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2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
2013 us grid storage report   executive summary
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2013 us grid storage report executive summary

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  • 1. Future of Grid Storage in the US: Applications, Technologies, and Markets Author: Justin Malecki, Phd Contributing Authors: Shahab Shahnazari (Phd), Michael Deaves, and Tim Wohlgemut - Q1, 2013 - Prepared by ClearSky Advisors Inc. © ClearSky Advisors Inc. 27-Jun-2013
  • 2. About This Report The nascent market for grid storage devices will be characterized by the specific purposes (applications) for which the storage is used. Early adoption will occur for certain applications and favour specific technologies. These applications and technologies will have a huge impact on market development in this sector but may not be indicative of long-term viability. This report documents the most promising applications and technologies for grid storage in the USA. It quantifies likely installations segmented by application and technology over the next 10 years. Importantly, using ClearSky Advisors’ proprietary Dynamic Forecasting Tool, the report examines multiple scenarios for which market development is likely to occur. Implications for market size, technology adoption,market value, andpolicydevelopment are discussed andquantified asappropriate. Recommendations and considerations for those organizations considering their role in future grid storage adoption are also provided. © 2013 ClearSky Advisors Inc. All Rights Reserved. Copying of or reproduction from this report in any form without prior permission is strictly forbidden. The materials ClearSky Advisors Inc. provides to clients will reflect ClearSky Advisors’ judgment based upon the information available to ClearSky Advisors Inc. ClearSky Advisors Inc. disclaims any other representations or warranties, express or implied, including without limitation any implied warranties of merchantability, fitness for a particular purpose or non-infringement. This report is based on sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. ClearSky Advisors Inc. shall have no liability for errors, omissions or inadequacies in the information contained in this publication.
  • 3. Why This Report? The emergence of grid storage is expected to facilitate greater renewable energy generation and promote the evolution of a smarter electrical grid. While some studies have reported on the feasibility and economics behind the variousgrid storage technologies such as lithium ion or compressed air energy storage, critical questions concerning suitability, installation costs, and opportunities remain unanswered. In this report, ClearSky Advisors provides not only a comprehensive analysis of key grid storage technologies and applications but also a detailed forecast for their growth. Executive Summary As jurisdictions around the world set ambitious goals for the proportion of electricity that will be generatedbyvariablerenewablesourcessuchaswindandsolar,utilitiesandgridoperatorsarebecoming increasingly aware of the challenges that this new generation will pose to existing grid infrastructure. One of the primary ways to mitigate these challenges is to incorporate more storage capability on the grid to: a) dispatch renewable generation during times of high demand b) provide a more steady and smooth source of electricity that does not tax existing grid infrastructure As of Q1, 2013 there is 20,738MW of grid storage power capacity servicing the US grid. Currently the majority of this storage power capacity (99%) is comprised of pumped hydro storage. While pumped hydro willcontinue to playa large role in energy storage,ClearSkyAdvisorsexpects that the next 10years will see three-fold higher installations of non-traditional mechanical and battery-based storage technology than traditional pumped storage. Grid Storage Technologies: 1. Pumped Hydro Storage 2. Non-traditional Mechanical Storage a. Flywheel b. Compressed Air Energy Storage 3. Battery Storage a. Advanced Lead Acid b. Lithium Ion c. Zinc Bromine d. Sodium Sulfur Grid Storage Applications: 1. Distributed Energy Storage Systems 2. Commercial and Industrial Applications 3. Transmission and Distribution Support 4. Frequency Regulation 5. Bulk Storage Applications Applications can be combined in order to form systems capable of performing multiple tasks (e.g., wholesale energy arbitrage with regulation, local capacity, and transmission benefits) Pumped 99% Battery and Non- traditional Mechanical 1% Current US Grid Storage Power Capacity (MW) Pumped 73% Battery and Non- traditional Mechanical 27% 2022 US Grid Storage Power Capacity (MW)
  • 4. The forecast data presented in this report is based on analysis using ClearSky Advisors’ Dynamic Forecasting Tool (DFT). The DFT is a proprietary model designed to calculate the economic viability of electricity generation or storage technology in a given region, and based on that economic calculation, determine the volume of adoption of that technology within the region. The DFT is informed by more than 140 inputs describing average current local conditions for a particular technology and grid application, policy rules that influence the economic attractiveness of facilities, and assumptions for how these factors will change over the course of the forecast period. Using the DFT, ClearSky Advisors has modeled 189 different scenarios across:  13 different grid storage applications  9 different technologies  3 different scenario classes (High, Expected, and Low) Combining these modeling scenarios into three broad categories and incorporating the schedule of known planned projects results in a 10-year forecast of 28.2 – 47.0 GW of grid storage power capacity by 2022. The 10-year compound annual growth rates (CAGR) for each scenario are:  9.3% - High Case  6.3% - Expected Case  3.4% - Low Case Excluding the pumped hydro market, the growth rates (CAGR) for each scenario will result in an increase to between 37.9%-45.3%. The following graph shows the annual installations for the expected case scenario. Complete segmentation of this data by technology and application can be found in the full report. Due to their flexibility, we anticipate that over the 10-year forecast period, market opportunities for battery technologies (i.e., advanced lead acid, lithium ion, and zinc bromine) will be greater than those for mechanicaltechnologies(i.e.,pumpedhydro, and compressedair energystorage). ClearSky Advisors expects that overall growth in this sector will continue to accelerate beyond 2022. Segmentation: 1. Advanced lead acid 2. Lithium ion 3. Zinc bromine 4. Sodium sulfur 5. Vanadium redox 6. Flywheel 7. Compressed air energy storage (above ground) 8. Compressed air energy storage (below ground) 9. Pumped Hydro 0 1,000 2,000 3,000 4,000 5,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (MW) Annual US Grid Storage Installations - Expected
