Germany and the U.K. could see a combined 210 megawatt-hours of commercial and industrial (C&I) storage installed per year by 2021, new research shows.

The volume of installations would represent an almost tenfold increase on the roughly 22 megawatt-hours of C&I storage deployed across Germany and the U.K. in 2016.

Cumulatively, the two countries might have an installed base of between 500 and 600 megawatt-hours of C&I storage within five years, says a confidential study from Delta Energy & Environment (Delta-ee), a global energy research and consultancy firm in Edinburgh, Scotland.

“Over the next five years, we see a significant growth opportunity,” says the report. “The implication of this finding is that the C&I sector will play a significant role in shaping the distributed energy storage market.”

C&I-based storage will benefit from growing advantages in peak shaving, increasing value in flexibility, falling energy storage system costs, improving project economics from aggregation, availability of all-in-one products and heightened awareness in both markets, Delta-ee says.   

With energy storage costs falling at a predicted 10 percent a year, C&I customers could install projects primarily to take advantage of peak shaving, frequency regulation markets and electricity bill cuts due to self-consumption.

The business case for behind-the-meter storage will be strongest in retail, agriculture, water and waste treatment plants, and industrial processes requiring round-the-clock power, Delta-ee believes.

“The market is already crowded and we have profiled a total of 40-plus different key stakeholders,” write Delta-ee analysts. “Those with access to customers and the ability to build the right partnerships will succeed in the long term.”

Although Delta-ee singles out Germany and U.K. as the two European countries with the best conditions for C&I storage growth, it also highlights subtle differences between the two markets.

Growth is likely to pick up fastest in the U.K., for example, as C&I players install systems for backup power to take advantage of National Grid’s Firm Frequency Response payments and to avoid costly peak demand charges under the Triad system

These use cases will likely drive deployment of medium-sized storage systems with a capacity of between 250 kilowatt-hours and 1 megawatt-hour, Delta-ee predicts.

In Germany, meanwhile, C&I businesses may find it harder to access grid flexibility markets, and so larger companies will mostly focus on peak-shaving applications.

The real action, though, will likely be in projects under 250 kilowatt-hours, which will be installed by environmentally conscious firms looking to combine renewable energy self-consumption with backup power.

Delta-ee expects the number of such projects in Germany to double those in the U.K. Thus, although Britain will lead in annual C&I installation volumes up until around 2019, by 2021 it will only account for 45 percent of yearly installations across the two markets.  

Report co-author Julian Jansen, senior analyst and energy storage research manager at Delta-ee, said C&I opportunities in the U.K. and Germany were already attracting global interest, with more than ten new, unnamed players entering the markets in recent months.

“The range of stakeholders that are now getting involved in this is quite striking,” he said. “You’ve got new players such as aggregators like Kiwi Power, you’ve got energy suppliers E.ON and Centrica, and a third core segment is project developers." 

He said C&I represented “a huge opportunity that will shape the distributed storage market going forward. The pipelines are pretty impressive.” 

Delta believes C&I storage could also bloom in other European markets over time. 

For now, though, the few behind-the-meter projects seen in France are mostly funded trials, while storage implementations in Italy are dominated by the transmission operator Terna or the distribution network owner, Enel Distribuzione.

Storage generally is at a more nascent stage in most other European nations, although Jansen said C&I companies in most markets could ultimately benefit from renewable energy self-consumption and peak shaving aided through battery storage.   

Ron Van Dell, CEO of the flow battery company ViZn Energy, said self-consumption was already a big factor affecting C&I installations in Germany.

"Solar self-consumption is currently the biggest driver for commercial and industrial storage in Germany, and the way the Energiewende was originally set up incentivized facilities to overbuild their systems," he said. "As German C&I facilities lose feed-in tariff revenue over the next decade, this creates a huge market for energy storage, as they will be looking to avoid increasing energy market price fluctuations that create uncertainty."