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Nicholas Nhede looks at the US energy storage market, factors impacting the industry, suggested measures to accelerate technology deployment and how the sector is helping utilities to enhance smart grid capabilities.

The increase in the number of energy storage projects over the past decade is highlighting the significance of technology and renewables in the energy transition.

This article was originally published in Smart Energy International 4-2019. Read the full digimag here or subscribe to receive a print copy here.

A new report published by the US Energy Storage Association (ESA) and Wood Mackenzie notes the US market has recorded a 232% year-over-year growth in terms of megawatts (MW) deployed in a single quarter between 2018 and 2019.

The US storage market had its strongest quarter ever in Q1 2019, with 148.8MW (271.1MWh) of energy storage being deployed, breaking the previous record set in Q4 2018 by 6%.

The market is expected to double its size by the end of 2019 from the 2018 level and to triple over the next three years. This is owing to the continued pairing of solar and energy storage projects and the implementation of favourable regulation across US states.

For instance, utility PacifiCorp and its subsidiary Rocky Mountain Power partnered with Black & Veatch to combine a 1MW/5MWh lithium-ion battery with a 650Kw solar energy system. The aim is to address transmission and distribution system reliability needs in the Utah town of Panguitch.

Kelly Speakes-Backman, CEO at ESA, said: “These first-quarter numbers indicate that 2019 will be a banner year for energy storage in the US.

“The industry is responding by developing storage projects and creating jobs in their states.”

A 2019 report issued by the American Jobs Project found that 3,450 people were employed in the energy storage industry in New York, generating nearly $1 billion in annual revenue.

“California once again led the US storage market in Q1 2019, while Arizona, New Jersey and New York also posted strong growth. State-level regulatory activity, such as the Value of Distributed Energy Resources (VDER) proceeding in New York state and the Solar Massachusetts Renewable Target (SMART) Programme in Massachusetts, continue to spur pipeline buildout in these states and position them for substantial growth in the next few years,” adds Backman.

Other favourable regulations enacted in 2019 to accelerate the adoption of energy storage technologies include:

• The New York Market Acceleration Bridge Incentive Programme, which opened in April 2019, was fully subscribed in a little over a week, highlighting the demand for energy storage. The programme will release $280 million to support available storage projects as part of a $400 million energy storage investment initiative to deploy 3,000MW of storage capacity by 2030.

• The Financing our Energy Future Act which will help establish a long-term tax framework to accelerate storage deployment.

• Energy Storage Tax Incentive and Deployment Act (S. 1142 / H.R. 2096).

• The Omnibus Jobs and Energy Bill passed by the Minnesota Senate and House to incorporate storage into utility planning and fund a cost-benefit study of state-wide deployment.

• The Better Energy Storage Technology (BEST) Act and the Promoting Grid Storage Act of 2019 enacted by the House of Representatives to authorise the Department of Energy to create public-private partnerships to demonstrate new electrochemical, thermal and physical storage technologies in real-time electric grid operations.

• The Energy Storage Pilot Project Act signed by the Governor of Maryland to accelerate deployment within the state.

Research firm Global Market Insights forecasts the size of the US utility energy storage market alone to exceed $1.5 billion by 2024 as a result of the need to improve grid resilience and efficiency, grid modernisation efforts and growing concerns over climate change.

Overall, the energy storage market is expected to generate $4 billion in revenue by 2024.

Utilities continue to increase their focus on energy storage systems, as evidenced by efforts by different companies to become leaders in the market.

Duke Energy in June announced the development of its largest energy storage project in Florida, in a system that will improve overall grid reliability and support critical services during power outages.

Set to be operational by the end of 2020, the system is part of efforts by Duke Energy to invest $1 billion towards acquiring 700MW of solar capacity and 50MW of energy storage capacity by 2022. Duke is confident the project will enhance grid resilience during storms, reduce customer bills and enhance services to some 1.8 million consumers in the region.

Alex Eller, a senior research analyst with Navigant Research, said: “While the majority of energy storage deployments are stationary solutions, grid operators and facility owners around the world are beginning to recognise the value that mobile advanced battery systems can provide. Drivers for mobile advanced batteries include cost deferral potential, short-term load management, and flexibility.”

Whilst the high cost associated with deploying grid-scale energy storage systems hinders utility adoption, Navigant Research states that project developers can reap the benefits of energy storage without large upfront investment through mobile advanced solutions.

Moreover, the electric vehicles industry is expected to accelerate innovation within the energy storage segment and utilities continue to be aware of the impact of EV fleets on local transformers.

Green Mountain Power (GMP) – energy provider to 265,000 customers in Vermont – partnered with electric vehicles firm Tesla to test how battery energy storage can be used to measure energy delivery whilst reducing consumer energy costs.

The two are replacing traditional energy meters with a battery energy storage system.

The pilot is open to 250 consumers only and is part of the utility’s Bring Your Own Device initiative which includes expanding the firm’s energy demand-side management capabilities.

By implementing the project, Green Mountain Power says it is preparing its customers for future business models and to adopt new technologies such as solar and smart devices.

“As climate change impacts accelerate, we all must act and continue to innovate dramatic shifts in energy delivery that help customers, and GMP, to drive down carbon emissions,” said Mary Powell, President and CEO of Green Mountain Power.

“We have a vision of a battery system in every single home. Our Resilient Home pilot programme does this by breaking the old utility mould – transforming the way energy is delivered to customers, increasing their comfort and convenience in the face of increasing severity and frequency of storms in Vermont due to climate change.”

External influence on the local market

Factors, technologies and expertise from outside the US are also expected to impact on the local market both positively and negatively.

The US Department of Energy, through the National Renewable Energy Laboratory, recently partnered with UK utility Centrica, through its Business Solutions arm, to study the integration of several energy storage technologies.

Centrica Business Solutions will provide its proprietary battery aggregation and control systems to manage new and second-life batteries (i.e., batteries previously used in electric vehicles) as a single unit for disparate applications, including supporting electric vehicle charging infrastructure.

The aim is to develop new solutions to address major challenges facing the energy industry and to lower the cost and expand applications for energy storage systems.

US-China trade war

In early June, the ESA and its members released a statement expressing concerns by the organisation regarding the negative impacts that tariffs placed by the US government on Chinese lithium-ion batteries will have on the local storage market.

“As one of the fastest-growing areas in the US energy sector, the storage industry needs greater certainty for future investment and hiring decisions. Our innovative companies are changing the business model in the electric industry. And now is not the time to disrupt the international supply chain as we work to build a resilient, efficient, sustainable and affordable grid for all Americans,” reads the statement.

ESA says the tariffs will slow the pace of energy storage deployments and will stymie growth and job creation. SEI