BUSINESS

Energy storage reaching a 'tiny fraction' of its U.S. potential -- report

Energy storage technologies and applications are experiencing strong growth in places where electricity costs are high and utilities use pricing structures that require customers to pay more for power at certain times of the day.

But storage systems are not being adopted broadly across the United States, according to a new analysis, in part because electricity markets and energy investment valuations have not developed mechanisms that account for the benefits of such systems.

A 17-page white paper, released yesterday by the Clean Energy Group, predicts that the United States will install a record 220 megawatts of energy storage capacity in 2015, "but it represents only a tiny fraction of the estimated potential for storage," which the Sandia National Laboratories estimates at more than 64,000 MW of capacity nationally.

Seth Mullendore, a project manager for the Vermont-based nonprofit and the report's lead author, said market mechanisms necessary to expand the energy storage sector "are still in their infancy," adding that "until markets have been developed and properly structured to value energy storage services, the full beneficial impact of energy storage on the power system will remain unrealized."

But that doesn't mean the market is stagnant.

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In some regions of the country, "Energy storage projects have begun to flourish, forcing utilities and regulators to catch up with demand for deployment, a trend reminiscent of solar markets a decade ago," the analysis states. "Additionally, rapidly declining costs and advancing technologies have improved the economic case for battery storage."

Market growth from Hawaii to N.J.

Among the current leading markets are the PJM Interconnection, extending from northern Illinois to the Ohio Valley and the Mid-Atlantic; New York; and California, where commercial customers face relatively high demand charges.

Hawaii is also adopting energy storage faster than other regions due to the Pacific islands' high solar generation capacity combined with high prices for grid-delivered electricity, the analysis found.

In New Jersey, the state Board of Public Utilities funded 13 solar-plus-storage projects with a combined capacity of nearly 9 MW. The facilities were located at emergency shelters, wastewater treatment plants and other sites considered critical for maintaining essential services during emergencies and prolonged grid outages. Additionally, each of the solar-plus-storage projects expects to generate revenue by contributing power to the grid under normal operating conditions, according to the Clean Energy Group.

"Each of these regions provides an example of what can occur when a portion of the potential benefits of energy storage are monetized; however, there is currently no location in the U.S. where an energy storage system can realize its full economic potential for the multitude of services it is capable of providing," the analysis states.

For energy storage to reach its full market potential, developers will need to attract interest and financial support from a range of power-sector entities -- including utilities, grid operators and customers -- all of which benefit in different ways from energy storage technologies, the report states.

And, it says, "even with energy storage costs on the decline, it will still be important for developers to have the option of tapping into multiple revenue streams to optimize the economic benefits" of the technology.

Twitter: @dcusickmpls Email: dcusick@eenews.net

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