Grid-connected energy storage projects around the world have reached 2 GW of capacity, up 20 percent since the end of 2015.
Owing to massive cost reductions, Li-ion technology is now leading lead-acid batteries in the power storage category; it is even challenging sodium sulphur and flow for long-duration storage. IHS estimates that 90 percent of the utility-side of meter energy storage projects tracked are based on Li-ion battery technology. Underpinning the rapid cost reduction is the build-up of the supply chain for batteries in the auto and power sectors. Competition between China’s BYD, GCL, South Korea’s Samsung SDI, LG Chem and Japan’s Panasonic is intensifying. In the residential space GCL has launched a battery system at $450/kWh (excluding inverter) in Australia, nearly matching Tesla’s announced price of $3,000 for a 7kWh system.
Li-ion is also gaining traction in the grid-scale market for longer duration, which has been historically dominated by sodium sulfur and flow batteries. IHS has observed grid-scale batteries prices for delivery in 2016 around $400/kWh to $500/kWh, including warranty and management system, with a further 30 percent reduction in the next 18 months. Nonetheless, flow battery manufacturers are scaling up their ambitions and betting on superior lifetime of flow battery technology, as evidenced by the announcement of the 200 MW/800 MWh Dalian demonstration project in China, led by Rongke Power and UniEnergy Technologies.
Although lead-acid technology continues to be used in emerging markets where lack of financing is the biggest barrier, we’re seeing lead-acid market share shrinking in developed countries, owing to the superior performance of Li-ion in terms of response time and longer life.
While equipment costs keep falling, policies favorable to energy storage are being implemented in a larger number of countries, driving up new demand in the power sector. In the United States, after the press announcement from the US administration to commit to 1.3 GW of energy storage deployment, Senator Martin Heinrich (D-NM) is set to introduce a draft bill that would grant a 30 percent tax credit to residential and commercial owners of energy storage. Policies are also announced in South Korea, which is considering mandating energy storage in public buildings, as well as allowing energy storage to participate in the South Korea wholesale power market.