In 2018, the U.S. energy storage market nearly doubled. It is expected to double again this year, according to Wood Mackenzie Power & Renewables and the Energy Storage Association’s report: U.S. Energy Storage Monitor 2018 Year-in-Review.
The report found that 777 megawatt hours of grid-connected energy storage were deployed in the U.S. in 2018 – an 80% increase from what took place in 2017. On the global front, a recent report from Bloomberg New Energy Finance (BNEF) predicts that the universal energy storage market will double six times between now and 2030.
Today, energy storage has the potential to transform the energy industry. It allows electric transmission systems to take full advantage of periods of high generation from intermittent resources, such as wind and solar, and use that energy in times when those resources are not available, but energy is needed. But why the sudden and exponential growth?
Battery Storage Prices Fall Faster Than Expected
The considerable growth in energy storage can be attributed to the cost reduction for batteries and more efficient storage systems, along with a greater need for more gigawatts of flexibility to manage the ups and downs of wind and solar-powered grids, according to the BNEF report. In fact, the levelized cost of energy (LCOE) for multi-hour lithium-ion batteries has fallen to a point where batteries co-located with solar or wind projects are beginning to compete with coal and gas-fired generation for the provision of power that can be supplied whenever the grid needs it, as opposed to only when the wind is blowing or the sun is out. BNEF research shows that lithium-ion batteries have decreased 35% in cost (to $187 per megawatt hour) since the first half of 2018, a decline that has outpaced the continuing slide in LCOE for solar PV and onshore and offshore wind power.
Renewable Energy Growth Takes the Lead
Also contributing to the growth is the increase in availability of renewable energy, which includes wind and solar. Over the next two years, renewable energy is expected to outpace all other energy sources. The storage capacity of lithium-ion batteries provides increased capacity and efficiency to support the variations of wind and solar power, storing it when winds are strong or when the sun is out, thereby reserving it for high-demand electricity hours. This has prompted many states to move forward with new storage directives, such as New York’s 1.5 GW energy storage target by 2025, and Arizona’s 3 GW by 2030.
The substantial reduction in the long-term costs associated with supplying grid electricity from lithium-ion batteries makes these batteries a cost-competitive alternative to natural gas-fired power plants in many energy markets, such as wind and solar, and will continue to be a viable option for renewable energy projects in the U.S. over the coming years.
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Additional source used in this article: Institute for Energy Economics and Financial Analysis.