Fears over energy storage hype resulting in a boom-and-bust cycle appear unfounded on the basis of grid-scale deployments so far, a top analyst has confirmed.
Bloomberg New Energy Finance associate Logan Goldie-Scot, who will be speaking at the Energy Storage World Forum next month, told Energy Storage Report: “We see continued steady progress instead of a huge leap in 2015.
“We certainly think the market is growing. But I don’t think we’re at a point where we’re going to see a huge leap in capacity on the ground, just because we already have visibility of much of 2015.”
The prediction is a welcome one for a sector that has long been considered prone to hype, with reports frequently citing an upcoming boom. And in fact, said Goldie-Scot: “There has been quite a lot of progress since last year.
“Especially in North America, we’re now seeing projects getting commissioned and working their way through the development process.”
Frequency regulation markets
Significantly, a growing number of grid-scale energy storage projects are being built in the absence of mandates or market incentives, for instance in frequency regulation markets such as the PJM Interconnection Regional Transmission Organization.
“Many people say storage is not commercially viable now,” Goldie-Scot commented. “In some markets there are some organisations that clearly believe that it is and are adding tens of megawatts of capacity.
“There is a lot of excitement there as people gain a better understanding of some of these markets and some of the applications.”
One example of this growing enthusiasm was last month’s promise by the energy storage provider Alevo to deliver 200MW of batteries for US grid frequency regulation in partnership with the services company Customized Energy Solutions (CES).
“This is a critical juncture in the integration of battery storage into the market, transitioning from pilot projects to grid-scale commercially viable installations,” said Judith Judson, director of emerging technologies at CES, in a press note.
Growing appetite for small projects
Such grandiose statements are typically the stuff of markets at risk of overheating. In today’s energy storage market, however, the reality is more one of a growing appetite for small projects by a large number of customers.
“Utilities globally are at least now considering energy storage,” said Goldie-Scot. “Once you see your competitors working with the technology, you want to at least assess whether it could make sense for you.”
For now, deploying grid-scale energy storage remains easier for North American utilities than it does for European companies such as Enel or Energie Baden-Württemberg, both of which are speaking at the Forum.
The European utilities are often subject to unbundling regulation that makes it harder for them to take advantage of the benefits that energy storage can provide.
Giw Zanganeh, of the advanced adiabatic compressed air energy storage company ALACAES, said: “The feedback that we have gotten from European utilities is that there is a strong potential interest in grid-scale energy storage.
“But that the economic and regulatory frameworks are not yet robust enough to justify large-scale investments typically necessary for grid-scale storage systems. This is changing for some of the control reserve markets.”
Primary control reserve
For example, the primary control reserve is becoming lucrative enough for some utilities to invest in frequency-regulating technologies such as batteries.
However, for large-scale, energy-intensive technologies that qualify for the secondary control reserve market, such as CAES and pumped-hydro storage, “the business cases are still ambiguous,” Zanganeh said.
“This is expected to change in the next five years as the share of renewables in the electricity mix increases. But for now, most of the European utilities seem to be on standby for that market sector.”
Even in Europe, however, some notable grid-scale energy storage projects are already underway.
In Britain, for example, UK Power Networks has built what it believes is a credible business case for a 6MW, 10MWh battery storage facility mostly funded by the UK Office of Gas and Electricity Markets (Ofgem).
“Ofgem wouldn’t be doing this if they didn’t see that ultimately they would approve a storage project at that level,” Goldie-Scot pointed out. “You wouldn’t do a pilot if you saw no prospect of it being deployed commercially.”
Not a passing fad
At the same time, a regulator such as Ofgem would hopefully not fall for something it considered might be a passing fad.
Last July it had energy storage, for uninterruptible power supplies and power quality at least, climbing the ‘slope of enlightenment’ in its hype cycle for emerging energy technologies.
That is just before mainstream adoption starts to take off and the industry heads towards maturity. Admittedly a number of other energy storage areas, such as grid support and fuel cells, were sliding into the ‘trough of disillusionment’.
Nevertheless, that is still far ahead of consumer energy storage, which Gartner placed at the peak of its hype cycle. And nine months on, grid-scale deployment seems to have reached a point that some feel justifies dubbing 2015 ‘The year of energy storage.’
Meanwhile back at Bloomberg New Energy Finance, Goldie-Scot has had enough of the hype. “I don’t think 2015 will be the year when we look back and say it all changed,” he said. “But I don’t think there will be a year like that.
“There is good, steady progress, which is very exciting.”
Written by Jason Deign
- Book now to see Logan Goldie-Scot and other industry experts at the Energy Storage World Forum in Rome, Italy, from April 27 to 30.