  • 5. The modeling scenarios also consider the market opportunities for grid storage facilities with individual grid applications as well as facilities comprised of multiple/combination applications. The following two graphs show the modeled expected case annual installations for each. Complete segmentation by combination application and individual application can be found in the full report. With greater revenue opportunities, combination applications are more economically viable but have greater local requirements (i.e., there are fewer locations requiring such combinations of grid storage services). As a result, markets for combination applications are expected to take off early but will become saturated more quickly compared with individual applications. There are numerous factors that will determine precisely how US grid storage markets will evolve over the next 10 years. The following table summarizes the primary factors currently driving and restraining grid storage markets. 0 500 1,000 1,500 2,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (MW) Combination Storage Applications - Expected 0 1,000 2,000 3,000 4,000 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (MW) Individual Storage Applications - Expected Grid Storage Markets: Drivers and Restraints Drivers Impact Increasing Renewable Generation High Government Funding High Deregulation of Electricity Markets Moderate Location Flexibility Low Restraints High Capital Cost High Unproven Technology High Decreasing Cost of Gas Generation Moderate Lack of Storage Specific Permitting/Regulation Low Segmentation: 1.Distributed energy storage system commercial and industrial customers with local capacity benefits 2.Stationary transmission and distribution support with regulation, local capacity and deferral benefits 3.Transportable transmission and distribution support with regulation, local capacity and deferral benefits 4.Wholesale arbitrage with regulation, local capacity and transmission benefits 5.Commercial and industrial energy management with distribution benefits Segmentation: 1. Distributed energy storage system commercial and industrial customers 2. Commercial industrial energy management 3. Transportable transmission and distribution support 4. Stationary transmission and distribution support 5. Wholesale arbitrage 6. Commercial and industrial 4-hour reliability 7. Wholesale frequency regulation 8. Remote wind
  • 6. Table of Contents ABOUT THIS REPORT..........................................................................................................................1 WHY THIS REPORT?............................................................................................................................2 EXECUTIVE SUMMARY .......................................................................................................................2 LIST OF FIGURES.................................................................................................................................7 LIST OF TABLES ..................................................................................................................................8 LIST OF COMPANIES MENTIONED IN THIS REPORT..............................................................................9 1. INTRODUCTION ........................................................................................................................10 KEY FINDINGS ...........................................................................................................................................12 2. GRID STORAGE MARKET DRIVERS AND RESTRAINTS..................................................................13 DRIVERS....................................................................................................................................................13 RESTRAINTS ..............................................................................................................................................14 3. GRID STORAGE APPLICATIONS ..................................................................................................16 MAXIMUM MARKET POTENTIAL..................................................................................................................20 4. GRID STORAGE TECHNOLOGIES.................................................................................................22 MARKET PENETRATION..............................................................................................................................24 Pumped Hydro Storage Projects .........................................................................................................24 Demonstration Projects Funded by the Department of Energy..........................................................26 CHARACTERISTICS OF GRID STORAGE TECHNOLOGIES .................................................................................27 Distributed Energy Storage Systems for Commercial & Industrial Customers....................................28 Commercial & Industrial Electricity Reliability & Management..........................................................28 Transmission & Distribution Support ..................................................................................................28 Frequency Regulation..........................................................................................................................29 Bulk Storage........................................................................................................................................29 