Behind the Meter Energy Storage Soars
The rise of solar and wind power is leading to an explosion in energy storage, according to the U.S. Energy Storage Monitor 2015, which was released last week by GTM Research and the Energy Storage Association.
The study found that the overall U.S. energy storage market grew by 243 percent in 2015 and predicts that the market will reach 17 gigawatts by 2020. Last year was the best ever for the category, and the fourth quarter – when 112 MW was deployed – was its best quarter. For the year, 221 MW — 161 megawatt hours — were deployed.
GTM and the ESA divides the category utility, residential and non-residential (commercial) deployments. The utility segment controlled 85 percent of the market. The remaining 15 percent, which is the “behind the meter” category, grew an aggressive 405 percent during the year. Hawaii led the residential and California the non-residential elements of the behind the meter segment the company said.
GTM Energy Analyst Ravi Manghani said that the commercial element of the behind the meter segment grew 424 percent between from 2014 to 2015, though it did shrink 15 percent during the fourth quarter of 2015 compared to the third quarter of the year.
The concentration of growth in California suggests that there is a tremendous amount of untapped demand elsewhere. Indeed, the dominance of the Golden State is striking: Manghani said that California has about 28 MW of storage in place – which is as much as 24 times the total of the second highest market.
Manghani said that two reasons drive the dominance by California: Energy costs tend to be high in the state – which causes organizations to look for alternatives energy sources – and incentives which can cover as much as 60 percent of the upfront costs of putting storage infrastructure in place are available. An addition point is that incumbent utilities increasingly are requred to offer energy storage to their customers.
The non-residential segment will grow– and perhaps quickly – in areas that have three attributes: High electric bills, great volatility in those bills and a high number of medical facilities, college campuses and other businesses that need backup power. These areas – especially if there regulators and legislators are supportive – could close the gap with California. Markets that seemed primed to move quickly are New Jersey, New York and states in the Midwest. Though markets are now looked at in statewide basis, Manghani suggests that local markets within states may start to lead the way forward.
The Supreme Court’s January decision on Federal Energy Regulatory Commission (FERC) Order 745 – which was seen as a victory for advanced energy distribution ecosystem and its users – also is a boon for distributed energy. “We see changes in net metering policies are going to improve to improve the economics for solar storage,” Manghani said.
Building managers, owners and others interested in the behind the meter non-residential storage market have a lot to which to look forward: The dominance of California is so great that moving up even moderately in other states and regions will greatly expand the category. Conditions are not so different in California that the success there can’t be replicated in other regions, given enough time. The growth of renewable energies in general will tend to push the storage vendors – who also will benefit from the research and development in the electronic vehicle sector.
The bottom line is that the good year reported by GTM Research and the Energy Storage Association almost certainly is not an aberration. The geographic profile suggests that demand will grow — especially if storage costs come down. “We expect the market to grow across all three segments,” Manghani said. “And all will grow pretty rapidly. We do anticipate that both behind the meter segments are going be a bigger portion of the market by 2020.”
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