How Energy Storage’s Growth Trajectory Differs from the Early Days of Solar

DENVER — It’s become a cliche to compare today’s energy
storage market to where the solar industry was a certain number of
years ago. But storage’s trajectory differs from the early growth
dynamics of solar power in a crucial respect: It transcends the
geographic boundaries, dictated by sunshine and policy, that
contained solar’s rise.

Fast-acting battery technology performs many roles: frequency
regulation, capacity, deferral of wires upgrades, resilience,
firming renewable generation and more. It does not rely on a
geographically specific weather pattern or any one set of state
policies to become valuable, and it’s already asserting itself
across the U.S., said Daniel Finn-Foley, energy storage director at
Wood Mackenzie, speaking Tuesday at GTM’s Energy Storage Summit in
Denver.

Solar reached the big time early in California, thanks to
abundant sunshine and supportive state incentives. Pockets of
development later formed in Hawaii and the desert Southwest, and in
the less sunny but politically supportive New England states. But
it did not spread evenly, and whole regions like the Southeast and
Midwest trailed behind for years. 

“Energy storage’s value lends itself to a much more diverse
range of geographies,” Finn-Foley said in an interview after the
talk. “It’s finding value in wholesale markets, it’s finding value
in vertically integrated utility markets, it’s finding value for
residential deployments — really, just about everywhere.”

Storage is still considered new and experimental in many states,
but a map of where development has taken place reveals the
border-crossing appeal. Here are the states that already operate
more than 50 megawatts of grid storage, according to Finn-Foley’s
presentation.

The blue cluster of states to the East reflects the first
commercial storage market, serving a fast frequency regulation
market in the PJM grid. That market burned brightly for several
years, but dimmed when rule changes made the service less
valuable.

On the other coast, California approached storage through
top-down procurement mandate that spurred utilities to acquire grid
batteries. But these tools proved unexpectedly useful when the
Aliso Canyon natural gas leak jeopardized fuel supplies for
Southern California power plants. The state fast-tracked storage
procurement to install emissions-free capacity in urban areas in
just a few months, something traditional power plants couldn’t
possibly achieve.

Hawaii hit on storage because solar installations were flooding
the isolated island grids, and batteries offered a way to store
that power for the evening peaks when it was more useful. Hawaii
also faces unusually high fuel costs because fossil fuels must be
shipped there; solar-plus-storage beat incumbent power sooner there
than on the mainland. And the state’s early commitment to a 100
percent renewable grid made storage all the more necessary.

Rounding out the map is Texas, largely covered by the
competitive, energy-only ERCOT market. No state incentives help
storage there; indeed, its classification as a generation asset
effectively bars distribution utilities from using batteries to
assist their wires infrastructure. But developers have found
business cases worth investing in, like
saving clipped solar power
arbitraging
wind power
and
hitting peaks in the energy market
.

Storage developers did not need to replicate the same conditions
in each of these early markets. They found different routes to make
themselves useful, based on the varied capabilities of storage
itself.

Layering in states that have more than 10 megawatts operating
and more than zero reveals that states without any energy storage
are clearly in the minority.

And looking ahead at states’ contracted pipelines depicts an
even more complete takeover.

This geographic diversity matters for predicting the growth
prospects of battery storage, which is hard to do because the
historical record offers little insight into future
deployments.

Conventional estimates woefully under-predicted the rise of
solar over the last decade. Finn-Foley displayed the Energy
Information Administration’s projections for national solar
deployment from 2011, 2012 and 2013. Even after two revisions
upward, the expected cumulative installations for 2019 ended up
equalling the utility-scale solar installed in North Carolina
alone, a far cry from predicting solar for the whole country.

The experience watching solar evolve and repeatedly defy
expectations should inform modelling for the ramp-up of energy
storage years later. But Finn-Foley’s argument cautions against
extrapolating too much from the solar experience to the storage
experience, because storage can follow more paths to market. 

The hard work put in by the wind and solar industries to load up
grids with cheap, renewable power, will eventually serve to boost
interest in storage, too.

“When you have these long renewable grids, it’s no longer the
industry pushing upwards and saying, ‘Here’s what we’re capable
of,'” Finn-Foley noted. “It’s now policymakers and regulators
pulling upwards and saying, ‘Storage, we need you.”

Put another way, Finn-Foley said, “The wind energy and solar
energy industries are writing checks that energy storage is going
to cash.”

Source: FS – Transport 2
How Energy Storage’s Growth Trajectory Differs from the Early Days of Solar



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