Energy storage installations, including stationary batteries used in eight applications but excluding pumped hydro storage, around the world will multiply exponentially, from a modest 9 GW/17 GWh deployed as of 2018 to 1,095 GW/2,850 GWh by 2040, according to the latest forecast from research company BloombergNEF (BNEF).

This 122-fold boom of stationary energy storage over the next two decades will require $662 billion of investment, according to BNEF estimates. It will be made possible by further sharp declines in the cost of lithium-ion batteries, on top of an 85% reduction in the 2010-18 period.

BNEF’s Energy Storage Outlook 2019, predicts a further halving of lithium-ion battery costs per kilowatt-hour by 2030, as demand takes off in two different markets – stationary storage and electric vehicles. The report goes on to model the impact of this on a global electricity system increasingly penetrated by low-cost wind and solar.

Two big changes in the report are that BNEF has raised its estimate of the investment that will go into energy storage by 2040 by more than $40 billion, and that BNEF now thinks the majority of new capacity will be utility-scale, rather than behind-the-meter at homes and businesses.

BNEF’s analysis suggests that cheaper batteries can be used in more and more applications. These include energy shifting (moving in time the dispatch of electricity to the grid, often from times of excess solar and wind generation), peaking in the bulk power system (to deal with demand spikes), as well as for customers looking to save on their energy bills by buying electricity at cheap hours and using it later.

In the near term, renewables-plus-storage, especially solar-plus-storage, has become a major driver for battery build. This is a new era of dispatchable renewables, based on new contract structures between developer and grid.

Just 10 countries are on course to represent almost three quarters of the global market in gigawatt terms, according to BNEF’s forecast. South Korea is the lead market in 2019, but will soon cede that position, with China and the U.S. far in front by 2040. The remaining significant markets include India, Germany, Latin America, Southeast Asia, France, Australia and the U.K.

There is a fundamental transition developing in the power system and transportation sector. Falling wind, solar and battery costs mean wind and solar are set to make up almost 40% of world electricity in 2040, up from 7% today. Meanwhile passenger electric vehicles could become a third of the global passenger vehicle fleet by 2040, up from less than half a percent today, adding huge scale to the battery manufacturing sector.

Demand for storage will increase to balance the higher proportion of variable, renewable generation in the electricity system. Batteries will increasingly be chosen to manage this dynamic supply and demand mix.

The report finds that energy storage will become a practical alternative to new-build electricity generation or network reinforcement. Behind-the-meter storage will also increasingly be used to provide system services on top of customer applications.

The total demand for batteries from the stationary storage and electric transport sectors is forecast to be 4,584 GWh by 2040, providing a major opportunity for battery makers and miners of component metals such as lithium, cobalt and nickel.

Source: BNEF

2018 was a remarkable year for stationary energy storage. Governments and policymakers around the world are beginning to wake up to the value batteries can offer to the grid, both in terms of flexibility and decarbonisation. Over 6 GWh was deployed, and market leaders such as Tesla expect to double their deployments for 2019.

The progress is thanks in no small part to falling Li-ion battery costs, driven by the economies of scale of the electric car industry: plug-in passenger electrics topped five million on roads globally at the beginning of 2019. Indeed, as costs have fallen, projects with longer duration battery systems have become feasible (many new grid-level projects are now four hours). This has created opportunities for storage developers: in some scenarios, it has even enabled the displacement of gas peaker plants, for grids aiming to fully decarbonise. As detailed in the new IDTechEx report, “Batteries for Stationary Energy Storage 2019–2029”, enormous projects are underway.

For example, the famous ‘100 MW (120 MWh) in 100 days’ challenge from Elon Musk to the South Australian government, a previous world record and now operational, is a fraction of the planned 730 MWh system Tesla will install in Moss Landing, California, to help replace three ageing gas plants.

The U.S. has led the industry for a number of years; a sizable mandate from California coupled with big-budget financial incentives have underpinned the country’s deployments, as well as the batteries procured for frequency response in PJM’s territory from 2012 – 2017 (now saturated). In 2018, landmark rulings like FERC Order 841, ambitious decarbonisation and renewables targets in multiple states, and growing momentum behind state-wide energy storage mandates will pave the way for the future of energy storage in the country.

The global picture is also changing: both China & South Korea topped 1GWh in yearly deployments in 2018, with India also commissioning some of its first large-scale projects. With such rapid progress, teething problems have emerged: to meet the sudden demand in South Korea, ESS makers compromised on quality, leading to a government shutdown of hundreds of public battery systems that spontaneously caught fire. The issue was reported by Korean news outlets to be faulty battery management systems.

Despite hiccups, the ambitious levels of renewables integration in many of these countries will nevertheless require massive amounts of energy storage to manage moving forward.

Source: IDTechEx