Early 2018 Energy Storage Developments

Battery storage continues to advance in real and projected terms.   On March 13, 2018 Volkswagen AG announced a $25 billion purchase of batteries from Samsung SDI Co., LG Chem Ltd, and Contemporary Amperex Technologies Ltd to backstop approximately 3 million electric vehicles scheduled to be produced through the end of 2022. This compares with Telsa’s $17.5 billion purchase of batteries from Panasonic for a comparable timeframe. Overall, Volkswagen indicated that they plan on purchasing 50 billion Euros in batteries for their electric vehicle production through 2025. These actions support GW factory level production of Lithium Ion batteries and enable costs to decrease in other sectors to wide-spread adoption levels.

Regarding the electricity sector, IHS Markit predicts an international 26 GWh battery storage market to develop between 2018-2025, with costs dropping by 31% by 2021. GTM predicts 8% per year decline in storage system costs from 2018 until 2022 and a market in the US 6 times the current market size over the next 5 years. Higher cobalt and lithium prices are cited as slowing price declines from 2015-2016 rate of change levels which saw declines in the 24% range. However, balance of system costs are cited by some as 40% to 70% of overall system installations costs. In an effort to lower overall system costs, as well as realizing other benefits (such as time-shifting, ramping, and distribution network support), IHS Markit believes 40% of the utility storage pipeline is in combination with solar.

Australia has announced a 2.1 GW storage pipeline paired with solar. And while it involves a number of early stage activities, if realized, it would be very ambitious. Fluence, the joint company of AES and Siemens, has announced a 100 MW-400 MWh battery in Long Beach, CA one of the largest battery system announced and under development. And Telsa’ South Australia Hornsdale 100 MW-129 MWh Power Reserve Facility is a tribute to what can be accomplished in a short period of time, when needed. GE’s new Reservoir containerized product 1.2 MW, 4 MWh that ships complete advertises a 50% reduction in installation time with orders for 20 MW reported in early March 2018.

Innovative battery solutions have been highlighted at Energy Storage Europe and PV Magazine’s Storage Highlights jury selection of the top storage concepts, which included: Younicos’ 4 MW gas-turbine hybrid 9 MW-6.5 MWh battery that provides optimized continuous power; E3/DC’ new power inverters to obtain better control of state of charge and Fraunhofer ISE’ power electronics efficiencies in converting lower voltages to high voltages, as well as SMA’s Medium Voltage Power Station of 5.5 MW that offers the equivalent of rotating mass inertia responses, and distribution level solutions by German EPC Smart Power. To encourage battery storage innovation, Enel has recently placed on their web site an invitation for new energy storage solutions to attract and reward new storage innovation proposals/concepts.

In the US in late February, the Brattle Group provided an analysis of storage that cited a potential 50 GW storage market size if state policies were aligned with proper storage incentives. Brattle was complementary of FERC Order 841 which asks regional transmission organizations to properly consider and value storage in their tariffs/operations. While this is a first step in realizing the full value proposition of storage at the grid level, states need to take an active regulatory roll to realize the full potential of storage to the grid and for behind the meter customers. Similarly, the IRS provided encouragement in a private letter ruling allowing a battery storage project charged by solar to receive a 30% solar investment tax credit 1 year after the solar project was built. Overall, many positive developments to encourage storage in early 2018 and many more needed to realize its potential.