Trends in the Grid-Scale Battery Storage Market
Grid-Scale Battery Storage is a collection of methods used for energy storage on a large scale for later use to provide electricity or other grid services when needed.
There are several battery chemistries available for Grid-Scale Battery Storage, including, lithium-ion, lead-acid, redox flow, and molten salt. They all differ in key technical characteristics and each has its own set of advantages and disadvantages.
Globally, the market for this technology is dominated by lithium-ion chemistries. There has been a 70% decline in the cost for lithium-ion chemistries over the years 2010 to 2016, due to technological innovations and increased manufacturing capacity, leading to a rise in the popularity of the technology.
Also, the global grid-scale battery market was valued at USD 0.90 Billion in 2017 and is expected to reach USD 5.9 Billion by 2023, at a CAGR of 35% between 2018 and 2023.
Since the times, the electrical grid has existed, there has been the need of storing energy so as to use during the times of peak demand and regulate frequency. In the past, the major chunk of this extra energy used to come from the conventional fossil fuel plants which were fired up and down basis the demand. But with the time as the renewable resources started making up for the resources for power generation, the need for stable and flexible energy storage technologies continues to increase. In the present day, nearly all worldwide electricity storage capacity (especially large-scale energy storage) is made up of pumped hydro water – the potential to generate vast loads in seconds makes it an extremely valuable storage resource.
Non-pumped hydro energy storage worldwide has grown from 0.34GW in 2010 to 6 GW in 2017. The bulk of this explosive growth is from battery energy storage systems – specifically, lithium-ion chemistries.
There has been a constant increase in the need for system flexibility and need for a decrease in the costs of battery technology, which has led to Battery Storage systems, in general, to play an increasing role in the power system in recent years.
Technology Impact on Industries:
Healthcare Industry: Batteries play a key role in many applications in the Healthcare industry. They are used for increased safety of operation and for having the freedom to move certain instruments in and around the hospital. However, the battery used in medical applications needs to meet very high standards for reliability, efficiency, and safety in all applications where they are used. Energy storage systems are not directly linked to patients, nor they are operated by doctors. They are the next step to uninterrupted power supplies (UPS) which have been traditionally used as a power backup system for the most critical applications such as IT Network critical infrastructure and Emergency room devices, etc. There is also an economic benefit on the electricity bill. Using such systems, they can directly control the usage profile of the electricity and reduce high power peak demands, which results in lower bills.
BFSI (Banking, Financial Services, and Insurance) Industry: The energy storage market is projected to realize over USD 625 B in projected investments. It will require venture capital and strategic investors to scale the battery companies that reduce costs, have longer discharge duration, extend life cycles, and improve safety.
There have also been major mergers and acquisitions happening in this domain.
Provided all this data, a greater number of people are becoming interested in investing in this sector, some are driven by the financial returns, while others seek out environmental or social returns (Impact Investing). Hence, this sector will observe a positive effect due to the rise of the Grid-Scale Battery Storage industry.
Technology Impact on Geographies:
North America: Research in energy storage has dramatically increased after the first U.S. oil crisis in the 1970s and also with the increase in the performance and the reduction in the cost of the rechargeable batteries. Also, 2.5% of delivered electric power in the U.S. comes is cycled through the storage facilities.
Europe: France and Germany, along with other European countries, are increasing share of renewable energy in their energy mixes. In France, it is approximately 20% and in Germany, it is around 32%. However, there is a lack of definition of energy storage in the current EU legislation which leads to certain barriers. However, EUROBAT is of the opinion that storage should be considered as the fourth component of the energy system, after generation, transmission, and distribution. Also, there are countries like Spain, where new laws on self-consumption risks preventing any positive possible developments for renewable and storage. It will require close collaboration of all the concerned parties to set the EU on the path of decarbonization, energy security, and independence.
APAC: The Asia-Pacific region is going to develop as the largest market for battery energy storage, accounting for the 45% share of the global markets. Countries such as China, India, Japan, South Korea, and the Philippines are going to focus on the frequency regulation in the energy grid to normalize the variation in power generation from the renewables.
Middle East and Africa: There’s a high disparity between the countries in terms of renewable penetration and capacity margin. Some are doing really good while some might turn up late for the party.
Abu Dhabi is the home to the world’s largest ‘virtual battery plant’.
Latin America: Energy storage is in the early stages of deployment in Latin America. However, this sector promises to become significant because the region plans to diversify its sources of power generation. Also, the policymakers and the private companies in the region are actively working in this domain to restructure power markets.
Top companies providing Grid-Scale Battery Storage:
- Fluence, a Siemens and AES company, is a global leader in the market for energy storage technology and services
- NextEra Energy, Inc. – The company has consolidated revenues of approximately USD 17.2 Billion and employ 14,000 people
- BYD Company Ltd. – Established in 1995, the company is the largest supplier of rechargeable batteries on the globe
- Samsung SDI – The company is one of the global leaders for the Lithium-Ion Battery for IT application such as Cell Phone, Note PC and Industrial Application
- Parker Hannifin Co. – The company manufacture and sell motion and control technology
Effect of COVID-19 on technology and industry:
The industry isn’t much affected due to COVID-19 and as per the top management of various companies, they are busier than ever and also hiring and onboarding employees remotely. They are also able to manage all their operations and development work remotely. However, they have suspended all the travel for the safety of their employees, customers, vendors, partners, and communities. Also, supply chains for the battery space were shaken by the early 2020 impact of COVID-19 on its biggest supply base, China.
Also, the technology is being promoted by various local governments in order to make an economic recovery, while permitting no-touch processes for the small plants.
Future of technology:
This technology is one of the options that can be also used for renewable energy integration and enhance power system flexibility. Hence, it may be used even more for the purpose. The energy storing systems are providing voltage support, peak shaving, and load leveling, which helps utilities to reduce operational costs and delay adding infrastructure.
Although Lithium-ion is dropping in price, it is going to be expensive for most of the grid-scale applications. As of now, they are unable to store more than four hours' worth of energy at a price that makes sense. And also, it poses a fire risk, and the ability to hold a charge fades over time.
But for now, the technology is available, it is maturing and being deployed. It has a long way to go.