According to the Smart Electric Power Alliance (SEPA), utilities in the US added 207MW/257MWh of energy storage capacity to the grid in 2016.The number of energy storage projects amounted to the installation of 829 systems to bring the country’s total energy systems to 2,399 and capacity to 622MW/661MWh. These are the findings of the 2017 Utility Energy Storage Market Snapshot, a study conducted by SEPA to provide insight on the level of utilities’ energy storage adoption.
SEPA gathered the data using an online survey conducted across some 115 utilities whose customer base, if combined, reaches 75 million accounts out of the 130 million utility metering points in the US.
The energy storage projects included the installation of batteries, flow batteries, kinetic energy storage, supercapacitors and compressed energy storage systems.
The 2017 Utility Energy Storage Market Snapshot is SEPA’s first research on utility-scale energy storage deployments.
Amongst states in the US, California implemented the highest number of energy storage projects (120.5MW/176.6MWh), followed by Indiana which deployed 22MW/20.8MWh and Ohio which installed 161.1MW/6.2MWh of energy storage capacity.
The US energy storage market was led by utility-scale energy storage deployments which accounted for 151MW/181.6MWh whilst the residential sector accounted for 4.5MW/7.5MWh yet the non-residential energy storage segment reached 54MW/68MWh of energy storage deployment.
Amongst the survey participants, 71 deployed at least one energy storage system in service territory as of the end of 2016 whilst 31 utilities said their first rollout of an energy storage system was in 2016.
Regulatory impact on utility energy storage market
According to the findings of the Utility Energy Storage Market Snapshot, regulatory policies implemented at state and national levels are driving utility adoption of energy storage systems.
For instance, following a mandate set by the California Public Utilities Commission for energy providers to install energy storage systems in response to the failure of the Alison Canyon gas plant, some 70MW of storage capacity were procured within six months.
Laws introduced by federal governments including New Jersey, Nevada, Maryland and California are providing incentives for the installation of storage systems. Currently, some 2,900 projects are under review to receive funding from state governments.
Furthermore, decreases in the costs of lithium batteries are positively impacting on the energy storage market. The report found that the costs of manufacturing lithium batteries has dropped by 60% between 2012 and 2017 resulting in lower costs of energy storage systems.
Amongst utilities operating in the US, California’s three investor-owned energy providers, Pacific Gas and Electric, Southern Edison and the San Diego Gas & Electric led the industry for interconnected energy storage followed by the Imperial Irrigation District which is also in California.
Some of the trends within the energy storage market include:
- Viable energy storage customer options have expanded. Utilities now offer behind-the-meter energy storage programmes that benefit customers and the grid. Of the utilities surveyed, 81% are currently, or interested in, offering a residential programme, while 89% are currently, or interested in, offering programmes for their non-residential customers.
- Utilities are testing the capabilities of battery energy storage through programmes that explore new business models, shave peak capacity, mitigate local reliability issues, and defer investments in generation, transmission, and distribution assets. Of utilities surveyed, 85% are interested in enabling customer-owned storage to provide ancillary services.
- Some utilities have taken a holistic approach to distributed energy resources (DERs) by testing the capabilities and interactions of these technologies on the grid. The majority of utilities included in our survey are planning or have already paired energy storage with renewable energy facilities and demand response activities.
- Islands have been early adopters of systems combining solar and storage. The trend is driven by a combination of economics and improved grid reliability.
- Power purchase agreements for solar-plus-storage projects generated industry buzz in early 2017 with prices as low as 4.5 cents per kWh.
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