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Surging storage market no 'one horse race,' finds report


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Surging storage market no 'one horse race,' finds report

Hitching a ride on the anticipated boom in lithium ion batteries for electric vehicles, the cost to install battery-based energy storage systems for homes, businesses and utilities could drop by more than half by 2030, found a new report from the International Renewable Energy Agency, or IRENA. That will pave the way for battery storage to play "a crucial role in enabling the next phase of the energy transition."

The surging storage market, however, "is not likely to be a one horse race," said the report, released Oct. 6. Although lithium ion batteries "are likely to dominate" the market for electric vehicles, "this is not necessarily going to be the case in stationary applications," IRENA added. While some services, such as frequency response, need powerful short-duration solutions like lithium ion batteries, other applications, such as firm capacity, require technologies capable of operating over longer periods. Flow batteries, for instance, could offer up to 20 hours of continuous discharge, the agency noted.

SNL Image

Home storage systems, like this Tesla unit in Vermont, could drive strong demand for batteries, believes IRENA.

Source: Associated Press/Dave Gram

Installed costs for stationary battery systems using various lithium ion chemistries could fall 54% to 61% by the end of the next decade to between $145/kWh and $480/kWh, the Agency forecasts, accompanied by significant cost reduction for other battery types. Installed costs for vanadium redox and zinc-bromine flow batteries, for example, could fall 66% by the same time to between $108/kWh and $576/kWh.

Stacking benefits

"As a result, the costs of storage to support ancillary services, including frequency response or capacity reserve, will be dramatically lower," IRENA Director General Adnan Amin said in the report's forward. "This, in turn, is sure to open up new economic opportunities." Battery economics will improve further by "stacking" multiple benefits, the report said, echoing a finding in a recent study from The Brattle Group.

Plummeting battery costs, combined with rising demand for storage services to integrate greater volumes of renewable energy into global electric grids, could push worldwide installed battery storage capacity to between 100 GWh and 421 GWh by 2030, from a current estimate of only 11 GWh, depending on the growth of variable wind and solar power.

"This boom in storage will be driven by the rapid growth of utility-scale and behind-the-meter applications," IRENA said. Utility-scale battery storage capacity, which accounts for the vast majority of the current total, is forecast to grow to between 45 GWh and 187 GWh by 2030 amid even stronger demand for commercial and residential battery systems. The largest battery storage market to 2030, according to the report, "may be the pairing of [battery storage] systems with the installation of new small-scale solar [electric] systems."

The economics of such distributed applications "could improve dramatically in the next few years," the report found, "especially in Europe and elsewhere where there are high residential and commercial electricity rates." In Germany, for example, the installed cost of small-scale systems using lithium ion batteries fell 60% between the fourth quarter of 2014 and the second quarter of 2017, IRENA added.

Pumped hydroelectric storage, which accounted for 96% of the 176 GW of storage capacity installed globally by mid-2017, is expected to cede market share to other technologies. By 2030, pumped storage could make up an estimated 45% to 88% of the total global storage market.