The White House announcement of new developments and investment in energy storage has been characterised as “the first executive office push for energy storage” that will “undoubtedly galvanize” the industry, in a new GTM Research brief by the firm's energy storage director Ravi Manghani.
As part of the initiatives propounded by the Obama administration, investors are announcing US$130 million in new funding commitments for energy storage. According to the report, in aggregate, these new commitments could lead to around US$1 billion in investments in energy storage.
Apart from significant financing announcements, other key takeaways from the federal government announcement are its commitment to increasing its storage and microgrid capacity through programmes that will both provide funding for rural microgrids and enable federal and military bases to be more resilient. Furthermore, the US Department of Energy is promoting the standardisation of energy data which will be more economical for the industry and individual stakeholders, as well as creating an accessible pool of information that will ensure efficiency and consistency across the industry.
In addition, sixteen developers and power companies in at least eight states have announced new storage procurement and deployment targets for the next five years on the back of the announcement, to aid in the push for what is known as the second wave of energy storage; in 2015, the US doubled its installed capacity of energy storage to 500MW.
The GTM report details how this wave is characterised by opportunities emerging in a small number of use cases and regions. US front-of-meter had a record-breaking year least year with almost 200MW of deployments. Similarly, behind-the-meter storage experienced a breakout year in 2015, with deployments increasing five-fold from 2014 figures. California market was accountable for 28.9 MW of these deployments, making it twelve times bigger than the second largest behind-the-meter market, according to the brief.
Business-as-usual outlook of seven-fold growth by 2021
GTM Research forecasts annual US storage deployments to grow from 226MW in 2015 to 2.1GW by 2021 – representing a seven-fold growth from 2015 deployments, and a compounded annual growth rate of 45% in that six year period. This is only a base forecast, that assumes no major federal policy or state-level mandates across the country. The report accentuates, however, that the addition of a new nationwide storage public-private push will provide “a well-earned boost to the market” and “an upward bump in the storage outlook”.
The report draws out two main categories that the US storage market will experience the main impacts of the federal announcement: storage for enabling military facilities to be more resilient; and new and the fortification of existing commitments from grid operators, power companies, state agencies and non-profit organisations.
To this end, one utility, Florida Power & Light Company (FPL) immediately announced an energy storage pilot project in the wake of yesterday's announcement that aims to strengthen the grid by testing multiple applications of advanced battery technologies under real-life conditions to assess their grid-balancing capabilities. FPL expects to begin construction on the project this summer with most components in operation by the end of the year.
'Usual suspects': Scaling the true impact of private sector commitments
Despite the encouraging appearance of the announcement and conjunctive commitments from the industry, the report cautions that the private sector commitments may not translate into significant extensions of business-of-usual, given that most of the companies promulgating the private sector announcements are the "usual suspects":
“[W]hile a lot these commitments appear lofty, it’s difficult, if not impossible, to parse out which ones are truly incremental versus expected business-as-usual progression,” Manghani writes. “Beyond the semantics though, these commitments will put these companies in the public (and investor) eye, to follow through on these targets.”
Indeed, it might be said that without this overarching federal involvement, prominent players such as Advanced Microgrid Solutions, DBL Partners, Sonnen and Stem might have made and acted upon similar commitments eventually as the market continues to progress. What remains to be seen is whether the White House announcement will create any significant ripples in the energy storage market that would have not have happened regardless, Manghani said.