By Jason Deign
Claims that energy storage is likely to evolve in the same way as solar might not be as accurate as previously thought, current trends reveal.
In particular, the move towards technology consolidation apparent in the photovoltaic (PV) sector is unlikely to materialise to the same extent in storage because of storage’s much wider range of applications.
At Energy Storage Europe this month, Ads-tec managing director Thomas Speidel is expected to say that the wide range of technologies being used for storage is a key to the success of the industry.
“We are experiencing a disruptive change to our energy economy,” he said in a press note. “That is why quickly scalable storage technologies such as battery storage, which can easily be rolled out, are beneficial.”
The need for different technologies to cater for applications as diverse as frequency regulation and time-of-use shifting marks energy storage apart from solar, despite frequent comparisons between the two.
“Like the solar industry”
Last October, for example, NorthBridge Energy Partners co-founder and Forbes energy correspondent Peter Kelly-Detwiler said sentiment at the Energy Storage North America show felt “much like the solar industry did 10 years ago.”
He listed five similarities between today’s storage industry and the nascent era of solar PV:
- The ability for utility-scale or on-site deployment.
- Multiple competing technologies in the market.
- Sharply falling costs with economies of scale.
- A need for further cost reduction.
- Third-party financing models.
But because PV’s success essentially depends on being able to produce energy at the lowest possible cost, the evolution of the solar industry has largely been dominated by a race for economies of scale.
Over the last decade, hundreds of solar startups have bitten the dust in the face of the plummeting cost of PV modules from China.
Price competition in the solar market
Price competition in the solar market has not just claimed individual companies, but even entire technology categories that were once touted as having significant promise, such as concentrated PV or dish solar thermal.
Cost reduction is clearly also a key factor in energy storage adoption, and so it is highly likely that consolidation will occur around given technology categories, such as batteries.
Unlike PV, however, storage can have different values depending on how, when and where it is used on the grid. And these values can be additive in the case of storage plants that can perform services which complement each other.
Indeed, project developers such as Bosch have already begun experimenting with hybrid storage plants that use a combination of storage technologies to power a range of grid services.
More value with stacked services
According to a Rocky Mountain Institute study from October 2015: “Energy storage can generate much more value when multiple, stacked services are provided by the same device or fleet of devices.”
The growing need to tie together different services and technologies is evidenced by current interest in software systems that can aggregate different storage assets.
Even these, however, tend to be focused on particular technology families within energy storage, such as batteries.
At a portfolio level, though, it is possible for utilities and other asset owners to end up managing technologies as vastly different as batteries, thermal storage or flywheels, each with its own use case and business model.
Comparisons with PV are too narrow
From this perspective it is clear that comparisons of storage with PV are far too narrow. Instead, it probably makes more sense to compare storage with renewable energy in general.
Like renewable energy, storage has a massive legacy installed base of hydro, a couple of dominant emerging categories (wind and PV versus batteries and thermal) and a host of smaller, more specialised technologies.
Each of these categories is an industry in itself.
Thermal storage and batteries might both store energy, for example, but the business model for the former is no more likely to be affected by battery economics than wind power generation is affected by PV cost reductions.
Plenty of market niches to exploit
This is good news for storage technology developers because it means there are plenty of potential market niches to exploit.
But these developers should take heed of a more general lesson from the renewable energy sector: it is not just PV that has faced intense price competition and consolidation.
From biomass to mini hydro and wind power to tidal, all renewable energy industries have had to evolve quickly to bring down costs and become commercially acceptable… and some, such as wave power, are still trying.
- Energy Storage Europe runs from March 15 to 17 in Düsseldorf, German. Register now so you don’t miss out.