The rapid market progress of the battery storage sector over the past few years marks the beginning of a profound shift in the way energy will be used by homeowners, businesses, utilities, and government agencies. Significant revenue growth and ever-improving pricing have stirred interest and enthusiasm, with an increasing number of companies, from large international players to innovative startups, entering the fray or upping their existing storage game.
While some observers have breathlessly called 2015 the “Year of the battery,” a more accurate description might be that we are seeing the dawn of the “Age of energy storage,” especially the winning combination of storage integrated with solar and emerging smart grid technologies.
To get a sense of the change in tone and importance, one need look no further than the blend of hype and substance around the Tesla Powerwall announcement. The news, fueled in large part by the “Elon Musk factor,” not only served to put energy storage in the public eye, but helped push the topic into the mainstream conversation in U.S., European, Asian and Australian media outlets and financial markets.
It's not so much about the batteries themselves, but what they can do and the expanding variety of markets in which they will find a crucial role. Image: Flickr user: Andy Armstrong.
Energy independence as a growing concern for households
Powerwall deliveries are set to start soon but it is important to note that in markets such as Germany or Japan, storage has been a reality for more than 3 years. While volumes have been modest due to high costs, the effect has been profound. In Germany, Austria and now Denmark it is now essential for residential installers and distributors to include storage as part of their product portfolio. Simultaneously the message to customers has shifted from “how much money” to “how much (energy) independence”. Today, with the likes of Tesla, Panasonic and LG finally bringing solutions to satisfy demand and large companies such as Sungevity and Solarcity adding storage products to their B2C offering, the first gleam of what could become luminous U.S. and Australian residential storage markets will be visible.
As the storage discussion has evolved, the subtle and not-so-subtle differences among many value-propositions in the burgeoning market have begun to tease out: distributed versus centralised, AC versus DC-connected, grid-connected versus off-grid, residential versus commercial, backup power versus self-consumption models. The underlying message is that there is no “one size fits all” storage solution. There are dozens of current and potential applications for smart battery technology—and hundreds of companies involved. This and the not-so straight-forward methodology to calculate the actual business case achieved with a storage solution, make it hard to apply a simple ROI or payback benchmark rule, which again contributes to shifting the focus to the product, its technical features and most importantly, to energy independence.
Encouraging signs from Australia
When analysing early candidates for prolific storage market growth, it is worth taking a closer look to Australia. Recent announcements from Greg Hunt, Australia’s environment minister, bode well for deployment of storage Down Under. Citing the already large number of solar rooftops among Aussie households as well as high demand charges during peak use periods, the government official has signaled a new openness to help accelerate the domestic storage market.
Companies such as LG, Sunverge, Enphase, Panasonic and Tesla are all closely eyeing the Australian market, with initial products already making an impact. Enphase recently launched its modular “plug-and-play” AC battery as part of the company’s intelligent home energy solution, while collaborator-competitors Tesla and Panasonic are expected to begin shipments of their respective 7-10 kWh lithium ion-based residential storage systems to Australia within the next few months. In the case of Panasonic, their storage launch is being implement in cooperation with some of the country’s most innovative utilities such as Red Energy. It aims at offering decentralised, utility scalable storage, bringing benefits to both the final customer and the utility/distributor, with the latest taking advantage of the unique integrated demand-response remote control platform.
Australia's storage market is of growing interest in terms of energy storage, at residential level and for the grid. Image: AGL.
Storage's role in global 'energy revolution' is just beginning
Investments in--and acquisitions of--storage companies have mirrored the expanding market sector. On the heels of installing more than 8,000 smart storage systems in Europe, Sonnenbatterie received a fresh financial infusion earlier this year and is using the new capital to establish North American partnerships and scale its U.S. operations. SunEdison’s interest in acquiring Solar Grid Storage in March implied a growing realisation that the widespread proliferation of solar will depend in part on scalable, cost-effective storage solutions that will help, not hinder, the grid’s ability to integrate distributed renewables on a massive scale.
GTM Research, Moody’s and other research firms see the various strands of the global battery storage sector accelerating toward a gigawatt-scale, multi-billion dollar market by the end of the decade. And that’s just the beginning of storage’s role in what will become the renewable energy revolution’s multi-billion dollar climate-friendly opportunity.