Navigant Research Blog

Energy Storage Diversity Highlights Regional Differences

— April 14, 2015

As the global energy storage industry continues to take shape, clear differences between regions are emerging. These differences reflect of a number of factors in each area, including electricity market structure, local manufacturing expertise, industrial and energy policies, and geographic characteristics. These factors have significant influence on the diversity of energy storage technologies being deployed in each region. Navigant Research’s Energy Storage Tracker 1Q15 tracks all storage projects around the world, allowing for deep insights into the impacts that market structure and policies have on each region’s market and technological diversity.  

Map of Energy Storage Technology Diversity (Number of Deployed Technologies), World Markets: 1Q 2015

North America is the most technologically diverse region for energy storage in the world, with 19 different technologies (20 including pumped storage) currently installed. This is a result of agencies and favorable policies in North America that are focused on encouraging innovation, such as the United States’ Advanced Research Projects Agency-Energy (ARPA-E) program, as well as various state policies. The U.S. federal government supports technological diversity through the Department of Energy (DOE) Loan Programs Office, which provides secure, competitive financing for innovative clean energy projects that utilize a new or significantly improved technology. As a result of these factors, lithium-ion (Li-ion)-based storage systems (the most popular globally) only account for 12% of deployed systems in North America and 13% of the regional pipeline, which includes projects utilizing 15 different technologies.

Local Specialties

Due to local manufacturing and engineering specialties, batteries are the primary choice for energy storage in Asia Pacific, making the region less technologically diverse than North America or Western Europe. Regulatory policies tend to favor domestic technologies and manufacturers. Notably, Japanese sodium sulfur (NaS) battery manufacturer NGK Insulators has benefited from close relationships with many utilities, resulting in an installed base of over 360 MW in the region. Given recent safety concerns regarding NaS systems and the opening of new markets, domestically produced Li-ion systems now lead the Asia-Pacific region. This is also a result of the region’s grid resiliency efforts (particularly in Japan), which encourage the adoption of smaller distributed storage systems, an ideal application for Li-ion systems. Overall, Li-ion-based systems represent 76.6% of the pipeline for the Asia Pacific region.

The technological diversity of Europe’s energy storage industry falls in between North America and Asia Pacific. Europe has a much greater diversity of market rules and policies compared with other regions. In general, European policies favor innovative/foreign technologies more than in Asia, and as a result there are eight different technologies in the European project pipeline.

Regional View

Germany, the leading market in Europe, has policies and market conditions (e.g, a high penetration of distributed solar, net metering restrictions) that favor distributed energy storage. As Li-ion systems are ideally suited for distributed installations, those batteries have begun to lead the German market despite a relatively diverse base of deployed technologies.

The Energy Storage Tracker explores the global energy storage landscape by tracking projects deployed and planned around the world. Navigant’s project database allows for in-depth analysis of regional markets to understand the impact of policy on technological diversity. Technological diversity can be a key indicator of the overall health of a market and the opportunities for innovative or foreign companies to compete.


Energy Storage Leaders Stumbled, Then Survived

— March 20, 2015

At a time when the major electric industry players were either unwilling or not nimble enough to develop energy storage systems integration expertise, four growing energy storage players with four distinct technologies took a risk to develop this expertise. Over the last few years, each of these companies failed financially and was subsequently acquired, in some cases more than once. In nearly every case, private equity firms stepped in, seeing an opportunity to invest in a maturing technology company with specialized expertise in the market.

Citing Tesla founder Elon Musk’s determination to build a massive Gigafactory to manufacture batteries for his vehicles, E Source Senior Fellow Jay Stein has argued that company failures like these indicate the shortcomings of the overall market. This is a logical fallacy.

Number of Deployed Systems Market Share by Top 10 System Integrators, Excluding Pumped Storage and CAES, World Markets: 1Q 2015

(Source: Navigant Research)

Detours Behind

The chart above is derived from Navigant Research’s Energy Storage Tracker 1Q 15, a global database of energy storage installations that includes 808 projects. This specific graph charts the top 10 systems integrators of energy storage in terms of number of systems deployed globally. Four of the 10 market leaders for systems integration have gone bankrupt and been acquired in the past several years. NEC Energy Solutions, formerly A123 Energy Solutions, was acquired following a bankruptcy filing, and the grid business was subsequently spun off and sold to NEC Corporation for approximately $100 million in 2014. Beacon Power was acquired by a private equity firm following a bankruptcy filing in 2012, and Xtreme Power (now Younicos Inc.) was acquired by Younicos AG in 2014, also after filing for bankruptcy.

All three firms were focused on a core grid storage technology (lithium ion batteries, flywheels, and advanced lead-acid batteries, respectively), but all spent a great deal of resources in the earlier days of the market learning how to integrate complete systems. Ultimately, all three firms developed this expertise, and NEC Energy Solutions and Younicos repositioned themselves as systems integration companies, offering software, controls, and integration expertise as opposed to pure-play battery suppliers. Beacon Power is a market leader in flywheels and flywheel systems integration and has developed a modular flywheel product with built-in power electronics for simpler integration and installation.