5. GRID STORAGE MARKET FORECAST...........................................................................................30 FORECAST SUMMARY ................................................................................................................................30 MODEL ANALYSIS: APPLICATION & TECHNOLOGY SEGMENTATION ..............................................................33 Combination Applications...................................................................................................................34 Individual Applications........................................................................................................................38 DISCUSSION ..............................................................................................................................................43 The interplay of combination and individual applications..................................................................43 The role of technological innovation...................................................................................................43 The dominance of battery technology ................................................................................................44 6. MARKET VALUE ........................................................................................................................45 7. CONCLUSIONS AND RECOMMENDATIONS.................................................................................47 APPENDIX A – FORECAST METHODOLOGY ........................................................................................49 APPENDIX B – DETAILED MODEL SEGMENTATION.............................................................................51 DISTRIBUTED ENERGY STORAGE SYSTEMS FOR COMMERCIAL & INDUSTRIAL CUSTOMERS .............................51 Distributed Energy Storage System Supporting Commercial/Industrial Customers with Local Capacity Support................................................................................................................................................53 Distributed Energy Storage System Supporting Commercial/Industrial Customers ...........................54 Safety Concerns Low
  • 7. COMMERCIAL & INDUSTRIAL ELECTRICITY RELIABILITY & MANAGEMENT.......................................................56 Commercial/Industrial Energy Management with Distribution Benefits............................................58 Commercial & Industrial Energy Management...................................................................................59 TRANSMISSION & DISTRIBUTION SUPPORT..................................................................................................62 Stationary Transmission & Distribution Support with Regulation, Local Capacity, and Deferral Benefits ...............................................................................................................................................64 Transportable Transmission & Distribution Support with Regulation, Local Capacity, and Deferral Benefits ...............................................................................................................................................65 FREQUENCY REGULATION..........................................................................................................................68 Wholesale Frequency Regulation........................................................................................................70 BULK STORAGE .........................................................................................................................................72 Wholesale Energy Arbitrage with Regulation, Local Capacity, and Transmission Benefits................74 Wholesale Arbitrage ...........................................................................................................................75 APPENDIX C – COMPANY PROFILES ..................................................................................................78 Disclaimer The materials ClearSky Advisors Inc. (ClearSky Advisors) provides to the client will reflect ClearSky Advisors’ judgment based upon the information available to ClearSky Advisors. ClearSky Advisors disclaims any other representations or warranties, express or implied, including without limitation any implied warranties of merchantability, fitness for a particular purpose or non-infringement. This report is based on sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed.
  • 8. List of Figures Figure 1 - 10-Year US grid storage maximum market potential, individual applications. Source: EPRI, Sandia National Laboratory, ClearSky Advisors ............................................................................20 Figure 2 - 10-year US grid storage maximum market potential, combination applications. Source: EPRI, Sandia National Laboratory, ClearSky Advisors ............................................................................20 Figure 3 - Current US grid storage power capacity. Source: EPRI, Sandia National Laboratory, ClearSky Advisors ........................................................................................................................................24 Figure 4 - Cumulative US grid storage installations............................................................................... 31 Figure 5 - Annual US grid storage installations...................................................................................... 33 Figure 6 - Cumulative installations: combination applications............................................................... 34 Figure 7 - Forecast of modeled combination applications, application segmentation ........................... 36 Figure 8 - Forecast of modeled combination applications, technology segmentation........................... 38 Figure 9 - Cumulative installations: individual applications ...................................................................39 Figure 10 - Forecast of individual applications, application segmentation.............................................40 Figure 11 - Forecast of individual applications, technology segmentation.............................................42 Figure 12 - Annual market value, overall forecast..................................................................................46 Figure 13 - Installation cost assumptions for distributed energy storage systems ................................. 