Cleantech Market Intelligence
In Energy Storage, Power-to-Gas Seeks a Market
There are no clear technology winners when it comes to energy storage for wind and solar (ESWS) integration. This is partly because the energy storage sector hasn’t seen the mass-manufacturing, low cost, and commoditization to be expected from a leading technology. That could change with the expansion of materials-based storage, specifically systems that rely on gas instead of electrochemistry (electrolysis is an electrochemical reaction, but the product, gaseous hydrogen, is the energy carrier).
Gaseous storage – specifically compressed air and hydrogen – accounts for a little more than one-fifth of the total energy storage market, with 4,616 megawatts (MW) forecast to come online in the next 10 years. This assumes a business-as-usual scenario; if the demonstration projects in Germany and other parts of Europe prove successful, we could see much more accelerated market growth for these technologies.
New Installed Capacity of Energy Storage for Wind and Solar Integration by Technology, Base Scenario, World Markets: 2013-2023
(Source: Navigant Research)
With power-to-gas technology (wherein the hydrogen generated is pumped directly into the natural gas grid, or is methanized into syngas and then pumped directly into the gas grid), hydrogen has an advantage over other technologies because the cost of actually storing the energy is at, or close to, zero. Most of the hydrogen market will be composed of the power-to-gas variety; however, passive electrolyzers paired with small wind and solar PV will also take an increasing share of the ESWS market toward the end of the forecast period.
On the other hand, because the benefits of hydrogen storage are absorbed by the entire gas system, building a business case for power-to-gas systems may be more challenging. Under the base scenario in Navigant Research’s report, Energy Storage for Wind and Solar Integration, hydrogen will account for 9% of ESWS installed capacity in 2023 and 6% of market revenue ($574.84 million) in the same year. The market will be led by Europe and parts of North America, which are already funding power-to-gas projects.
The compressed air energy storage (CAES) market, meanwhile, will be led by a handful of promising startups with modular or cavern-based technologies, including SustainX and General Compression, that require little to no natural gas. Although CAES will take 13% of the market in terms of installed capacity by 2023, the technology’s low marginal cost of energy means its market share in terms of revenue will be about half that of installed capacity – coming in at 5% of the market ($549.05 million) in 2023.
That said, gaseous storage has a low marginal cost of storage, is comprised mostly of inexpensive components (particularly in the case of modular CAES), and offers the benefit of bulk storage without an unwieldy footprint. If these companies can devise financing and business models for the ESWS market, gaseous storage could overtake advanced batteries.