The Energy Storage Report 2024

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GTM: US commercial storage market to grow 34% annually between 2014 and 2020

The US market for commercial energy storage will grow by the equivalent of 34% annually between 2014 and 2020, resulting in the deployment of over 720MW of distributed energy storage, according to a new report by GTM Research.

The analysis firm claims that photovoltaics will be one of the drivers of the commercial storage market, with the next six years representing “the beginning of a long-term, viable growth opportunity for commercial energy storage”.

Advances in battery technology, scaling up to mass production of batteries for electric vehicles (EV) and consumer electronics, as well as ongoing improvements in balance of system costs for grid-integrated systems are likely to drive down the high cost of energy storage compared to traditional grid alternatives, according to GTM.

GTM claims the report, 'Distributed Energy Storage 2014: Applications and Opportunities for Commercial Energy', “explores distributed energy storage as a new paradigm of electricity supply”.

A recent report by rival analysis firm IHS claimed that the grid-connected energy storage market will exceed 40GW globally by 2022.

GTM has likened the market for commercial storage to the status of the US solar power market in 2005, in that the technology, though still expensive, is “sophisticated enough to allow for widespread adoption”, while business models are “just beginning to emerge”. Similarly to solar, GTM also asserts that policy and incentives will drive the domination of the distributed generation market in key regions.

The report identifies key market drivers and use cases for storage, as well as barriers to its widespread introduction. Drivers include the attractiveness of reduction in demand charges for commercial and industrial customers, synergy in the markets between PV and energy storage, use of storage for providing frequency regulation services and state-level incentives.

Meanwhile barriers include the initial difficulty of monetising the full value of storage applications, lack of dedicated federal incentives at a national level, a lack of transparency into project performance, economics and safety, the accessibility of behind-the-meter resources to wholesale markets, the cost of batteries and capacity restraints and the use of net energy metering.

In addition, GTM has identified more than 20 value streams for storage depending on the point of interconnection, asserting that opportunities for combining value streams are greater where systems are interconnected nearest to customer load.

Shayle Kann, GTM vice president, cited California and the area covered by regional transmission organisation PJM as early growth markets in which progress would be “vital in helping the market scale and getting investors comfortable with the complexity of financing energy storage in the US."

“The commercial energy storage market is still in its earliest days, but we're starting to see real opportunity emerge for companies that can selectively pursue attractive markets and successfully monetise multiple value streams,” Kann said.

The report features forecasts for three different segments; baseline commercial capacity deployed, categorised by technology and area covered by each Independent System Operator (ISO) or Regional Transmission Organization (RTO), baseline frequency regulation and bill management across the various RTO and ISOs. The final forecast examines the cumulative capacity installed by region between 2014 and 2020.

The forthcoming volume of Solar Business Focus magazine will include a feature article on the future of electrical energy storage (EES) and PV, from interviews with experts and industry figures.

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