US energy storage will spread when better market design meets falling costs, says GTM analyst

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

Two regions have dominated the energy storage market in the US for more than two years, but falling costs and better market design could see deployments spread across the country in future, an analyst with GTM Research has said.

The research and analysis group launched the latest edition of its quarterly Energy Storage Monitor today, which takes a quarterly look at the US in terms of storage deployment, pricing, policies, regulations and business models. The document, which covers the second quarter of this year, is produced in cooperation with the Energy Storage Association, although forecasts and predictions are strictly in GTM’s area.

According to GTM’s findings, two markets pinpointed by the report as leaders in the US for storage, the state of California and the area served by regional transmission operator (RTO) PJM, have installed 88% of the total 156MW of storage deployed in the US in the last 10 quarters. That includes both in front of the meter (utility or centrally controlled) and behind the meter (customer sited or distributed) segments.

Ravi Manghani, the report’s author, told PV Tech that the relative success of the two regions can be attributed to very different circumstances, specific to each.

PJM Interconnection is responsible for electricity transmission in and across more than a dozen states. PJM has shot to prominence in energy storage reporting, due to its introduction of a market structure that recognises the ability of battery-based energy storage to efficiently and quickly provide power to keep the grid running at the right frequency to keep it stable.

“The contributing factor to that is PJM’s adoption of Federal Energy Regulation Committee (FERC) Orders 755 and 784 that require independent system operators (ISOs) and RTOs to make rules for storage to participate in frequency regulation market,” Manghani said.

“…So this particular premium payment has made the economics of storage in PJM attractive.”

California, Manghani said, is dominating the US market for behind the meter residential and non-residential segments by deployment. At present this is being driven by the state’s self-generation incentive plan (SGIP), which subsidises the cost of deploying distributed resources, including solar and storage by about 60%. There is also an overlay of other drivers, including the use of storage to reduce demand charges, applied to commercial and industrial customers.

Turning point

According to the report, the storage market over the next five years will grow across the US until reaching 858MW by 2019, which GTM points out is 13 times bigger than the sector was in 2014 and around four times bigger than the analysis firm is expecting it to be worth over the course of this year.

Manghani said that since the drivers in California and the PJM service area are very specific to the same areas, it will not be a question of replicating the market conditions in each to foster deployment across the country. Instead, the combination of two general trends, firstly towards more distributed energy networks in many states – resulting in market design to accommodate flexibility resources such as storage – and the falling costs of storage, will converge, the analyst said. Along with California, New York is also already redesigning its energy networks at present to make the leap to integrating distributed platforms with its Reforming the Energy Vision (REV) initiative, for example.

“California and New York are probably leading that trend, we are definitely moving to an environment where the grid will be more distributed,” Manghani said.

“…We are seeing a lot of innovation happening around the edge of the grid which has opened up room for storage and other distributed resources, such as demand response, which in itself is a type of DER (distributed energy resource) asset.

“Other states are looking at behind the meter assets to participate in grid services today, but in the end if we see the growth in the way solar has grown, taking off in California, Hawaii, and we have solar installation in 40-plus states – so I hate to give this analogy – but as costs fall and the services storage can provide are recognised and we set up the right market conditions to enable monetisation of those value streams, we could see storage deployment across the US and not just in one or two states.”

For an in depth look at the drivers behind PJM and California's leading position for US storage installations and more insights from GTM's Ravi Manghani, visit PV Tech Storage.

28 July 2021
LONGi has launched its Hi-MO N module, the company's first bifacial module with N-type TOPCon cells, designed to deliver ultra- high value and lower LCOE to utility-scale PV power plants. This PV TechTalk Product Series webinar will provide an overview of the module’s technology and how the introduction of n-type technologies will provide efficiency and performance gains for solar project developers.
29 July 2021
This free webinar will explore the ongoing opportunities in the UK solar PV market, looking at global technology trends and how they apply to the UK. Join us for an overview of the project pipeline and forecast for deployment over the coming years. We'll be looking at the types of modules available and being used in the UK and presenting a case study on the deployment of bifacial modules in this market.
19 August 2021
The utility-scale PV market is poised for exponential growth and yet the industry still has many fundamental opportunities to improve on standards and best practice. Tracker shade loss has been one of those topics that deserve more attention, but has been typically handled by derate factors rather than trying to accurately forecast the loss over the life of the system. Join Nextracker’s subject matter experts, Aron Dobos and Neelesh Umachandran, and Rounak Kharait, director of solar energy assessments at DNV, for a webinar about why shade modeling matters and recommendations on what the solar industry should do about it.
25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?

Read Next

July 26, 2021
A solar-wind-energy storage hybrid project is to power a Madagascan mine after Rio Tinto signed a power purchase agreement with independent power producer CrossBoundary Energy.
July 26, 2021
The pace of climate action in the US is “wholly unacceptable”, according to the director of the US Department of Energy’s (DOE) Loan Programme Office
July 26, 2021
Support for distributed energy resources (DERs) like rooftop solar, community solar and battery storage could save Californian ratepayers US$120 billion over the next 30 years, according to a new report
July 26, 2021
Oil and gas giant Eni has acquired 1.2GW of Spanish renewables from Madrid-based European private equity manager Azora.
PV Tech Premium
July 26, 2021
Boris Farnung and Keith Punzalan of VDE and David Moser of EURAC’s Institute for Renewable Energy take a look at the positive impact comprehensive quality assurance measures can have on the early stage of a project’s lifespan, exploring yield assessments, LCOE projections and the critical need for high quality components.
July 26, 2021
US utility giant NextEra Energy added 1.84GW of renewables and energy storage projects to its backlog in Q2 2021, but its Energy Resources division reported a fiscal loss of US$315 million.

Subscribe to Newsletter

Upcoming Events

Solar Media Events, Upcoming Webinars
July 29, 2021
Webinar
Upcoming Webinars
August 19, 2021
At 9am (PT) | 6pm (CEST)
Solar Media Events
August 25, 2021
Solar Media Events, Upcoming Webinars
October 6, 2021