Navigant Research Blog

Energy Storage Industry Jobs Linked to Energy Storage Capacity

— May 25, 2017

Jobs in the energy storage industry in the United States are expected to grow substantially over the next decade. In a white paper prepared for the Energy Storage Association (ESA) on an Energy Storage Vision in the United States, Navigant Research modeled the value of 35 GW of energy storage by 2025 against the cost of storage in the same period. Value was measured in terms of job creation, emissions reductions, grid operational cost savings, and reliability.

Jobs in the US Energy Industry

In January 2017, the US Department of Energy (DOE) published its U.S. Energy and Employment Report, calculating the total employment across sectors of the energy industry, including storage. The findings in this report provided a reference point for estimating total employment in the industry between 2017 and 2025.

According to the U.S. Energy and Employment Report, there were a total of 90,831 individuals directly employed in the US energy storage industry during 2016. These direct jobs include battery and component manufacturing and R&D, engineering and construction (project development), operations and maintenance, sales, marketing, management, administrative, and other positions. Most of these portions of the value chain will see job growth as the industry scales.

Energy Storage Capacity and Jobs

Navigant Research estimates that approximately 225 MW of new energy storage capacity was deployed in the United States during 2016. Using the DOE estimate as a starting point, this represents 403.7 jobs per MW of installed energy storage system capacity. Given that the storage industry is still nascent, and considering the complexities of storage technology project development, we expect the number of jobs per unit of capacity to start high and then decrease rapidly over time. By comparing solar PV industry jobs per unit of new capacity over the past decade, Navigant Research estimated future job creation under the ESA Energy Storage Vision market forecast.

In 2008, about 250 MW of new solar PV capacity was installed in the United States, and the industry supported approximately 35,000 jobs. As the market and annual deployments grew, the number of jobs per MW of capacity decreased substantially. In 2016, an estimated 10,800 MW of new solar PV was built in the United States, and the industry employed 260,777 people per the Solar Foundation’s National Jobs Census 2016. This equates to 24.1 jobs per MW of new capacity.

 Decline in Number of Energy Storage Industry Jobs per MW

Navigant Research expects a similar decline in the number of industry jobs per MW of new energy storage capacity as the market matures. The number of solar jobs per MW of new capacity decreased gradually until 2011, the year after the solar industry experienced a bump in deployments. Market growth triggered industry learning, efficiency, and economies of scale in the solar PV space. Given the current state of the storage industry and growth projections, Navigant Research estimates that the energy storage industry is on the verge of experiencing a similarly dramatic decrease in the number of industry jobs per MW of new capacity. The number of jobs per incremental MW in the storage industry is expected to decrease from 403.7 in 2016 to 50.9 in 2021 and 32.5 in 2025 for a total of 368,836 jobs in 2025.

Cumulative Energy Storage Industry Jobs, Vision Scenario, United States: 2016-2025

(Source: Navigant Research)

Navigant Research will discuss the Energy Storage Vision results and other key findings during a webinar with Matt Roberts, executive director of the ESA, on May 30 at 2 p.m. EDT.


Nevada’s Net Metering Change May Present Opportunities for Storage

— April 15, 2016

GeneratorNevada’s public utilities commission (PUC) has changed the net metering rules for solar PV, effective January 1, 2016. Not only will this development erode the business case for new systems, but will also affect approximately 17,000 existing customers. SolarCity and Vivint have eliminated jobs in Nevada, and Sunrun has exited the solar PV market in the state. Two customers have filed a class-action lawsuit against utility NV Energy in protest of the decision. Although this rule change has been characterized as a bait-and-switch for solar PV customers, this is also an opportunity for residential energy storage under two scenarios.

The first scenario would be if residential energy storage with PV can be aggregated to deliver services to NV Energy. The aggregator—which could either be the utility itself or a third party—would share the payment with residential customers. In order to make the storage option appealing to customers that have invested heavily in solar PV, it would need to be offered using a low capital expenditures (CAPEX) business model. The value of the services delivered through the virtual power plant would need to at least cover the monthly grid connection charge and would also need to help the customer minimize the amount of solar PV energy exported to the grid and maximize self-consumption. The Nevada PUC could also opt to waive the grid connection fee for solar PV plus storage plants because distribution system issues would be mitigated by using a storage system.

Customer Disconnects

A second scenario that may present an opportunity for storage is if the storage can help customers disconnect completely from the grid. This would be a much more radical move for customers, but would help them avoid the grid connection charge. This charge starts at $12.75 to $17.90 per month in 2016 and is slated to increase to $38.51 per month by 2021. Although the yearly grid connection fee is relatively modest in 2016 at between $153 and $214, it is set to double to $462 within 5 years. Customers could spend over $1,500 over a 5-year period in grid connection charges alone. This solution’s business case would take many years to pay for both the battery and the solar PV. Therefore, this solution would also require some financing mechanism to ease the CAPEX burden on the homeowner in order to gain market traction. This scenario would be appealing to customers dissatisfied with the local utility, or who are looking to move off-grid for ideological reasons.

