The U.S. Energy Storage Boom Is About To Begin
- Aug 28, 2020 2:48 pm GMT
The rise of renewable energy sources and the decarbonization of the grid will need new energy storage installations in the coming years to provide flexible energy and capacity. Alongside rising shares of solar and wind power in the electricity mix, the U.S. is set to see increased energy storage installation as storage is critical to ensuring more solar and wind power generation.
America has the potential to see 100 gigawatts (GW) of new energy storage deployed by 2030, the U.S. Energy Storage Association (ESA) said in a new white paper this month.
That is an ambitious target, considering that in its previous estimate from 2017, ESA projected 35 GW of energy storage – including batteries, thermal, mechanical, and pumped storage hydro – installed by 2025.
The ambitious 100-GW target of new energy storage is achievable if supportive policies and emerging policies removing barriers to market participation continue, the trade association says.
“Remarkable Growth Ahead”
“With the right policies and regulatory frameworks in place, we believe that achieving 100 GW of new storage installations by 2030 is entirely reasonable and attainable. Current market projections indicate remarkable growth for energy storage over the next decade, and its role is expanding to maintain and enhance the reliability, resilience, stability and affordability of electricity over the coming decade,” said Kelly Speakes-Backman, CEO of ESA.
All estimates point to the exponential growth of energy storage installations over the next decade.
The most recent U.S. Energy Storage Monitor from Wood Mackenzie Power & Renewables and the ESA shows that a total of 523 MW of energy storage was deployed in the United States. This year, the storage deployment is set to double to nearly 1.2 GW, despite the coronavirus crisis that has changed and challenged energy markets and company plans. In 2025, energy storage deployment is set to reach 7 GW, representing six-fold growth compared to the new storage installations in 2020.
Supportive legislation would be one of the key growth-enabling factors for energy storage deployment, which could create at least 200,000 jobs directly associated with the expanding energy storage market—roughly a threefold increase from current levels, ESA said in its report.
These legislative initiatives could be Congress enacting an investment tax credit (ITC) for stand-alone storage facilities, the trade association says. State-level pledges for grid decarbonization, expansion of solar and wind generation, and clean energy standards would also drive energy storage deployment.
“A supportive policy framework and a vibrant clean energy economy would drive energy storage growth and set a trajectory to attain the 100 GW storage goal by 2030,” says ESA, which notes that seven states have enacted deployment targets totaling approximately 11 GW of new storage by 2035, and that over US$1 billion in incentives specifically for energy storage have been made available in six states, with several more states piloting storage incentives.
Utilities And Businesses Deploy More Energy Storage
The other key growth factors include the fact that utilities are now planning and preparing for energy storage in their resource planning, and companies in various sectors are increasingly looking to deploy renewables+battery storage on-site to cut their electricity bills.
A growing number of utilities across the United States include storage in their integrated resource planning (IRP). According to ESA, more than
80 percent of 2018-2019 utility IRPs examined storage in their models, and over 20 GW of storage has been economically selected in IRPs through 2040.
For example, El Paso Electric, a regional electric utility in the Rio Grande Valley, plans to expand solar energy and introduce utility-scale battery storage with a 100-MW solar facility combined with 50 MW of battery storage in Otero County, New Mexico, and a 50 MW stand-alone battery storage facility in Canutillo, Texas.
Companies are also increasingly looking to use solar-plus-storage to have access to cheaper electricity.
Technology infrastructure corporation Switch and asset management firm Capital Dynamics broke ground last month on what they described as the largest behind-the-meter solar plus battery project in the world.
The ‘Gigawatt 1’ project will use thousands of solar panels made by U.S. firm First Solar, and battery storage utilizing Tesla Megapack manufactured in Storey County, Nevada.
“This project also ensures Switch’s power costs will remain in the 5 cent a KWh range and Switch clients will continue to enjoy low-cost, 100% renewable power for decades to come,” Adam Kramer, Switch EVP of Strategy, said.
The power costs would be several cents lower than what Switch would pay to buy electricity from the local utility NV Energy, thus saving Switch tens of millions of dollars a year, Katherine Blunt of The Wall Street Journal writes.
“Our goal is to be running around the clock on green electrons,” Kramer told the Journal.
The image of sustainable business practices and care for the environment aside, companies have a good financial incentive to install solar-plus-battery on site.
Beer maker Sierra Nevada Brewing Company installed in 2018 in Chico, California, a Tesla Powerpack battery system to help it better use the energy it produces. The Powerpack charges when energy demand is low, then kicks in when demand jumps.
With the battery system, Sierra Nevada has cut its power costs from US$50,000 to below US$10,000 per month, sustainability manager Mandi McKay told the Journal.
This year, various U.S. businesses are expected to install 220 MW of storage at or near their locations in 2020—and this annual pace of deployment is set to quadruple by 2029, Ricardo Rodriguez, research analyst at Guidehouse Insights, told the WSJ.
Companies and utilities have started to realize that energy storage could help them cut costs and adapt to the push toward cleaner energy in many U.S. states. Combined with the right incentives and policies, America could witness an energy storage boom in the next decade.
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