Navigant Research Blog

Turning Point for Renewable Energy Storage

Anissa Dehamna — November 11, 2013

There are two schools of thought regarding the use of advanced energy storage to integrate renewables.  The first is that there is a huge total addressable market for advanced energy storage systems (ESS) when it comes to helping grids cope with variable generation – the challenge is finding the right business model.  The second school of thought is that, although the market for integrating variable generation is sizable, ESS is being displaced by traditional power plants and the business case for ESS is actually quite challenging – not the least because the technology itself is still expensive.

At Navigant Research, we split the difference.

Yes, there is a sizable market for advanced storage to integrate renewables.  Our logic, as laid out in the Navigant Research report, Energy Storage for Wind and Solar Integration, is that the volume of variable generation resources coming online in the next 10 years will have both a direct and an indirect impact on the market opportunity.   Although only a fraction of the amount of wind and solar installed represents the total addressable market for ESWS, the more wind and solar installed, the greater the need for ESWS overall.

Next week, I will have a chance to learn more about how both technology and energy companies are addressing this market for renewable energy storage.  I’m looking forward to participating in the International Renewable Energy Storage (IRES) conference, in Berlin, mainly because we are at the point where a market starts to take shape and begin its upward trajectory, or it flatlines and is forgotten.

Instability Ahead

Grids can cope with modest amounts of variable generation, without special consideration for integration.   Many industry stakeholders cite a tipping point – anywhere from 15% to 30% variable generation – after which the stability of the grid system is threatened.   The reason why this range is so wide is that no one really knows what will happen.  We’ve never done this before.

What we do know is that larger and better interconnected systems (such as those found in Germany) can handle more variable generation without special considerations whereas smaller, more isolated systems (such as Puerto Rico, Hawaii, and the islands of Okinawa, Japan) have a lower tolerance for variable generation without incorporating firming resources.

In our base scenario, we estimate a 5,490.52 MW market for advanced ESS in 2023, which is a tiny fraction of the total wind and solar market between 2013 and 2023.  Even at this modest level of market penetration, the market for advanced energy storage is $10.3 billion in 2023.

Variable Generation Forecast and ESWS Market Penetration Scenarios, World Markets: 2013-2023

IRES 2013 will provide the opportunity to hear from vendors and energy companies such as Younicos, Furukawa, Gildemeister, and E.ON on the progress being made to resolve some of these challenges and carve out a larger market for renewable energy storage.

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