The chart below forecasts the power capacity and revenue of residential solar PV and energy storage systems—referred to by Navigant Research as nanogrids—as 40.8 GW and $79.5 billion from 2015 to 2024. North America is slated to account for 16.8% of the global market over the 10-year period. One of the key issues to tapping into this market will be creative customer offerings and go-to-market strategies on the part of vendors in this space.

Solar PV plus Energy Storage Residential Nanogrid Capacity and Revenue by Region,
World Markets: 2015-2024

Anissa Blog Chart

 (Source: Navigant Research)


The Invasion of the Storage-Enabled Virtual Power Plants

— April 13, 2016

Energy CloudNavigant Research recently published a white paper detailing Five Trends for Energy Storage in 2016 and Beyond. One of these trends focuses on the coming invasion of energy storage-enabled virtual power plants (VPPs) into energy markets.

While the trend of energy-storage enabled VPPs entering into energy markets may sound ominous, it isn’t. It is simply a step forward in the transition away from a centralized power system toward a distributed energy system that resembles the Energy Cloud.

What Is a VPP?

A VPP is defined as a “system that relies upon software and a smart grid to remotely and automatically dispatch and optimize DER [distributed energy resources] via an aggregation and optimization platform linking retail to wholesale markets.” An energy storage system (ESS)-enabled VPP is a VPP that uses energy storage as the foundation of the plant. Storage acts as a foundational element because once storage is included in a VPP, the VPP becomes dispatchable and schedulable. In addition, other assets that are not schedulable—such as load or solar PV—become more attractive.

For example, solar PV can be included in a VPP, but in order to balance the uncertainty of energy generation availability, aggregators design and build portfolios that meet a commitment to a utility while minimizing risks (such as significant cloud cover causing the aggregator to miss its commitment). However, by using an ESS in a solar PV portfolio, the aggregator would have more flexibility designing a portfolio and could bid more confidently and aggressively in the market. Energy storage of all types adds flexibility to VPPs.

Gaining a Foothold

By the end of 2016, Navigant Research anticipates that ESS-enabled VPPs will have cleared the proof-of-concept stage. With pilots in Switzerland, California, New York, Kentucky, Australia, and Ontario, the ESS-enabled VPP trend is gaining a foothold in key markets in North America, Asia Pacific, and Europe. However, ESS-enabled VPPs have only been in operation for as little as a few months (with the exception of Ice Energy, which has been using the company’s Ice Bears in a similar fashion for the past several years). By the end of 2016, nearly all of these VPPs will have over a full year of operational data available.

Utilities and grid operators with these systems will learn how ESS-enabled VPPs operate and benefit the grid in periods of both extreme summer and winter weather. Utilities can use this data to build a rate case for ESS-enabled VPPs and give regulators a justification for allowing utilities to build and operate these systems. The primary risk for utilities is that regulators have not developed regulation around VPPs as an asset class—it remains to be seen whether utilities will own and operate VPPs exclusively, or if customers will have a choice of VPP-providers, similar to how customers can often choose their energy supplier.


Powerwall Takes Tesla Into the Energy Cloud

— May 8, 2015

Elon Musk has announced that Tesla’s Powerwall, the company’s residential energy storage product, is already oversubscribed—38,000 residential systems have been reserved. The company’s PowerPack offering has an even more impressive backlog: 2500 reservations averaging an estimated 10 Powerpacks at 100 kWh, representing 7.1% of the Gigafactory’s planned capacity. Executing these orders will carry the company into 2016. In total, the reservations amount to between 2.9 GWh and 3.6 GWh. While this is an impressive feat, Tesla’s contribution to the market will not be based on technology—at least not at the battery cell level. Although the company’s battery pack offers benefits that integrators may not receive from products from LG Chem, NEC, Saft, or Samsung SDI, Tesla’s effect on the market is likely to reach far beyond hardware deployments.

Specifically, that influence will come in building economies of scale, popularizing the home storage concept with the general public, and, ultimately, developing viable financing schemes. Tesla’s move will also certainly spawn imitators in the residential space, encouraging competition and differentiation in the marketplace. Tesla can bring its sales and installation machine to bear in a portion of the market plagued by fuzzy margins, fickle business cases, and inconsistent interconnection fees. In a similar fashion, SolarCity and its peers can change the residential PV market simply by deciding to establish a market offer in a particular territory.

The Full Ecosystem

The broader play for Tesla is not to sell battery hardware into the residential market. Rather, Tesla has an opportunity to use the Powerwall as an anchor for a Tesla home energy ecosystem. The company is transforming itself into an energy provider, but not in the traditional sense. Interested in reducing your energy bills? Join the Tesla family. Purchase a vehicle, solar PV, electric vehicle charging, battery storage, and perhaps even energy-related services. Customers are buying into a platform, the same way that Mac users bought into the Apple ecosystem.

In 3 to 5 years, once market penetration nears saturation in early-adopter markets, Tesla could parlay these assets into a virtual power plant (VPP), bidding into deregulated markets or even selling directly to vertically integrated utilities. In order to expand its VPP market share, Tesla may decide to license the software and controls—the brains of the system—to other firms so that even competitors’ units can opt into a VPP in the future.

What does this mean? It signals that Tesla Energy is the newest player in the Energy Cloud.


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