The renewable energy storage market is on a tear, driven by lower-cost batteries, incentivized solar installations, a desire for energy independence, and the need for smart-grid stability and lower overall utility costs.
While current solar energy tax incentives start to dissipate in 2016, a bid to extend those incentives to 2020 has just passed Congress and has reignited the solar industry, with a knock-on effect for battery-based energy storage systems.
This surge around energy storage systems (ESS) in general, and renewable energy storage (RES) in particular, has created enormous opportunities for designers of power conversion architectures and inverters, especially for home applications. Even Tesla has gotten involved, announcing its Powerwall, a $3,500, 10-kWh storage system for the home, business and utilities.
However, designers beware: choose the wrong components and you may delay your design’s time to market, or worse still, seriously injure the unsuspecting homeowner.
Battery storage: Hawaii beats California
According to GTM Research, 60.3 megawatts (MW) of energy storage were deployed in Q3 2015, twice that of Q3 2014 – and a 46% increase from Q2 2015. However, it is the “behind the meter” market, including residential and commercial, that is shining through, growing to over 15 times that of Q3 2014.
Regionally, Hawaii took the lead in residential ESS deployments, surpassing California for the first time, which came in third. GTM combined the other five regions it monitors into second place.
And the future only gets brighter. GTM predicts that the U.S. energy storage market will surpass 1 gigawatt (GW) in 2020, translating to a dollar growth from $381 million in 2015 to $2 billion by 2020, with the behind-the-meter sector increasing its overall portion to 59% of the total market.
Solar energy flares
That Hawaii would outshine California in energy storage deployments comes as no surprise to Brett S. Simon, Energy Storage analyst at GTM. “Hawaii’s electricity prices are high, and it already has a high level of residential PV [photovoltaic] deployments,” he said.
The connection of ESSs to photovoltaic deployment cannot be ignored, particularly with regard to residential applications, where solar deployments are increasing at a phenomenal rate (Figure 2). This increase has technological as well as financial drivers.
Technologically, the efficiency of solar cells continues to increase and module costs continue to fall, to the point that it has increasingly become a viable option in many developed regions as well as an alternative to diesel in regions such as Africa.
That said, solar’s cost parity with conventional power sources remains a discussion shrouded in controversy, nuances, biases and misinformation, much of it due to subsidization of both solar cell manufacturing and deployments.
As mentioned above, federal investment tax credits (ITCs) have encouraged and subsidized many residential deployments of solar power. In fact, GTM based its 2016 projections on the likelihood that those ITCs would start expiring at the end of next year, driving somewhat of a “gold rush”.
“In 2016, developers will have a laser-like focus on project build-out in order to qualify for the 30% federal Investment Tax Credit, which is scheduled to step down to 10% for utility, commercial, and third-party-owned residential PV, and to expire altogether for direct-owned residential PV on January 1, 2017.”
—The quarterly SEIA/GTM Research U.S. Solar Market Insight report (Q3, 2015).
But not so fast: The effect of those ITCs expiring would ripple across the entire renewable energy and storage industry. So much so, that in December 2015, Congress extended the ITCs beyond the original expiration date of 2016.
The deal would call for a five-year renewal of the ITC in exchange for lifting the ban on U.S. oil exports. By the end of day, battered solar stock prices had rallied, with SolarCity’s stock price alone soaring by more than a third.
In response to the rule change, IHS Research, which initially had projected solar deployment in the U.S. to approach 17 GW in 2016, before falling to 6.5 GW in 2017, has revised its 2017 figure upward, dramatically, to between 13 and 16 GW. It expects it to peak in 2020 and 2023, based on the new ITC rules.
The U.S. isn’t alone in expanding PV deployments. “Solar power could grow by 80% in Europe by 2020,” said James Watson, CEO of SolarPower Europe, commenting on a research firm that released its “Global Market Outlook for Solar Power 2015-2019” report in June of 2014.
While 40 GW had been deployed globally in 2014, the report predicted that 540 GW could be deployed by 2019. All this bodes well for energy storage, though lithium-ion (Li-ion) may not be the beneficiary.
A recent report by Navigant Research made the point that, “Input costs, some safety issues, and materials scarcity all make that chemistry’s [Li-ion] current grasp on the leadership title relatively weak, and these challenges leave it vulnerable to new chemistries that solve some or all of those problems.”
Those advanced storage options include ultracapacitors (not a battery chemistry, but counted as an advanced storage mechanism for the purposes of the report) as well as battery chemistries such as lithium sulfur (LiS), magnesium ion (Mg-ion), solid electrolyte, next-generation flow and metal-air. Navigant expects global deployments of next-generation technologies for energy storage to increase from near zero this year, to $9.4 billion by 2023. The bulk of that will come from Europe and Asia. Overall battery demand will increase from 66.2 GWh in 2014 to over 225.3 GWh in 2023.
Energy storage rising with renewab les
Adding some form of energy storage to a renewable energy source, particularly solar, is one of the main drivers of ESS deployment, according to Tee Chun Keong, a product marketing manager at Avago Technologies, Inc. Avago is a major supplier of components to the power conversion and isolation protection market.
Traditionally, adding a solar panel came with the assumption that any excess power generated by the solar cells and not used by the homeowner would be sold back to the utility.
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