Navigant Research Blog

Energy Storage: Half Empty or Half Full?

Anissa Dehamna — April 6, 2012

One of the difficulties of the energy storage market is that technologies have such diverse cost and performance characteristics that making fair comparisons across technologies is difficult (some would claim impossible). In building Pike Research’s database of energy storage projects globally, we take an application-based approach to evaluating the value of the market.

If we look simply at cumulative capacity by storage technology, pumped storage is the obvious winner.  (The energy in a pumped storage installation is stored as water in a reservoir.)  This is no surprise, as it has been commercial for a hundred years and is a materials-based energy storage technology, meaning that it’s cheaper on an energy basis than mechanical (such as a flywheel) or electrochemical-based storage (such as a battery).  That’s why traditional pumped storage installations dwarf newer, less mature technologies such as advanced batteries.

However, if we highlight the relatively small number of installations based on newer technology, it becomes clear that there is a great deal of diversity in the emerging portion of the energy storage market.  Advanced batteries, variants on pumped storage, compressed air, flywheels, and hydrogen all have significant niches, though collectively they’re still only a small percentage of the overall market.  Over time, as the markets catch up and begin to recognize the value that these technologies offer, this percentage will grow. The tipping point will likely be in the 2014-2015 timeframe, when the technology costs come down enough, and the markets structures allow the value of the technology to be commoditized.

For now, long lead times, even for battery systems, are holding up installations and delaying growth in these newer technology segments.

If we use a different metric than capacity, and focus on installations (or number of projects), the outlook is turned on its head. The chart below shows greater diversity and activity in the industry, particularly if we are comparing only “new” technologies.  This view offers a fairly optimistic view of market diversity.

These two charts demonstrate that, in the energy storage industry, there are so many measurable characteristics that it’s easy to take a pessimistic or an optimistic view of the market, depending on how your view the data.  Over the next few years the half-empty glass will undoubtedly start to look more than half-full.

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