Energy storage: Enabling a clean energy transition

Energy storage: Enabling a clean energy transition

Storage is to energy as the mobile phone was to telecom—it’s a game changer. Energy storage is changing the face of the utility industry. Storage could be the catalyst for renewable energy adoption globally.

The thing is, the cost of both solar electricity and battery storage is decreasing—and by a lot. In a recent report, Deutsche Bank predicted that solar electricity would become competitive with retail electricity in an increasing number of markets. In fact, in many markets around the world, unsubsidized rooftop solar electricity currently costs $0.08 to $0.13 per kilowatt-hour—or 30 to 40% less than retail electricity.

Price projections of various technologies, 2014-2030. Source: LCOE Trends, Navigatn Research, 2014.
Price projections of various technologies, 2014-2030. Source: LCOE Trends, Navigant Research, 2014.

Storage is getting cheaper

Deutsche Bank also predicted that energy storage companies would make significant progress in reducing the cost of energy storage over the next five years.

“Solar plus storage is the next killer app that could significantly accelerate global solar penetration in our view.” —Deutsche Bank, “Crossing the Chasm”

In its report, Deutsche Bank stated that a 20 to 30% yearly cost reduction could be expected. According to the report, this “could bring conventional lithium ion batteries at commercial/utility scale to the point of mass adoption potential before 2020.”

The report also stated that the incremental cost of storage will likely decrease from approximately $0.14 per kilowatt-hour to about $0.02 per kilowatt-hour within the next five years.

“When overall system cost decreases are considered, we believe solar + batteries will be a clear financial choice in mature solar markets in the future,” the report continued.

Battery price projections. Source: Rocky Mountain Institute via Deutsche Bank, “Crossing the Chasm.”
Battery price projections. Source: Rocky Mountain Institute via Deutsche Bank, “Crossing the Chasm.”

The cost of batteries has been falling, due in large part to electric vehicles or, more specifically, the mass production of batteries for electric vehicles. Tesla Motors is a key market influencer here. First, Tesla’s gigafactory is set to be fully functioning by 2020 and is expected to produce 500,000 battery packs per year. Second, Tesla is also aiming for the residential storage market with plans to announce a battery for homes and businesses soon. The company has stated that approximately 30% of the gigawatt factory production will go into stationary applications.

Combine this information with a fall in the cost of solar energy—not to mention smart grid advances—and you’ve got a serious alternative to the electric utility. (Be sure to check out Rocky Mountain Institute’s report “The Economics of Grid Defection” for more on this topic.)

Capturing the energy storage value chain

There is clearly great market potential and many new companies are arising in the energy sector both here and abroad. Canada is home to some great energy storage technology companies, in addition to a variety of companies spanning various portions of the supply chain, from materials and components to integrators and end users.

Source: National Research Council Canada
Source: National Research Council Canada

According to Navigant Research, worldwide revenue from energy storage enabling technologies (ESET) is expected to grow from $605 million annually in 2015 to more than $21 billion by 2024.

Anissa Dehamna, principal research analyst at Navigant, defined ESET as “the supporting technologies associated with energy storage systems, and these include power conversion (primarily focused on inverters), system-level software and controls, and systems integration services.” According to Anissa, these technologies form a critical component of the energy storage value chain and “are undergoing intensive scrutiny, as vendors face pressure to deliver more consistent pricing.”

Installed ESET revenue by technology in world markets, 2015-2024. Source: Navigant Research.
Installed ESET revenue by technology in world markets, 2015-2024. Source: Navigant Research.

On April 9, key market players from all areas of the energy storage supply chain are coming together for Canada’s largest energy storage event at MaRS in partnership with National Research Council Canada. The opening keynote will be by Brad Duguid, Ontario minister of economic development, employment and infrastructure, who will discuss the link between a strong supply chain and stronger job creation.

A diverse range of participants from across the supply chain have registered to participate in breakout sessions covering: raw materials and components; controls, equipment and system integrators; and installation and operation (including end-users). These market players will work to identify gaps and opportunities in the Canadian energy storage supply chain in order to set a path to a profitable and globally competitive sector.

Canada needs to ensure two things: first, that we capture the waterfall effect of job creation as the energy storage market takes off globally; and second, that we best position Canadian companies to win competitive international contracts.

Join the conversation by registering for the event here.

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