51 Figure 14 - Installation forecast: distributed energy storage systems for commercial/industrial customers with local capacity applications.................................................................................... 53 Figure 15 - Installation forecast: distributed energy storage systems for commercial/industrial customers .....................................................................................................................................54 Figure 16 - Installation cost assumptions for commercial/industrial applications ..................................56 Figure 17 - Installation forecast: commercial/industrial energy management with distribution benefits58 Figure 18 - Installation forecast: commercial/industrial energy management .......................................59 Figure 19 - Installation cost assumptions for transmission & distribution support applications .............62 Figure 20 - Installation forecast: stationary transmission & distribution support with regulation, local capacity, and deferral benefits ......................................................................................................64 Figure 21 - Installation forecast: transportable transmission & distribution support with regulation, local capacity, and deferral benefits ......................................................................................................65 Figure 22 - Installation cost assumptions for frequency regulation applications....................................68 Figure 23 - Installation forecast: wholesale frequency regulation.......................................................... 70 Figure 24 - Installation cost assumptions for bulk storage applications................................................. 72 Figure 25 - Installation forecast: wholesale energy arbitrage with regulation, local capacity, and transmission benefits .................................................................................................................... 74 Figure 26 - Installation forecast: wholesale energy arbitrage ................................................................ 75
  • 9. List of Tables Table 1 - Grid Storage Markets: Drivers and Restraints ............................................................................13 Table 2 - Most valuable grid storage applications .....................................................................................17 Table 3 - Other grid storage applications...................................................................................................17 Table 4 - Multiple grid storage applications...............................................................................................18 Table 5 - Present value of grid storage benefits. Source: EPRI.................................................................19 Table 6 - Most feasible grid storage technologies.....................................................................................23 Table 7 - Pumped hydro storage projects in the US. Source: FERC .........................................................25 Table 8 - Demonstration projects funded by the US DOE.........................................................................27 Table 9 - Technology characteristics for distributed energy storage systems. Source: EPRI, ClearSky Advisors. .............................................................................................................................................28 Table 10 - Technology characteristics for commercial & industrial electricity reliability & management. Source: EPRI, ClearSky Advisors........................................................................................................28 Table 11 - Technology characteristics for transmission and distribution support. Source: EPRI, ClearSky Advisors. .............................................................................................................................................29 Table 12 - Technology characteristics for frequency regulation. Source: EPRI, ClearSky Advisors........29 Table 13 - Technology characteristics for bulk storage. Source: EPRI, ClearSky Advisors. .....................29 Table 14 - Financial parameters assumed in model...................................................................................49 Table 15 - DESS - Installation Cost Assumptions.......................................................................................52 Table 16 - Distributed Energy Storage System Supporting Commercial/Industrial Customers with Local Capacity Support - Annual Installations.............................................................................................55 Table 17 - Distributed Energy Storage System Supporting Commercial/Industrial Customers - Annual Installations.........................................................................................................................................55 Table 18 - Commercial/Industrial - Installations Cost Assumptions..........................................................57 Table 19 - Commercial/Industrial Energy Management with Distribution Benefits - Annual Installations ............................................................................................................................................................60 Table 20 - Commercial and Industrial Energy Management - Annual Installations..................................61 Table 21 - Transmission and Distribution Support - Installation Cost Assumptions.................................63 Table 22 - Stationary Transmission and Distribution Support with Regulation, Local Capacity, and Deferral Benefits - Annual Installations .............................................................................................66 Table 23 - Transportable Transmission and Distribution Support with Regulation, Local Capacity, and Deferral Benefits - Annual Installations .............................................................................................67 Table 24 - Frequency Regulation - Installation Cost Assumptions............................................................69 Table 25 - Wholesale Frequency Regulation - Annual Installations ..........................................................71 Table 26 - Bulk Storage - Installation Cost Assumptions ..........................................................................73 Table 27 - Wholesale Energy Arbitrage with Regulation, Local Capacity, and Transmission Benefits - Annual Installations............................................................................................................................76 Table 28 - Wholesale Arbitrage - Annual Installations ..............................................................................77
