Why storage is different to PV

Trends reveal the energy storage industry may not follow the growth pattern of solar, due to the need for a wider range of different technologies. Photo credit: Ads-tec
Trends reveal the energy storage industry may not follow the growth pattern of solar, due to the need for a wider range of different technologies. Photo credit: Ads-tec
Trends reveal the energy storage industry may not follow the growth pattern of solar, due to the need for a wider range of different technologies. Photo credit: Ads-tec

Trends reveal the energy storage industry may not follow the growth pattern of solar, due to the need for a wider range of different technologies. Photo credit: Ads-tec

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.

As a result, there is also likely to be an ongoing need for different technology categories such as flow batteries or ultracapacitors because each is suited to different applications.

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.

Management systems being developed by companies such as Demand EnergyGreensmith or Younicos, for example, are largely technology agnostic.

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.

2 Comments on "Why storage is different to PV"

  1. The article doesn’t respect the recent success of flyhweel energy storage from AMBER Kinetics, who were rewarded with a 20 MW/80MWh energy storage contract from PG&E in California, and STORNETIC in Germany who recently provided a storage container with their flywheels to Stadtwerke München.

    Flywheels are successfully bridging the gap between batteries and super capacitors, they can provide very high power in combination with an almost unlimited number of load cycles, and at full capacity.

    Other companies to mention are BEACON Power and TEMPORAL Power, although the former could not announce any new projects after their 20 MW installation in Hazle, PA, and the latter have still not finished their first projects from Ontario grid, so it seems.

    • Energy Storage Report | March 7, 2016 at 7:48 pm | Reply

      Thanks Christian. We’re aware that we haven’t covered the flywheel sector in some time and are looking to rectify that in the near future. Nevertheless, we remain convinced that flywheels represent a very different technology and market proposition to batteries and/or supercapacitors… although we’re happy to hear an alternative view.

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