Download - Signposts for an accelerating market
Trusted Power and Renewables Intelligence woodmac.com
Signposts for an accelerating market
Wood Mackenzie Power & Renewables | October 2019
Trusted Power and Renewables Intelligence woodmac.com
Key energy storage industry trends
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Contents
1.Deployment trends 3
2.Technology and system price trends 6
3.Market drivers and outlook 10
Deployment trends1.
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20
40
60
80
100
120
140
160
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Deplo
ym
ents
(M
W)
Residential Non-Residential Front-of-the-Meter
Source: Wood Mackenzie Power & Renewables
U.S. Q2 2019 deployments up 20% year-over-year
Market dropped 49% quarter-over-quarter as front-of-the-meter market quiets
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50
100
150
200
250
300
350
400
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
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Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
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Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Deplo
ym
ents
(M
Wh)
Residential Non-Residential Front-of-the-Meter
Source: Wood Mackenzie Power & Renewables
U.S. Q2 2019 megawatt-hours deployed dropped 40% from Q1 2019
Market up 3% YOY with a total of 165 MWh installed
Technology and system price trends2.
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* “Other” includes flywheel and unidentified energy storage technologies.
Source: Wood Mackenzie Power & Renewables
Lithium-ion still dominates the market, accounting for 98.5% share of MW in Q2 2019
Lead-acid held 1.3% market share in Q2 2019, while an iron flow battery project accounted for the final 0.2%
Quarterly energy storage deployment share by technology (MW %)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
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Q22018
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Q12019
Q22019
En
erg
y s
tora
ge d
eplo
ym
en
ts b
y t
ech
nolo
gy (
MW
)
Lithium Ion Lead Acid Sodium Chemistries Flow - Vanadium Flow - Zinc Other
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Source: Wood Mackenzie Power & Renewables
Long- and medium-duration FTM system prices set to decline by more than 15% by 2021
Front-of-the-meter fully installed system price trends, Q3 2019 and
2021E, 4-hour ($/kW)
Front-of-the-meter fully installed system price trends, Q3 2019 and
2021E, 2-hour ($/kW)
Median - $2,075
Median - $1,625
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Front-of-the-meter (4-hour) Q32019
Front-of-the-meter (4-hour)2021E
Q3 2
019
syste
m p
rice r
anges (
$/k
W)
Median - $1,400
Median - $1,075
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Front-of-the-meter (2-hour) Q32019
Front-of-the-meter (2-hour)2021E
Q3 2
019
Syste
m P
rice R
anges
($/k
W)
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Source: Wood Mackenzie Power & Renewables
Short-duration FTM system prices expected to decline by 10% over the next two years
Front-of-the-meter fully installed system price trends, Q3 2019 and
2021E, 30-min. ($/kW)
Median - $750
Median - $650
$0
$200
$400
$600
$800
$1,000
$1,200
Front-of-the-meter (30-minute)Q3 2019
Front-of-the-meter (30-minute)2021E
Q3 2
019
Syste
m P
rice R
anges
($/k
W)
Market drivers and outlook3.
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Source: Wood Mackenzie Power & Renewables
Front-of-the-meter policy and market developments, Q2 2019FDNY issued new proposed rules for outdoor
storage permitting. The results of the peaker
plant replacement study were released.
NYISO and stakeholders continue to go back
and forth on participation barriers. Utilities
released bulk storage plans, and Con Ed
released a distribution deferral RFP.
New York
The Dept. of Public Utilities opened an
investigation into DG interconnection,
including storage. The Dept. of Energy
Resources issued updated draft language for
the Clean Peak Standard, with favorable
provisions for storage.
Massachusetts
PGE’s integrated resource plan (IRP)
includes some storage, but not significant
amounts compared to other RFP and IRP
announcements over the past two quarters.
Oregon
L.A. Dept. of Water and Power announced a
300 MW/1,200 MWh solar-paired storage
project. Glendale Power & Light released an
RFP to replace a proposed natural-gas peaker.
California
Distribution utilities in Texas can now own
energy storage thanks to a bill signed by Gov.
Greg Abbott this summer, effective 3
September.
Texas
HECO released Phase 2 of its renewable
procurement, including GWh-scale storage
procurements.
Hawaii
Rutgers University published a study of the
investment needed to meet NJ’s storage
goals. The Board of Public Utilities included
provisions for the state’s storage mandate as
part of the 2019 Energy Master Plan.
New Jersey
PacifiCorp's latest IRP includes upside for
storage of as much as 2.7 to 3.7 GW.
Multiple
PNM’s IRP includes significant storage
announcements.
New Mexico
Xcel Minnesota released an IRP with limited
and slow-paced energy storage plans.
Minnesota
The U.S. Senate’s BEST act
would direct the DOE to fund long-
duration storage research and
demonstration projects.
Federal
Tennessee Valley Authority's IRP could
drive 5,300 MW of energy storage through
2038.
Tennessee
Connecticut Public Utilities Regulatory
Authority opened a docket on the value of
distributed energy resources.
Connecticut
Nevada Energy awarded 509 MW
of energy storage for its latest solar-
plus-storage procurement.
Nevada
Georgia PSC approved Georgia Power’s
plan to own and operate 80 MW of energy
storage, along with new renewable build-out.
