It's been a breakout year for energy storage.
The U.S. energy storage market grew 185 percent, from $134 million in 2014 to $381 million in 2015. By 2020, it will be a $2 billion market, according to GTM Research.
The growth in numbers has come largely from a few states and a few big trends. California is starting to see traction with procurements to meet AB 2514, which calls for 1.3 gigawatts of energy storage by 2020 from the state’s three large investor-owned utilities.
A handful of other states are also giving more attention to storage. For the first time, Hawaii passed California for residential deployments in the third quarter of 2015. New York comes in third behind California and Hawaii for non-residential energy storage systems.
Even with advances in a few states, however, "Let's be honest with ourselves about the market as it exists today,” GTM Research Senior VP Shayle Kann said at the beginning of the GTM's Energy Storage Summit in December. “It's very small.”
The nascent energy storage market got a huge boost in 2015 with the announcement of Tesla’s Powerwall, which brought an incredible amount of attention to the burgeoning industry. Tesla’s Powerwall is priced at $3,500 for a 10-kilowatt-hour residential storage system. There have been claims from companies that say they can rival Powerwall, although few if any may be able to compete with its market cachet in the early days.
There was also a rush of companies, including Sunrun, SolarCity, EnerNOC and SolarEdge, which have announced intentions to work with Tesla. One utility has already made good on its announcement: Vermont’s Green Mountain Power is the first in the U.S. to lease the backup system to customers.
Moving to the front of the meter, the PJM Interconnection region is leading the charge for utility-scale projects, with California coming in second. Even though the action is concentrated in a few states and regions, there are clues about where the market is going to be found in many of the smaller stories that happened in 2015.
Here’s what you might have missed.
Oregon’s storage mandate
California grabs most of the headlines for its precedent-setting 1.3 gigawatts of mandated storage. But to the north, Oregon is also directing utilities to adopt storage. This summer, legislators passed House Bill 2193, which requires utilities to invest in at least one energy storage system of at least 5 megawatt-hours. The state regulators will put out procurement guidelines by January 2017 and utilities will have to submit proposals the following year.
RegD in PJM
Way back in 2011, Order 755 from the Federal Energy Regulatory Commission called for an increase in the pay for “fast” responding frequency regulation sources, such as batteries, flywheels and demand response.
By 2013, payments for fast frequency regulation, known as RegD in PJM, had tripled. But as RegD resources have flooded the market, PJM has found that there are decreased benefits with an over-representation of RegD resources in the total frequency regulation mix.
To correct this issue, PJM has proposed an adjustment to both its total cost formula and benefits factor curve, and a decision is expected next year. No matter what the final calculation looks like, this issue highlights the fact that higher-paying fast regulation is already reaching saturation in the largest market in the U.S., notes Ravi Manghani, senior energy storage analyst with GTM Research. For energy storage projects that are banking on frequency regulation as a core economic benefit, it raises questions around what that value may be in years to come.
SDG&E expands Borrego microgrid pilot
San Diego Gas & Electric’s Borrego Springs microgrid project was put into motion long before AB 2514. The DOE-funded project brings together a network of rooftop solar, substation batteries, backup diesel generators and intelligent grid switches within the isolated desert town.
Earlier this year, the California Energy Commission offered a $5 million grant to expand the project so that it can run entirely on clean energy. The microgrid’s battery installation will allow for the project to run entirely on solar and serve the entire 2,800 customers in the community, up form the 1,000 customers the microgrid serves today. The expansion has already been useful; in June the microgrid served the entire community while SDG&E did routine maintenance.
The project expansion will make it one of the largest community microgrids in the U.S. and an example of how renewables, intelligent grid controls, and batteries need to work together as a single distributed energy resource management system.
Ireland’s energy storage ambitions
Unlike many other countries in Europe, Ireland has a robust ancillary services market, which is expected to reach more than $250 million in 2016, James Tedd of the Electricity Supply Board, Ireland’s state-owned power utility, told PV Magazine.
Ireland has a goal of getting 40 percent of its electricity from renewable energy by 2020. Currently, the power system allows for intermittent renewables up to 50 percent. To meet increased intermittency from renewables, and wind in particular, the grid operators are looking at storage options.
AES is developing a 100-megawatt lithium-ion project in Northern Ireland, which will be the largest battery energy storage system in Europe when complete. There’s also a flywheel project and a 300-kilowatt, 150-kilowatt-hour ultracapacitor and battery storage project at the Tallaght Smart Grid Testbed in South Dublin County.
Con Edison tests market solutions for energy storage
As part of a slew of demonstration projects for New York’s Reforming the Energy Vision proceeding, Consolidated Edison will partner with SunPower and Sunverge to integrate residential behind-the-meter storage to create a virtual power plant.
These battery assets at the grid edge will have a total capacity of 1.8 megawatts and be used to help eliminate peaks, which often come in the evening in Con Edison’s urban territory. For the demonstration, Con Edison will own the energy storage assets that will be offered through its solar partners. Even though it’s small, GTM Research's Manghani calls it “one of the most innovative behind-the-meter storage programs” because it will test at least three novel rate designs, and Con Edison will use the systems for grid applications.
Open standards gain ground
As storage systems proliferate for a range of front and behind-the-meter uses, there is an increasing need for systems that can interact seamlessly with other grid assets. “Software and system controls are going to be a big part of this industry moving forward,” said Matt Roberts, executive director of the Energy Storage Association.
Earlier this year, Duke Energy, one of the largest utilities in the U.S., joined the MESA Standards Alliance, which is pushing for non-proprietary communications specifications for grid-connected batteries.
Duke Energy has also been forging ahead on its own with its growing "Coalition of the Willing," a group of grid vendors working on standardizing the way various grid-edge technologies can integrate with each other in the field. The utility has developed a real-time standard called the Open Field Message Bus, or OpenFMB, which is now part of Smart Grid Interoperability Panel’s EnergyIoT initiative.
At GTM’s Grid Edge Live conference in June, Jeff St. John reported that one of the coalition’s members, Omnetric Group, will test this IT architecture with the National Renewable Energy Laboratory, and it should be available in the marketplace in 18 months.
Some vendors in the industry are also adopting standards from other technology on the grid edge. Greensmith, for instance, has built an open architecture modeled after the OpenADR communication standard.
PG&E looks beyond lithium-ion
Lithium-ion batteries have dominated the procurement process as California’s big utilities look to deliver 1.3 gigawatts of energy storage by 2020.
But Pacific Gas & Electric’s recently announced contracts show an appetite for a wider range of technologies. Seven vendors will deliver 74 megawatts of energy storage, including 20 megawatts from flywheel startup Amber Kinetics, making it only the second flywheel vendor behind Beacon Power with multi-megawatt deployments in North America.
There are also two zinc-air battery projects with Convergent (10 megawatts) and Western Grid (3 megawatts) that add up to create one of the most sizable utility zinc-air energy storage purchases to date.
Even if lithium-ion remains the dominant energy storage material for the foreseeable future, new technologies will get deployed as utilities turn to storage to solve different grid issues.