Driven by declining prices and supportive government policies, the market for energy storage on the power grid is growing at a rapid clip.
Based on a research about the operation and costs of electricity grids, especially the benefits of new technologies, energy storage could transform the way American homeowners, businesses, and utilities produce and use power.
According to the firm GTM Research, the U.S. electricity industry installed a total of 1 gigawatt-hour of new storage capacity between 2013 and 2017 after annual average growth of about 50 percent for five years.
Analysts predict that installations will double between 2017 and 2018 and then keep expanding rapidly in the U.S. and around the world, even if this amount of storage is still less than 0.2 percent of the average amount of electricity the U.S. consumes.
Because it can be deployed at any scale and any point in the grid, from a small home storage system to a pumped hydroelectric reservoir big enough to Solar power a small city, Energy storage is essentially acting like a Swiss Army knife for electricity grids, helping balance short-term power fluctuations, manage peak demand or act as a backup to prevent or recover from power outages.
Storage may also make a big difference with electricity generated through solar or wind power – which can only be harnessed when the sun is shining, and the wind is blowing.
But wind power generates only about 6 percent of U.S. electricity and solar less than 2 percent, even if those industries are growing quickly. In general, it isn’t necessary for that purpose yet because Electricity solar power grids currently use almost all of that power as it is produced.
Utilities will be meeting the peak demand more easily with less total capacity and fewer power plants once energy storage scales up. They can install new transmission lines or rely on flexible natural gas, which is essentially the biggest competitor for energy storage.
It’s also not hurting the industry that the government is helping to boost its development.
California, Maryland, New Jersey and Nevada are subsidizing storage, mandating its adoption or both. A similar measure is pending in Hawaii’s legislature.
The federal government is now laying the regulatory groundwork for the storage industry to compete directly in open wholesale energy markets for the first time, despite the Trump administration’s efforts to maximize fossil fuel extraction.
The reason why the grid currently has relatively little storage and why only about 200,000 of the 17.2 million vehicles Americans bought electric cars in 2017 is the same: it’s still expensive today.
Market experts project that owning electric cars will cost less than standard vehicles powered by gasoline within a decade and continue getting cheaper after that, but for now, these cars aren’t saving money for most of the American drivers
Likewise, for the electricity grid, if storage gets cheap enough, its potential market could expand from 1 gigawatt-hour to dozens or even hundreds of gigawatt-hours.
Wind and solar power would become more competitive, increasingly displacing both coal and natural gas if or when that happens. The cheaper storage will also make electric cars more affordable.