Georgia
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Source: Wood Mackenzie Power & Renewables
Behind-the-meter policy and market developments, Q2 2019
NYSERDA announced $15 million in BTM storage incentives available
immediately on Long Island ($55 million in total committed). The NYC fire
department, FDNY, issued new proposed rules for outdoor storage
permitting. The Public Service Commission issued an order that storage is
required to pay contract demand charges under standby and buyback rates;
it also issued a progress update on the pilot of a DER data platform.
New York
Dept. of Public Utilities began studying DG
interconnection, including storage. National
Grid allowed residential battery systems
enrolling in its Connected Solutions program
to claim 100% of the annual incentive if
enrolled before 1 August.
Massachusetts
The California Public Utilities Commission
adopted rules for a new greenhouse gas
signal and energy equity and resilience
funding for marginalized and high-risk
communities under the Self-Generation
Incentive Program and proposed changes to
the Demand Response Auction Mechanism,
including an extension through 2022.
California
DOE announced funding for multiple tribal
energy projects, several of which have a
storage component.
Federal/national
Governor Janet Mills signed a bill to
establish a commission to study impacts of
storage in Maine, with a report due by
December 2019.
Maine
Rutgers University published a study
analyzing investment needed for the state to
meet its storage goals. The Board of Public
Utilities included provisions for the state’s
storage mandate as part of the 2019 Energy
Master Plan.
New Jersey
Eversource issued a proposal for a program
to increase reliability, reduce peak demand
and reduce GHG emissions using a
combination of battery storage, DER and
energy efficiency.
New Hampshire
Connecticut Public Utilities Regulatory
Authority opened a docket on the value of
distributed energy resources.
Connecticut
Oregon State Legislature passed and the
governor signed a bill establishing an
incentive program focusing on low and
moderate income solar-plus-storage projects.
Oregon
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Source: Wood Mackenzie Power & Renewables
Total FTM pipeline swells to over 67 GW following latest ISO cluster applications
This represents a 67% increase to the pipeline, following a pattern of rapid growth in Q2 and Q3 each year
U.S. front-of-the-meter energy storage pipeline market share, Q3
2015-Q2 2019 (%)
U.S. front-of-the-meter energy storage pipeline by market, Q3 2015-
Q2 2019 (MW)
Most interconnection queues grew massively this quarter, which combined with several large-scale utility announcements increased the pipeline to record levels.
While California did retake its position as the holder of more than 50% of the market, it only barely reached this benchmark, showing that other markets continue to
see interest.
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019T
ota
l F
TM
en
erg
y s
tora
ge p
ipelin
e (
MW
)
Arizona California ColoradoFlorida Hawaii MassachusettsNevada New Jersey New YorkPJM (Exc. NJ) Texas All Others
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q32015
Q42015
Q12016
Q22016
Q32016
Q42016
Q12017
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Q22019
Tota
l F
TM
pip
elin
e s
hare
over
tim
e (
% o
f M
W)
Arizona California Colorado
Florida Hawaii Massachusetts
Nevada New Jersey New York
PJM (Exc. NJ) Texas All Others
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83 46 65 227 231 224 311
478
4,834
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E
En
erg
y s
tora
ge d
eplo
ym
en
ts b
y s
egm
en
t (M
W)
Residential Non-Residential Front-of-the-Meter
Source: Wood Mackenzie Power & Renewables
U.S. energy storage annual deployments will reach over 4.8 GW by 2024
Utility procurements, changing tariffs and grid service opportunities all drive the market forward
U.S. energy storage annual deployment forecast, 2012-2024E (MW)
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85 51 89 168 341 449 778 1,131
15,487
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E
En
erg
y s
tora
ge d
eplo
ym
en
ts b
y s
egm
en
t (M
Wh
)
Residential Non-Residential Front-of-the-Meter
Source: Wood Mackenzie Power & Renewables
U.S. market will reach 15.5 GWh in annual deployments by 2024
4-hour systems becoming the norm for front-of-the-meter systems; average BTM durations inch toward 3 hours
U.S. energy storage annual deployment forecast, 2012-2024E (MWh)
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$249$111 $135
$297 $314 $317$487
$720
$5,122
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2012 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E 2024E
Ann
ual energ
y s
tora
ge m
ark
et
siz
e (
mill
ion $
)
Residential Non-Residential Front-of-the-Meter
Source: Wood Mackenzie Power & Renewables. Note: Market size is reported as energy storage system deployment revenue (product of deployments and installed system prices).
U.S. energy storage will be a $5.1 billion market in 2024
Annual value to more double between 2019 and 2020
U.S. annual energy storage market size, 2012-2024E (million $)
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The new foundation for hybrid energy storage systems –recognizing value True value for hybrid storage systems lies at the intersection of green policy and system needs
• As you move in either
direction, either towards
valuing renewables, or
valuing delivery during peak
hours, storage’s value
increases.
• As you move in both
directions, valuing
renewables during certain
hours, storage’s value
increases exponentially.
• The clean peak standard, if it
becomes a model as capacity
markets and the RPS did,
could drive massive storage
growth.
National Energy Policy Act – 1992Deregulating energy markets
Example market – Texas
Iowa launches the first Renewable Portfolio Standard - 1983
Example market – Hawaii (100%)
Reliability Pricing Model – 2007PJM capacity market acknowledges
that availability during peak times matters
Example market - Kentucky
Massachusetts’s An Act to Advance Clean Energy – 2018
Example market – only Massachusetts (for now!)
Competitive markets can help drive down costs
Not all MWh are created equal…
Keep it simple –secure
MWh of energy
Not all hours
have the same need…
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