Engineering Inc - July/August 2019 - 6

MARKETWATCH

Increasing Demand, New Technology
Prompting Surge in Battery Storage Market

n March, Florida Power & Light (FPL) announced that
it will build the world's largest solar-powered battery
system. When it comes online in 2021, the FPL Manatee
Energy Storage Center will provide 409 megawatts
(MW) of electricity. Chances are, though, by the time
you read this article, another energy company will have
announced plans to build an even bigger storage battery.
Maybe more than one.
"It seems like every few months we hear of plans for the next
world's biggest battery," says Joe Fox, director, power market at
Ulteig Power. "This is a very exciting time to be in this sector."
Fueled by increasing demand from utilities, independent
power producers, companies looking to cut
energy costs and rapidly developing technology
that is reducing battery storage costs at a
remarkable pace, the battery storage market
segment is on a major upswing.
In 2018, U.S. energy storage deployments
totaled 311 MW, up 44 percent from the year
earlier, according to the U.S. Energy Storage
Monitor Year-in-Review, a report by Wood
Mackenzie Power & Renewables. Wood
Mackenzie forecasts that annual U.S. energy
storage deployments will reach 4.4 gigawatts
by 2024.
"The market is exploding," says Mike Voll,
global sector lead for smart technologies at
Stantec. "We expect the global segment to
continue to grow at double-digit levels over the
coming years."

Looking longer term, Bloomberg New Energy Finance
(BloombergNEF) projects in its New Energy Outlook that
by 2050, 50 percent of all global power generation will come
from wind and solar. Hydro, nuclear and other renewables will
account for an additional 21 percent. Natural gas, coal and oil
will account for only 29 percent of electricity production, down
from 63 percent today.
As a result, BloombergNEF's Seb Henbest says in the report,
"We see $548 billion being invested in battery capacity by
2050, two-thirds of that at the grid level and one-third installed
behind-the-meter by households and businesses."
Second, the price of lithium-ion batteries, which have
accounted for most battery storage systems
installed since 2015, has fallen precipitously.
"With manufacturers producing lithium-ion
batteries at scale for electric vehicles and other
applications, they have pushed the price point
down to where the business case for largerscale storage projects is easier to pencil out,"
says Fox.
A BloombergNEF analysis reported that the
benchmark levelized cost of energy (LCOE)
for lithium-ion batteries has decreased by 35
percent since the first half of 2018. LCOE
measures the all-in expense of producing a
megawatt-hour (MWh) of electricity from a
new project, including the costs of development, construction and equipment, financing,
feedstock, operation and maintenance.
"Batteries co-located with solar and wind
projects are starting to compete, in many markets and without subsidy, with coal-and gas-fired generation
for the provision of 'dispatchable power' that can be delivered
whenever the grid needs," according to the analysis.
"There are numerous applications for utilities," says Fox.
"They may be looking to modernize their grid or improve grid
reliability, or they can use storage to defer the need to upgrade
infrastructure."
Third, the regulatory landscape is rapidly changing in favor of
energy storage.
In 2018, the Federal Energy Regulatory Commission issued
two orders that will promote the increased use of storage in the
transmission grid. Order 841 removes barriers to energy storage

Bloomberg New
Energy Finance
projects in its
New Energy
Outlook that
by 2050,
50 percent of
all global power
generation will
come from wind
and solar

RIDING THE RENEWABLE WAVE

Three factors are driving the growth of the battery storage
market.
First, battery storage has a symbiotic relationship with the
rapidly expanding renewable energy market.
According to the U.S. Energy Information Administration
(EIA) non-hydroelectric renewable energy sources, including
solar and wind, will be the fastest growing source of U.S. electricity generation for at least the next two years. EIA forecasts
that utility-scale solar generation will grow by 10 percent in
2019 and 17 percent in 2020, with wind generation growing by
12 percent and 14 percent, respectively.
6

ENGINEERING INC.

JULY / AUGUST 2019

JORDAN LYE / GETTY IMAGES

By Gerry Donohue

Engineering Inc - July/August 2019

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