Introduction

This energy storage systems (ESS) industry roadmap focuses on grid-connected energy storage, extending previous work to develop strategic roadmaps focused on distributed energy resources and systems (DERS) and energy efficiency technology, systems, and services (EE-TSS). The ESS project was launched during September 2014, concluded in late March 2015, and involved a large cross section of M-WERC members and external industry experts.

The project scope was originally defined to focus only on grid-connected ESS. This scope was extended to include uninterruptible power supply (UPS) systems and large-scale bulk storage technologies because these energy storage technologies have a significant impact on the economic activity and growth prospects in ESS markets. This decision and resulting analysis have resulted in great insights that provide a unique and more complete view of ESS than available from most syndicated research sources.

It is anticipated that there will be significant changes in the mix of technologies during this period. Pumped hydroelectric storage (PHS) has dominated the global ESS market for decades; it accounted for 75% of the global ESS market in 2013. But its hold on the market is slipping, as other storage technologies open up new applications and new niches. By 2025, PHS’s market share will dip to around 40%.

Concurrently, continued refinements in the production of electric batteries (driven by increased electric vehicle sales) will drive battery costs down, and lower costs will lead to a proliferation in battery-based ESS markets in the near to middle term.

In developing economies, growing demand for electricity is placing a strain on existing generation systems.

Furthermore, power applications with short-duration, intermittent duty cycles will provide high-value opportunities.

Market Drivers: Market drivers for ESS reflect diverse regional economic factors. However, some key generalizations can be made;

In developing economies, growing demand for electricity is placing a strain on existing generation systems. ESS production is an alternative to load-following and peaking power production. Deployment of ESS in lieu of additional power production capacity will drive the continued development of large-scale ESS, particularly PHS, providing reliable baseline growth in ESS bulk storage applications.

It is also common for grid infrastructure in developing and transition economies to be unreliable. Power quality may be inconsistent, and in some areas brownouts and blackouts are common problems. Industrial producers are especially sensitive to power supply interruptions and power quality issues. As a result, it will be increasingly common for large industrial facilities or industrial parks to invest in ESS in order to ensure a more reliable power supply. (In developing countries)

... it will be increasingly common for large industrial facilities or industrial parks to invest in ESS in order to ensure a more reliable power supply. (In developing countries)

In developed countries, many diverse and sometimes conflicting factors influence ESS market development. Grid transmission- and distribution-level bottlenecks drive markets, especially in heavily populated areas where local transmission limitations place strain on certain distribution grid pockets. In these same areas, environmental and regulatory barriers can hinder development of large-scale ESS, but can also hinder the development of additional transmission infrastructure that could alleviate bottlenecks. The result is a focus on deployment of smaller scale energy storage systems, especially at the distribution level.

Other factors appear to be more important to informing the market overall in developed countries. For example, UPS systems are a mainstay within the ESS market and will grow as developed economies continue to strengthen. In areas where electricity costs are high, energy cost management is also a meaningful driver. ESS markets are also being driven by established market mechanisms (e.g., demand charges, power factor) in the Industrial/Large Commercial segment where price signals incentivize ESS.(In the US and other mature markets)

The last decade has seen strong technology development, especially in electric battery technologies.

New technologies and new economies of scale are also driving markets. The last decade has seen strong technology development, especially in electric battery technologies. Current and anticipated future battery cost declines will open up new niches and eventually mass marke ts and will provide strong support to ESS markets. For example, low-cost battery storage combined with UPS functionality will accelerate ESS market growth.

Increasing implementation of renewable solar and wind is another driver of ESS markets. Currently, many independent system operators and other electricity dispatchers are managing increased renewable loads without the benefit of extensive bulk storage capacity. It may be several more years before we achieve high enough renewable penetration to warrant the very rapid investment in ESS that some analysts have predicted.