in 2016, and the trend is set to continue well into the future. PG&E recently announced six winning projects from its 2016 Energy Storage RFO, and all six utilized Li-ion batteries. With more than 10 gigafactories under construction around the world, costs will continue to decline as production scales, far outpacing cost reductions in other chemistries and technologies.

4.     The sector’s policy and business model frameworks are maturing, while tech keeps improving.

Although there were significant storage installations in 2016 and 2017, most were the result of the Aliso Canyon emergency, rather than planned procurements. The industry is still largely forward-looking, focused on building policy frameworks at the national and state level; educating utilities about technology, use cases, and operations; and proving business models. Meanwhile, manufacturing scales and prices decline. Projections about growth vary, but all are rosy. The only debates are about whether storage will completely replace new gas peakers by 2020, or by 2025…

Yaron Glazer is the vice president of strategy at Coronal Energy.

Photo Credit: Nicolas Raymond

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