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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