  • 10. List of Companies mentioned in this Report List of Companies mentioned in this Report 1. A123 26.Energy Storage & Power LLC 50. Nippon Chemi-Con Corporation 2. Active Power 27. Enersys 51. Nrstor 3. AES Energy Storage 28.EnerVault 52. Panasonic Corporation 4. Alstom 29.Eos Energy Storage 53. Plug Power 5. Altairnano Technologies 30. Exide Technologies 54. Powerthru 6. Amber Kinetics 31. FireFly International Energy Co. 55. Premium Power Corporation 7. Andritz 32. General Compression Inc. 56.Primus Power 8. Aquion Energy 33. General Electric Company 57. Prudent Energy 9. Ashlawn Energy 34. Gravity Power 58. RedFlow Ltd. 10. Axion Power International 35. GS Yuasa Corporation 59.Saft Batteries 11. Beacon Power Corporation (bankrupt) 36. Heart Transverter 60.Samsung SDI 12. Black & Veatch 37. Highview Power Storage 61. Seeo 13. Bright Energy Storage Technologies 38. Hitachi Ltd. 62.Siemens Energy 14. BYD Company Ltd. 39. Hydrogenics 63. Sony Corporation 15. C&D Technologies 40.Hydrostor 64.Sumitomo Electric Industries Ltd. 16. Celestica 41. Isentropic Ltd. 65.SustainX 17. CellStrom GmbH 42.Johnson Controls 66.Temporal Power 18. China National Electric Equipment Corporation 43. LG Chem Ltd. 67. Ultralife Corporation 19. Deeya Energy 44.LightSail Energy 68.Valence Technology 20.Dow Kokam 45. Lithium Technology Corporation 69.Verdant (VRDT Corporation) 21. Dresser-Rand Group 46.Maxwell Technologies 70. Voith Hydro 22. East Penn Manufacturing Company 47. MWH Global 71. Vycon 23. Electrovaya 48.Nesscap Energy 72. Xtreme Power 24.Ener1 49.NGK Insulators 73. ZBB Energy Corporation 25. EnerDel
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  • 12. TERMS AND CONDITIONS The Reports will be provided in accordance with the General Provisions included herein. By signing this order form and accepting delivery of the Reports, you are agreeing to the accompanying General Provisions and understand that payment is due within acceptance of this agreement. General Provisions: This agreement provides ad non-exclusive license, subject to the restrictions below, is non- assignable, and does not grant you any right to permit third parties (including, without limitation consultants, independent contractors, investors, partners, subsidiaries, affiliates, or parent companies) to use the Reports. ClearSky Advisors Inc. will retain all ownership rights, including but not limited to rights in intangibles and copyrights, in all Reports and other materials we provide you. You acknowledge that the Reports and our responses to your inquiries will contain non-public, proprietary information (including, without limitation, our study data and methodology), and you agree that such information will be held and maintained in confidence not disclosed to parties outside your organization or Authorized Location (s) (if applicable) and will be used only for the purposes set forth above. Without limiting the foregoing, you agree that you will not disclose the Reports or any other material you receive from us with your partners or outside consultants. You further agree you will use reasonable care to maintain the confidentiality of such information, provided that such care shall be at least as great as the precautions you take to protect your own confidential information. In addition you agree that you will a) use the same degree of care for maintaining the confidentiality of passwords that govern electronic access to the Reports as you do for your confidential information, b) only permit access to the Reports by employees at the Authorized Location (s) if this is a Corporate License, and c) not permit unauthorized users to access the Reports. Neither the Reports, nor the information contained therein, nor the ClearSky Advisors name or any ClearSky Advisors trademark, may be used in whole or in part for advertising, for reference or inclusion in investor materials, or any other purpose without our prior permission in writing. We shall only be liable to you under this Agreement for direct damages and we shall have no liability for you for indirect, consequential, special, or punitive damages. Our aggregate liability to you for all matters and claims arising out of or relating to this Agreement or the Reports or other materials or services provided by ClearSky Advisors to you shall not exceed the amount that you paid to us under this Agreement in the 6-month period prior to the occurrence of the claim. The material we provide and responses to the inquiries will reflect our judgment based upon the information available to us. We disclaim any other representations or warranties, express or implied or statutory, including without limitation any implied warranties of merchantability, or fitness for a particular purpose. This agreement shall be interpreted according to the laws of the Province of Ontario, exclusive of its principles of conflicts of law. All lawsuits and other proceedings relating to this Agreement or ClearSky Advisors’ services shall be brought in the courts in the Province of Ontario. If you are using a purchase order to acquire ClearSky Advisors’ research, both parties agree that the terms of these General Provisions shall govern and that any terms in the Purchase Order shall not apply. This Agreement represents the entire agreement between you and us related to the subject matter hereof and superseded and prior or contemporaneous communications. Contact: Jon Winberg Account Manager – jwinberg@clearskyadvisors.com Office (877) 333-5821 Cell (647) 909-4930

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