utility-scale (grid) energy storage development – increased demand results in industry innovation
TRANSCRIPT
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Utility-Scale (Grid) Energy Storage Development –Increased Demand Results in Industry Innovation
Sara Bradford, Principal Consultant
Energy & Power Systems Group
June 18, 2009
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Poll Question
Which grid energy storage technology offers the strongest value proposition?
• Compressed air energy storage (CAES)
• Thermal energy storage (TES – molten salt, sand, sandstone, etc.)
• Pumped hydropower
• Flow and electrochemical batteries
• Flywheels
• Fuel cells
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Focus Points
� Impact of current economic situation
� State of the industry for large format utility-scale energy storage
� Growth trends
� Major market shifts
� Market challenges and drivers
� Revenue projections
� Key industry stakeholders
� Summary of conclusions
Agenda
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Impact of Current Economic Situation
�The new U.S. administration’s push towards alternative energy development has supported industry growth in grid energy storage solutions
�However, constricted credit/finance and available funding is expected to lower capital investments and R&D spending in this industry for the next two to three years
�Long-term potential and environment-friendly initiatives are key push factors that enable this market continue commercialization activities
�Today’s strict CO2 and other air contaminant regulations have encouraged utilities to identify alternative power generating technologies such as wind and solar
�With no commercially available energy storage technology available, utilities are forced to rely on gas and diesel-powered generators to supply peak power demand
�With increased wind/solar power generation in addition to smart grid modernization movement, utility-scale energy storage technologies market will continue to grow even in this harsh economic environment
Minimal Impact
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Current State of the Industry
�To reach the U.S. renewable energy target of 20% of power generated from renewable sources by 2020, grid energy storage is essential
�U.S. government is laser focused on this area and understand the need to support technology development in this area
�Without utility-scale energy storage, the U.S. cannot achieve the renewable energy targets
�Billions of stimulus dollars and other programs through the national laboratories are directed towards utility-scale energy storage development
�Bottom-line – utility-scale energy storage is the next highest growth potential battery market
�Utilities currently conducting test projects
�Venture capitalist investments active in this area
�Wind and solar projects require energy storage to expand
�Smart grid, energy storage and grid infrastructure are intertwined – all three needed to modernize the U.S. grid
Action is Required!
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Grid Energy Storage Definitions
�Known as utility-scale or grid energy storage technologies
�Used to manage the flow of electricity in an electric power grid
�For peak shaving, energy storage solutions are used to reduce the cost of peak electricity demand without the need for excess power generation capacity
Purpose
�Energy storage technologies are in various stages of development – from pre-commercial to commercial designs
�Grid stabilization alternatives to conventional lead acid batteries �Flywheels
�Fuel Cells
�Ultracapacitors
�Electrochemical batteries
�Peak shaving energy storage solutions�Compressed air energy storages (CAES)
�Superconducting magnetic energy storage (SMES)
�Thermal energy storage (TES) including storage mediums such as water, ice, molten salt, sand, sandstone, or chalk layers
�Flow batteries
�Electrochemical batteries
�Flywheels
Technologies
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Growth Trends
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Market Shifts
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Technology Segmentation – Advantages and Disadvantages
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Hot Progress Areas – Funding Opportunity to be Released Soon!
� U.S. Governmental Support – “President Obama has made a ‘smart power grid’a key element of his plan to lower energy costs for consumers, achieve energy independence and reduce greenhouse gas emissions”� The Obama Administration and Department of Energy have identified grid energy
storage and smart grid technologies as areas that require immediate funding support
� This progress is a result of key benefits this technology implementation will bring to the nation’s power grid
� Funding Opportunity Announcement (FOA) – Smart Grid Investment Grant� Proposes funding for one or two energy storage demonstration projects for grid frequency
regulation
� Proposed total funding to be made available for the project(s) is a maximum of $200 million, on a 50% applicant cost-share basis
� The demo projects will help to establish costs and benefits, verify technical performance, and validate system reliability and durability. Goal is to establish a technology that can be readily adapted and replicated across the U.S.
� Energy storage solutions eligible for this funding include advanced battery systems (including flow batteries), ultracapacitors, flywheels, and compressed air energy systems
� Application areas include wind and photovoltaic (PV) integration with the grid, upgrade deferral of transmission and distribution assets, congestion relief, and system regulation
� The formal FOA was expected to be released on or about June 17, 2009….
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Poll Question
What other form of support (financial, developmental) is required to advance grid energy storage?
• Increased subsidies
• Tax incentives
• Mandates
• Increased financial support
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Major Challenges
TECHNOLOGY: This market has been slow to develop as a result of technology limitations and high capital costs
CONSERVATIVE: Utilities are risk adverse, often require at least a 15 year track record for new technologies
RISK: Rapid deployment of grid energy storage is challenged by concerns over technology risk and financial complexity
REGULATION: Utility industry highly regulated although minimal regulations exist for grid energy storage
COMPLEX: Battery alternatives for this application require a complex arrayof battery modules, electronics, software, and thermal management systems
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Major Drivers
� INTEGRATION: Utility-scale energy storage solutions have reached technology development success level and are now being integrated for grid-stabilization applications
� DEMAND: Growing demand for electricity coupled with the lack of available non-fossil fuel options drive energy storage development
� GREEN: Increasing resistance to new fossil fuel and nuclear power plants results in more focus on bulk energy storage
� RENEWABLE: Push for alternative power generation plants such as wind and solar create higher demand for bulk energy storage solutions
� INTEGRATED STORAGE: Innovation accelerating bulk energy storage focus such as next generation concentrating solar power plants with integrated storage (molten salt system)
Drivers
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Revenue Projection – Grid Energy Storage Market (North America), 2005-2020
0.0
1,000.0
2,000.0
3,000.0
4,000.0
5,000.0
6,000.0
7,000.0
2005 2008 2011 2014 2017 2020
Revenues ($ Million)
Note: All figures are rounded. Base Year 2008. Source: Frost & Sullivan
25.8% Compound
Annual Growth Rate
(2008-2020)
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Market Growth by Technology
7%
27%
5%
6%
36%
7%
12%
21%
8%
3%37%
9%
13%9% CAES
Pumped Hydro
TES
SMES
Battery(Electrochemical/Flow)Flywheel
Fuel Cell
20102020
Source: Frost & Sullivan
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Key Industry Stakeholders
CAES
Flywheel
Flow Batteries
Fuel Cells
Electrochemical
Batteries
TES
SMES
Pumped
Hydro
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Summary of Conclusions
Each energy storage technology plays a different role when it comes to managing the power grid. Key functions include:
� Load leveling – improving power quality by minimizing voltage fluctuations
� Spinning/non-spinning reserve applications – limited backup
� Regulation service/ peak shaving – peak demand reductions
For example:
CAES better suited for load leveling
Flywheels better suited for regulation/peak shaving
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Bottom Line
Bulk Energy Storage Power Generation Grid Modernization+ =
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Next Steps
� Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. ([email protected])1-877-GoFrost (1-877-463-7678)
� Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ(www.gil-global.com)
� Register for the next Chairman’s Series on Growth:
The CEO's Growth Team™: Research & Development Driving Growth and
Innovation (July 9th) (http://www.frost.com/growth)
� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)
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For Additional Information
Johanna Haynes
Corporate Communications
Energy & Power Systems
(210) 247-3870
Diana Bragg
Sales Manager
Energy & Power Systems
(210) 247-3879
Sara Bradford
Principal Consultant
Energy & Power Systems
(650) 475-4550