Managers, Not Markets

Finally, Coda Energy repositioned itself as an energy storage integration firm in 2013 after filing for bankruptcy. The company rebranded and shifted its product offering to target stationary energy storage using a battery management system, battery thermal management, and a sophisticated power source controller.

Together, these four companies account for 21% of the global market share for the top 10 systems integrators (although part of this market share is attributed to Younicos AG). These companies and others like them are challenging incumbents such as ABB and S&C Electric, demonstrating that their earlier stumbles arose out of flawed management and/or strategy, not failed markets or futile technologies.

Equating a management failure with a market failure ignores the value of the technology. Whether the Gigafactory will be Musk’s Waterloo or Austerlitz has less to do with the technology and much more to do with Tesla’s strategy and execution—and Musk has proven he can accomplish both in the automotive and the financial services worlds.


E-Motorcycles and E-Scooters Primed for Acceleration

— March 17, 2015

Innovative product offerings, large new market entrants, and decreasing battery prices are all contributing to an increasingly positive outlook for the electric power two-wheel vehicle industry, which includes electric scooters (e-scooters) and electric motorcycles (e-motorcycles).

An influx of new product offerings and services in these markets is expanding the product options for consumers, offering legitimate alternatives to car ownership, and appealing to new, untapped customer bases. These products and services include fold-up e-scooters, hydrogen fuel cell scooters, e-scooter sharing programs (Scoot Networks), e-scooter battery swapping networks (Gogoro), and ultra-lightweight e-motorcycles.

Warming Up

In the e-motorcycle industry, several large manufacturers traditionally focused on gasoline-powered motorcycles are entering the market and providing new capabilities. These large companies bring brand recognition, extensive dealer networks, industry credibility, and large marketing and R&D budgets. It’s difficult to convince consumers to buy unknown brands in a new market, especially at higher price points compared to internal combustion engine (ICE) motorcycles.

With Polaris Industries acquiring Brammo in early 2015, Yamaha announcing its intention to enter the market in 2016, and Harley-Davidson expected to release its LiveWire product around the 2018 timeframe, the e-motorcycle industry is poised to undergo significant growth and significantly increase consumer awareness and recognition over the coming years. Lithium ion (Li-ion) battery units that would have cost more than $1,000 per kilowatt-hour (kWh) just a few years ago can now be had for about one-third of the price, and these costs are expected to continue to decline over the coming years.

According to Navigant Research’s recently published report, Electric Motorcycles and Scooters, worldwide sales of e-motorcycles and e-scooters are expected to grow from 5.2 million units in 2015 to just under 6 million units by 2024. Due to the new and expected market entries of Polaris Industries, Yamaha, and Harley-Davidson into the North American and European markets, high-powered e-motorcycles (more than 30 kW/40 hp peak) are expected to achieve by far the largest growth of any segment in this market, growing at a compound annual rate of 35.2% between 2015 and 2024.

E-Scooter and E-Motorcycle Sales by Type, World Markets: 2015-2024

(Source: Navigant Research)


Islands Sail into Energy Storage

— March 3, 2015

Saddled with the highest electricity rates in the world (and threatened by climate change more than almost any other communities), many islands and isolated grids have opted to integrate wind and solar to replace expensive, imported diesel fuel. One challenge for these systems is that they do not have the benefit of calling upon neighboring systems to balance their wind and solar against load–leading to instability and insecurity of supply.

As a result, many remote grids are adjusting their technical requirements for connecting intermittent resources like wind or solar to the grid, requiring that these resources be firmed. In late 2013, for instance, Puerto Rico adjusted its technical requirements for connecting wind and solar assets to the Puerto Rican grid. This isn’t a direct requirement for energy storage specifically, but is a good fit for storage.

The Flywheel Option

Other island markets are betting on storage more directly. Aruba has committed to an aggressive plan to become 100% renewable by 2020 and has signed agreements with BYD and Temporal Power, as well as a power purchase agreement with Hydrostor in order to achieve its energy goals.

The typical applications in these markets are wind, solar, and diesel hybrids. In previous years, the most common technology for remote, isolated grid storage was advanced batteries. This was partly a function of availability and technology fit. Very few other storage technologies are modular–underground compressed air and traditional pumped storage require specific geologies–and few vendors were targeting the space. Moreover, the working assumption in terms of technology fit has been that a longer-duration storage system is more valuable than a short-duration storage system. Several flywheel vendors are disproving this assumption, however.

ABB’s Powercorp, for example, uses flywheel technology in remote microgrids, such as the BHP Billiton nickel mine in Western Australia and the Coral Bay community in Northwestern Australia. These are remote diesel-led systems.

Way Up North

Beacon Power has commissioned a demonstration project in St. Paul, Alaska, combining an existing plant, which includes a 225-kW wind turbine and 300 kW of diesel generators, with a 160-kW flywheel system. In this scenario, the flywheel system will enable the host utility to further improve wind utilization and deliver fuel savings of up to 30% over existing (pre-flywheel) consumption levels.

While it is still the case that some amount of long-duration storage is necessary in order to achieve very high renewables penetration on an isolated grid, flywheels are demonstrating that significant diesel savings can be achieved with as little as 30 minutes or less of storage.


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