US energy storage installations jump 40% in 2014 as Lithium-ion still dominates

In 2014, 180 individual energy storage installations for a total market size of $128 million were completed in the US. This year is expected to be the biggest in the market’s history.

SCE's Tehachapi Energy Storage Project features 604,832 lithium-ion battery cells. Source: Southern California Edison

The US non-pumped hydro energy storage market is poised for significant growth over the next five years, with installed capacity in 2015 expected to more than triple to 220 MW from last year’s 61.9 MW, according to a GTM Research report released in March.

Energy storage installations were up 40% in 2014, driven mainly by utility-scale deployments of lithium-ion batteries.

In 2014, the US completed 180 individual installations with a weighted average system price of $2,064/KW. The energy storage market now nears $128 million, according to GTM Research.

Some 90% of energy storage capacity deployed in 2014 was utility-scale in-front-of-the-meter projects. Meanwhile, the majority of the behind-the-meter storage came from the non-residential (commercial, education, military and non-profit) segment.

There are clear signs that both the residential and non-residential markets are starting to gain momentum as both segments saw a drastic increase in deployments in the last quarter of 2014.

Meanwhile, lithium-ion batteries still dominated the technology landscape as they accounted for 70% of new energy storage capacity, according to the GTM Research data, which does not include pumped-hydro storage. 

"Other” technologies were second with 27%, largely due to one 16 MW flywheel project installed in 2014. Vanadium flow batteries, lead-acid batteries and sodium chemistries each added 1% to the technology pie.

Despite the considerable progress in energy storage across the US, the vast majority of energy storage deployments were concentrated in just a few markets, with utility-scale storage dominating in the PJM Interconnection territory and behind-the-meter market scaling the most in California.

Meanwhile, Hawaii, New York, Arizona and Texas have all started to emerge as potential alternative markets for energy storage technology.

Most of the current and recent RFPs for energy storage outside California are looking for a relatively small amount of capacity, indicating that these may be early experiments in a highly dynamic sector, according to data by Bloomberg New Energy Finance.

Technology outlook at the utility scale
These are still early days, but developments over the last year are beginning to provide pointers on the nature of the more developed markets in the US.

As of mid-April 2015, there are 514 energy storage projects in the US for a total of more than 29 GW of capacity – including plants in operation, proposed, under construction, contracted, announced or even decommissioned – revealing a significant operational capacity of 21.4 GW already in place, according to the US Department of Energy’s (DOE) energy storage database.

 Table 1: Existing and planned (proposed, under construction, contracted, announced) US energy storage technologies, split by capacity. Data source: DOE

Though most of this capacity is in the form of pumped-hydro reserves, Table 2 shows that the hydro storage is split between just 45 existing or planned installations, or less than 9% of all US projects.

Table 1: Existing and planned (proposed, under construction, contracted, announced) US energy storage technologies, split by number of projects. Data source: DOE

A comparison between Tables 1 and 2 highlights the contrast between technologies such as pumped hydro, which provide massive amounts of storage within a single plant, and lithium-ion batteries or ice thermal storage.

The latter two account for more than half of all projects listed by the DOE, but their cumulative capacity is less than 1%.

Even though adoption of energy storage is growing apace across the US, most utilities say it is still too early to provide a detailed evaluation of different technology types.

In October 2014, Southern California Edison (SCE) awarded 135 MW of behind-the-meter battery energy storage contracts and 100.5 MW in-front-of-the-meter battery storage as part of its local capacity requirements procurement. It also selected Ice Energy Holdings to supply 25.6 MW of behind-the-meter thermal storage.

While thermal energy storage has so far been mainly used for customer-demand management, Ice Energy’s contracts for SCE illustrate its potential value on the utility side to reduce the demand on distribution infrastructure during peak periods.

SCE was looking for technologies that could have a discharge rate of four hours to meet its Resource Adequacy requirements. Though SCE primarily opted for battery technologies, it saw “a good diversity” of technology types in the bidding process, according to Rosalie Roth, product lead for energy storage at SCE.

In its future solicitations for utility-owned storage, SCE plans to primarily seek technologies that provide longer-duration service, such as 2-4-hour systems, that are fairly compact and deploy at the distribution system, according to Mark Irwin, SCE’s director of Technology Development.

“For our application lithium-ion people have a leg up, and it will be a challenge for others to overtake them, but I think there is a chance,” he said.

“As you get to shorter durations – in the 30 minutes or less, or 1 hour or less – there are other chemistries that may have the opportunity to compete. And then when you get in the long duration, there are lots of other technologies that have that capability. But that’s not what we are chasing.”

In the early stages, at least, power companies are likely to take a conservative stance regarding storage technology, according to Evan Bierman, senior financial analyst with Sempra Energy, which owns utility San Diego Gas & Electric (SDG&E).

Another factor in lithium-ion’s favor is that it is backed by some of the world’s biggest battery manufacturers, including diversified manufacturing giants such as Sharp, LG Chem and Panasonic, and is driven by the fast-growing industry for electric vehicles.

“In the short run, manufacturers who are taking advantage of building scale to provide battery systems to the automotive industry seem to have quite a competitive advantage in the product development and in their cost roadmap,” Irwin said. “The question is really how do you get the scale of building manufacturing that you can translate to the stationary grid.”

There are promising developments with other battery technologies, though they are still to be tested in the open market. SunEdison, for example, recently announced it would purchase up to 1,000 flow batteries from Imergy Power Systems for rural electrification systems in India.

Imergy says its third-generation vanadium-flow battery aims to compete with lithium and lead-acid batteries at the grid scale on a cost basis, but finding markets will be a challenge.

“We are looking at Imergy and other technologies such as those that may be more appropriate for energy markets, but in the near term, in the US market at least, it’s going be almost exclusively lithium-ion batteries,” said Thomas Leyden, vice president for energy storage deployment at SunEdison.

Almost as important as the energy storage technologies are the applications they are used for as the application often determines the choice of technology.

Table 3: US energy storage applications, by capacity. Data source: DOE

DOE energy storage data (Table 3) shows that electric energy time shifting, predominantly through pumped hydro, is by far the biggest application in terms of overall capacity.

Meanwhile, other energy storage applications, such as black-start or micro-grid capabilities, are almost negligible in terms of capacity and numbers of projects.

Moreover, according to the data, only one application, renewable energy time shifting, appears to offer scope for participation of all energy storage technologies.

Conversely, electro-chemical technologies emerge as the most versatile of all categories, with applications across all areas except grid resiliency.

Turning to numbers of projects (Table 4), while there is a greater spread overall, the data shows there appears to be significant interest in using energy storage in electric bill management, energy time shift and supply capacity applications. These three applications account for more than 53% of all projects in the data set.

Table 4: US energy storage applications, by number of projects. Data source: DOE

“I will bet there will be people who will make it through that challenge and compete with people that are providing in the automotive space, and compete effectively,” Irwin said.

“Is that in the next two years for a proven utility product? I don’t think so. Is it in the next five years? I think it has a good chance. Is it in the next 10 years? I think it’s highly probable,” he added.

For a more detailed analysis of the US technology landscape, read Energy Storage Update's 2015 Technology Outlook whitepaper.